People and Profits

Do chief executives really mean it when they say "people are our greatest asset"? That's what top fund managers are asking, according to a recent article in the Wall Street Journal.

A group called The Human Capital Management Coalition, made up of representatives from 24 investor funds that manage a collective $2.5 trillion, asks companies to share details of how they pay and treat workers. "What companies do put out about workforce management can be vague, inconsistent, inscrutable or all three", says the WSJ article. The Coalition's interest is financial--companies that don't treat their employees well or fairly expose themselves and their shareholders to risk.

To cut through the fog and provide organizations with practical guidance, studying the relationship between people practices and financial performance has long been a focus of the Institute for Corporate Productivity.

We believe, and have the data to back it up, that there is a strong connection between people and financial performance. Past efforts to require more public reporting of this connection have failed, but what's interesting is that pressure to provide more visibility into how companies manage their workforce--which in turn can affect risk and long term outcomes--is coming from a new, arguably powerful source.

Regardless of where this all ends up, i4cp does provide a framework for how to measure and manage how people are treated and included in achieving the organization's goals (download the free white paper). Furthermore, we also offer an Organizational Effectiveness Assessment that helps quantify and benchmark these KPIs.

The bottom line: when it comes to people and profit, we agree organizations can do well by doing well. And whether organizations want to, or will be forced to, publicly report greater detail, they currently have the means to tie people practices to organizational performance.