Want Better Performance? Invite the CHRO into the C-Suite
At SAP and SuccessFactors, we talk with hundreds of senior HR executives every year. While they all have their own challenges, they always agree on one thing: being a part of the executive C-Suite allows them to significantly impact company performance. Observation is interesting, but proof is convincing. So we asked Dr. Karie Willyerd, our VP of Social Adoption, to provide quantitative proof to validate the observations.
Karie and her team analyzed the financial performance of Fortune 500 companies with and without a Chief Human Resource Officer (CHRO) in the C-Suite along with cloud data from many of our own customers to learn more about human capital management trends. Here are a few of the key findings:
- Institutionalizing the accountability CHROs have for aligning the workforce with corporate objectives is paying off. Companies with both a higher percentage of goals aligned with corporate objectives, and identified HR risks, have better financial and market performance.
- Those companies with a higher percentage of aligned goals consistently meet analysts’ estimates and have a better return on assets relative to their peers.
- Companies that have a higher percentage of completed goals are more profitable, delivering higher EPS growth and better PE ratios than their industry peers.
The Key Tool: Workforce Analytics
CHROs know the importance of using best practices to drive business growth — such as employing workforce analytics and proactive talent management. Specifically, some of the notable practices that correlate to superior performance in the companies we researched included diverse measures such as exposing HR risks in annual reports and instituting two or more performance reviews per employee per year.
I see many of our clients using our workforce analytics solutions to assess recruitment, staffing, training and development, personnel and compensation, and benefits. With the insight from these analytics, the companies reviewed are recruiting higher performers, increasing their retention rate, and predicting how people management initiatives can impact business performance.
The real relationship between workforce metrics and business performance is often misunderstood — including the correlation between salary, performance, and tenure. Companies tend to profess a culture of meritocracy, but once you look into the data, they actually are more regularly rewarding tenure.
With more than 2,000 unique metrics across our client base of 58 million customers we bring such insights to light. Our clients use these measures daily to keep a pulse on their business as they compare performance across business units, particularly where workforce populations vary significantly.
We just completed our annual SuccessConnect where more than 1400 customers, partners and industry analysts attended. The anecdotal stories we heard from our customers confirmed the premise that CHROs – and workforce analytics – make a difference. I expect we will see a greater adoption of the workforce analytics we can offer as companies everywhere seek to increase performance, and CHROs better understand how this analysis moves them from reporting from a rear view mirror perspective, to offering up predictive HCM. Those businesses are going to be better positioned for growth.
You can see a replay of my keynote at SuccessConnect, including stories from two of our largest customers here: SuccessConnect Keynote Replay.