The Boston Consulting Group (BCG) recently released findings on the power of individual human resources functions and recruiting came out on top as the most impactful HR function for businesses.
As we know here in Colorado, in this highly competitive job market and in these challenging economic times, HR departments are lucky to have a large pool of the best and brightest to pick from. But with this comes a responsibility to recruit the right talent who are the best return on investment.
In his article “News Flash: Recruiting Has the Highest Business Impact of Any HR Function” about the BCG report, human resources and talent management expert Dr. John Sullivan compares corporate recruiting to the sports and entertainment industries. “In pro basketball,” he writes, “you could take an average individual player and attempt to develop them over time into a ‘Lebron James.’ However, if you wanted immediate results with a low risk of failure, you would simply recruit Lebron away from his current team.”
Just as effective recruiting brings on the best employees, the BCG report also noted companies that invested in people and recruiting enjoyed better economic performance and stock price gains. And corporate executives like to see that.
To compare the relationship between people management capabilities and financial performance, BCG compiled a list of HR departments from Fortune magazine’s list of “100 Best Companies to Work For” then narrowed it down to “repeater firms” (those that have appeared on the list at least three times during the last 10 years). They then compared stock price growth between this list of companies and those on the S&P 500 list. According to Dr. Sullivan, “the results were phenomenal.”
“The ‘best companies’ with great HR saw their stock price rise an average of 109 percent, while the S&Ps rose only 10 percent over the last 10 years,” wrote Dr. Sullivan. “That means the stock price growth of firms with great HR departments was nearly 10 times higher!”
In our world where money talks and results are quantified in dollars, this report affirms the value of investing in a strong and effective HR department and company success.