Finally, there is a study that confirms what we have known for a long time: the best way to boost the bottom line is to lead people better.
The report, by the Boston Consulting Group (BCG) and World Federation of People Management Associations, titled, "From Capability to Profitability: Realizing the Value of People Management," has confirmed that companies with stronger people-management capabilities consistently have significantly stronger financial performance. Moreover, the report found companies had 3.5 times higher revenue growth and 2.1 times higher profit margins than those of companies with poor people management skills. Also emphasizing leadership development, talent management, recruiting, onboarding and retention, employer branding and performance management and rewards were particularly important.
"[Higher performing companies] take their people investment much more seriously," says Roselinde Torres, senior partner and managing director at BCG. The report examined more than 100 countries worldwide and surveyed more than 4,000 managers from human resources and other fields. The study used the corporate managers’ ratings of their organizations’ people-management capabilities, while BCG conducted independent reviews of companies’ financials.
As part of that review, BCG included a review of Fortune magazine’s list of the "100 Best Companies to Work For." Those that consistently made the list outperformed the Standard & Poor’s 500 eight of 10 years. The software company SAS Institute Inc., based in Cary, N.C., is one company that has consistently landed on the Fortune list every year. SAS has repeatedly received recognition for its people practices.
SAS demonstrates its sensitivity to the interests and talents of its employees by offering lots of different tracks for employee growth, including "subject-matter expert" and "critical-skills expert."
Though the company has more than 13,000 employees, its turnover rate is only 3.3 percent. SAS Human Resources VP Jennifer Mann believes that turnover is so low because the company provides opportunities for advancement. It also provides countless extra services, including an in-house health clinic, daycare and fitness centers and focuses on employees’ work-life balance.
Studies like this one will raise the consciousness of executives in corporations worldwide. Their challenge will be to embrace the culture of improvement and develop. Too many corporate leaders are not ready.
