Good HR drives results. And we’re not the only ones who think so anymore. Most CEOs we talk to understand the critical link between good people management and enhanced business results. A new study confirms what they suspected but couldn’t previously verify.
Last year, Cornell University’s Center for Advanced Human Resource Studies published the results of a three-year study designed to understand more completely exactly the type of HR management practices that produce measurable business results in small enterprises. They began their research where other previous studies left off. Others had already demonstrated the link between superior HR practices, positive business results, and increased shareholder value (see: Bruce Pfau, The Human Capital Edge, 2003). Cornell sought to identify specific practices that produced measurable business results in the world of smaller businesses (those with fewer than 200 employees).
What Cornell learned was that companies with management practices that emphasize the right types of people, in the right places, at the right times, doing the right things have measurably higher business results. In fact, small companies that embrace these practices showed:
- 22.1% higher revenue growth
- 23.3% faster profit growth
- 66.8% lower employee turnover
The Cornell study would seem to verify the links between good HR management and enhanced business results. Armed with this data, why aren’t more companies – especially smaller companies seeking growth – rushing to invest heavily in enhancing the quality of their HR management?
