What human resource function has the biggest effect on a company’s bottom line, it’s profit and revenue growth? A recent study has shown that recruiting has the greatest influence, and by a fairly wide margin.
The study was made by the Boston Consulting Group, which attempted to quantify the different jobs human resource departments do in terms of their impact on the organization.
According to the study, the top 10 human resource functions, in terms of their impact on a firm’s bottom line, from one through 10 are: recruiting, onboarding and re10tion, managing talent and employer branding, performance management and rewards, developing leadership, mastering HR processes, global people management and global expansion, enhancing employee engagement, and providing shared services and outsourcing.
Those functions at the bottom of the list, having the least impact on profit and growth, are: transforming human resources into a strategic partner, health and security management, managing flexibility and labor costs, restructuring the organization, managing work-life balance, and managing an aging workforce.
The study also looked at how human resource departments and their performance influenced the stock price of companies. In order to do this, Boston Consulting made a comparison of firms with well-regarded HR departments and other companies.
To choose the firms with the best human resource departments, the Boston Consulting Group looked at the list of the 100 best companies to work for, as reported in Fortune magazine.
To ensure that only the best companies were selected, Boston narrowed the number of companies even more by choosing only those companies that appeared on the list more than three times in the past 10 years. Boston then compared the stock price growth of those companies on the list with the companies in the Standard and Poors 500.
The stock price of the best companies – those thought to have exceptional human resource departments – rose more than 100 percent over the past 10 years. By comparison, the stock price of the companies in the S&P 500 increased only an average of 10 percent during the same time period. The stock price of the “best” companies increased 10 times more than the other firms.
The study quantifying human resource processes covered almost 4,300 companies in a wide range of industries from more than 100 countries.
If you need help recruiting great people to your Anchorage, Seattle, Tacoma, Chicago, Portland, or Lake Oswego company, look to the experts at the Opti Staffing Group. We look forward to hearing from you!