UPfront: People are profit

More evidence that good people practices are also profitable comes from recent PricewaterhouseCoopers (PWC) survey of human resource leaders in Australia and New Zealand.

They were questioned as part of global PWC survey and reflected worldwide findings that companies boasting documented HR strategy also have more productive employees.

Globally, the survey found 35 percent improvement in revenue per employee in organisations that had formalised their HR strategy compared to those that hadn’t. The findings should be of interest to the 25 percent of respondents in Australia and New Zealand who had no documented HR strategy, because it puts them at competitive disadvantage, says Kevin McKenna, director of PWC’s Human Resources Advisory Services.

“Our research clearly demonstrates that effective people management does add value to organisations by putting the right policy and practices in place to create good employment environment.”

A documented strategy is also associated with reduced absenteeism, more effective reward systems and better performance management systems. The survey showed up areas where companies in this part of the world are doing better than the global average.

There is higher percentage of companies with documented HR strategies (75 percent compared to 58 percent) and lower percentage of employee absenteeism (five days compared with global average of eight). On the down side, there is less training (1.2 days year/employee in New Zealand compared to the global average of three days), lower average length of service (6.7 years compared to 9.2 years), and lower levels of staff performance reviews.

The PWC survey reflects results from the Watson Wyatt Human Capital Index survey which found that the effectiveness of the HR function can increase organisational value by 31.5 percent (see Management December 2002).

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