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From a Boston Consulting Group article July 2012. We have condensed the report to highlight the key findings.
A survey was completed in partnership between the World Federation of People Management Association (WFPMA) and the Boston Consulting Group. The finding of the survey – Companies that are highly capable in 22 key HR topics consistently enjoyed better economic performance than those less capable. In seven topics this correlation was striking – up to 3.5 times the revenue growth and as much as 2.1 times the average profit margin.
The following are the top three areas where high performing companies make the difference.
The Top 3 Areas
High perfroming companies recognise that leadership is about more than just steering the business. It’s about nurturing, energising and challenging the people who help make it run – and who keep it competitive. To sustain success, a company needs leaders who care about and develop their people and the top companies use incentives to engage leaders to people develop, making career advancement dependant in part on leaders people development efforts.
These companies have values with actionable guidelines that inspire leaders and a leadership model that guides talent selection and promotion decisions. They also make leadership planning an integral part of their people planning efforts and embed in their comprehensive strategic workforce plan.
Top companies define talent more broadly, nurturing diverse complementary thinkers and those with deep functional expertise, strive hard to attract internationals and mature “emerging” potentials and “high potentials”. They diversify the talent base and systematically define development requirements for high-potentials and they realise the importance of building – rather than buying talent.
High performing companies do not relegate people development to the HR function. Instead, they view their leaders as the frontline developers of talent as they are best placed to identify shape and inspire potential talent. They capitalise on a broad array of strategies, initiatives, methodologies and programs to ensure they have the talent they need now and in the future, They are also more likely to offer career advancement opportunities with clear defined career tracks and are able to offer change of work location.
These companies recognise that beyond job stability and a good salary, today’s employees seek a fulfilling work experience as well as opportunities for personal growth.
Performance Management and Rewards
High performing companies reward behaviour not just results and they emphasise feedback and open discussion as well as more frequent, often informal reviews. They clearly define performance norms and standards and adopt them enterprise wide and on a global basis and put in the systems to support this. They also link managers bonuses or other incentives with business KPI’s to ensure managers are aligned with company strategy and goals. The Performance Management System is also tied to the company’s business strategy and includes leadership objectives and talent development objectives.
To foster – and sustain – excellent employee performance, companies need to create the right incentives. Developing a culture of meritocracy is key. High perfroming companies recognise the value of fair transparent measurement and rewards systems promoting such a culture.
A performance management system that is overly complicated or obscure, however, can harm employee engagement and those who don’t clearly explain their reward system undermine workforce cohesiveness and even risk losing valuable talent.
People Management Mastery translates into economic success – and competitive advantage.
Summary by Tanya Perry (E.L Blue Pty Ltd)