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Research
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1999, Watson Wyatt launched the Human Capital Index (HCI) study
in North America and became the first to demonstrate the link between
superior human capital practices and shareholder value creation.
Since then, our research has expanded to include Europe- and Asia-Pacific-based
companies and the overall results are consistent: there are specific
human capital practices that are related to shareholder value everywhere.
Further, we have found evidence that human capital can be a leading
indicator of shareholder value creation.
Now in its fourth year, Watson Wyatt’s global HCI is the most
comprehensive study of the impact of human capital on business and
analyzes shareholder performance from 1994 to 2002. Our database
now includes more than 2,000 companies from around the globe. And
while each regional study carries some cultural differences, we
found that our results were more alike than not.
Human capital travels well, it seems. And managing it well is a
true source of competitive advantage.
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The Watson Wyatt HCI "Global
Truths" |
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Companies with superior human
capital practices can create more than double
the shareholder value than companies with average
human capital practices. |
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Great human capital practices
prevail, regardless of economic conditions. The
same key practices that are associated with higher
value continue to show up in bull, bear and flat
markets. |
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Companies have better TRS if they
have:
- Clear Rewards and
Accountability -- delivering a 16.5
to 21.5% increase for practices such as broad-based
stock ownership, paying above the market and
effective performance management.
- Excellence in Recruitment
and Retention -- delivering a 5.4
to 14.6% increase for practices such as an effective
recruiting process, a positive employer brand
and focus on key skills retention.
- A Collegial, Flexible
Workplace -- delivering a 9.0 to
21.5% increase for practices such as employee
input into how the work gets done, higher trust
in senior management and a lack of workplace
hierarchy.
- Communications Integrity
-- delivering a 2.6 to 7.1% increase for practices
such as effective use of employee surveys, sharing
of strategy and financial data with employees
and employee input into decision-making.
- Focused HR Technology
-- delivering a 4.2 to 6.5% increase for
practices such as using technology to improve
service and accuracy, or to cut costs. We found
this consistently in North America and Europe,
and among larger organizations in the Asia-Pacific
study.
- Prudent Use of Resources
-- potentially draining shareholder value by
as much as 14.5 to 33.9% for practices such
as developmental training for career advancement,
360-degree feedback programs and using HR technology
for softer goals such as improved culture and/or
communication.
Please
see the regional reports for more details on
each key dimension.
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| The Bottom Line:
- Great people management equals great shareholder
value.
- Great people management is universal.
- Great HR can be a true source of competitive
advantage.
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HCI Reports by Region:
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Report
Press Release
Statistics
over 500 responses from 12 countries: People's Republic of China, Hong Kong, Taiwan, South Korea, India, Indonesia, Malaysia, Philippines, Singapore, Thailand, Australia, New Zealand
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