Based
on a survey of more than 4,200 HR and non-HR managers in more than 100
countries worldwide across a broad range of industries, the report
compares the practices of high-performing companies against those of
lower-performing ones in 22 key people-management areas.
The correlation between economic performance and capability in these
22 HR areas was especially striking in six contexts: 1) recruiting, 2)
on boarding of new hires and employee retention, 3) talent management,
4)employer branding, 5) performance management and rewards,
and 6) leadership development.
In three pivotal areas—leadership development, talent management, and
performance management and rewards—the high-performing companies
differentiated themselves dramatically. In each one, these companies
engaged in more activities and provided more options, did so more often,
and were generally more effective.
"Overall, what these findings reveal is that 'people' companies are
far more proactive and more strategic about ensuring they have the
talent they need—today and in the future. They fully understand the
connection between talent and sustainable performance," says Rainer
Strack, a senior partner at BCG and a coauthor of the report. Adds
Horacio Quiros, president of the WFPMA and another coauthor, "We've
always believed that companies that have good people-management
practices perform better. But we now have uncontestable evidence of this
correlation."
Among the key differences the study found between highly capable and less capable companies:
- In leadership development, high-performing companies rely
more on leadership models that clarify leaders' expected contributions
and behavior. They also make people development a central element of
leaders' job requirements, using incentives such as compensation and
career advancement.
- In talent management, high-performing companies know that the talent
pipeline must extend beyond the successors to top management.
Consequently, they offer more development programs for a broader range
of talent. They also try to attract more international talent. These
companies are proactive with talent reviews and create ample
career-advancement opportunities--including horizontal as well as
vertical ones. They also do more to nurture employees' individual growth
and keep them fulfilled professionally.
- In performance management, high-performing companies treat and track
performance with transparency. They recognize the value of fair and
transparent measurement and rewards systems in promoting a culture of
meritocracy. They more often align and motivate their people with clear
norms, expectations, and global standards. They reward behavior, not
just results, to a greater degree than low-performing companies.
Excelling in leadership development, talent management, and performance
management, however, is not enough. Being a “people company” means doing
more across the entire spectrum of people management activities, from
employer branding to employee retention. Furthermore, notes Jean-Michel
Caye, senior partner at BCG and a coauthor of the report, "It's not
enough to carry out people management activities in a linear and
separate fashion. There is an integrated logic in how a company builds,
for example, its talent-management, leadership-development, and
performance-management efforts."
The demonstrable economic benefits of people management have
important implications for companies that may be weighing cutting back
on the sorts of programs and activities that have a hard-to-quantify
return on investment. As Pieter Haen, secretary-general of the WFPMA and
a report coauthor, cautions, "These findings should be a wake-up call
for executives and HR people everywhere. As the talent crisis worsens,
those who don't make a commitment to attracting, developing, and
retaining talent put their future performance at risk."
According to the
press release,
"From Capability to Profitability: Realizing the Value of People
Management" is a preview of findings from the 2012 BCG/WFPMA global
survey on people management. The full findings will be discussed in a
larger report due in October as part of the Creating People Advantage
series that BCG has published annually since 2007, together with the
WFPMA and the
European Association for People Management (EAPM).
