The power of people

Why take any notice of how well a supplier or partner manages its people you may ask? What is good people management, what does it look like, what are the benefits…

Let’s start with what it looks like. There is much definition in the HRM literature to define good practice from academic’s view points as well as practitioner experience. From the point of view of business, I think the view point of practitioner can always be considered more valuable. Investors in People suggest that good people management can be broken down in to 10 principles:   

People Management Principles 

Empowering people

A focus on creating a culture of trust and ownership within an organisation to enable people to feel empowered to make decisions and act on them.

Developing strong and inspiring leaders

Organisational focus on building leadership capability throughout the organisation. The result being a culture of motivation and commitment driven by individuals with the skills to lead others.

Having a clear set of strong values

The presence of clear values that are understood and embedded in the day to day work of employees.

Individual performance is well managed

An organisation focused on setting stretching objectives which people are encouraged to regularly measure and assess their individual performance as part of the day to day running. 

Recognising and rewarding performance

A reward and recognition strategy provides both reward in the form of formal compensation and benefit arrangements (financial and non-financial) against performance. Acknowledging and appreciating people’s specific achievements form part of the day to day activities. 

The ability to compare performance to competitors

Management are able to benchmark and measure the performance of various practices, processes and outcomes of our competitors or ‘best in class’ organisations. 

The structure of work

This refers to how a business is structured to deliver the organisation’s ambition. Where there is a focus on this factor, roles are well defined to ensure delivery of organisational objectives, creating interesting work for people, while encouraging collaborative ways of working. 

A focus on building future capability

This factor explores how an organisation seeks to build people’s capabilities by understanding their potential, supporting learning and development and deploying the right people at the right time. A culture of continuous improvement 

A focus on building a culture of continuous improvement

By encouraging employees to use internal and external sources to come up with new ideas and approaches. This factor is associated with higher risk appetite. 

Adoption of sustainable practices

The extent to which there is a focus on future practices developed to respond to change. Leaders are expected to have a clear understanding of the external environment and the impact this has on the organisation resulting in an ability to constantly adapt. 

The benefits of focusing on excellence  

So, if this is what we agree good practice is based upon does focusing on excellence in people have any tangible benefits?  A recent IIP study surveyed 1000 UK businesses with the following results    

Firms that had a focus on 3 or more of these principles saw an overall efficiency premium compared to the UK average firm. There was, on average, a 108% efficiency premium, achieved by firms that placed importance on these factors:

statistics table showing data on efficiency in using people management principles

Key Findings

There is direct statistical correlation between the focus on certain people management principles and improved efficiency and therefore performance. There is an 108% Outperformance efficiency premium for firms that adopt 3 or more techniques.

Firms displaying at least three of the management principles identified are operating at higher levels of efficiency than firms displaying fewer of those behaviours.

If all UK firms adopted improved approaches to people management, there would be an overall gain to the economy.

When converted into monetary terms, this means that UK businesses are missing out on £84bn in efficiency improvements through poor HR and people management practices. Firms that had a focus on 3 or more of these principles saw an overall efficiency premium compared to the UK average firm. There was, on average, a 108% efficiency premium, achieved by firms that placed importance on these factors: 

In Summary 

Based on these statistics alone it would suggest that there is a huge potential benefit to working with a partner who has a meaningful commitment to their people.   Benefits will be made up of a better service level or product quality and an overall increased value proposition. Furthermore, the benefits of partnering with this type of organisation will see a value proposition grow year on year and this can only equal an effect on any company bottom line.

If you would like to find out more please feel free to contact us.

Author: Alastair Wilkins, Managing Director

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