How putting employees first drives business performance

HR and talent professionals have known it for years and now it’s been proven. A recent global study of more than 5,400 executives and employees conducted by Oxford Economics and SuccessFactors, an SAP company, found companies with above-average revenue growth are more likely to provide employees with learning opportunities and to prioritize workforce issues.

Yes, Virginia, development really does deliver results. HR and Talent teams whose senior leaders are not yet enlightened: arm yourselves with these and other findings below and start changing the conversation.

First, the bad news.

Based on responses from the 2,700 non-executive respondents, all companies could be doing better:

• Not enough employees get opportunities to learn. Only 41% of employees say they get opportunities to grow, and just over one-fifth of employees say self-directed learning is important to their employers.

• Companies aren’t prioritizing mentoring opportunities. Just over half have a formal mentoring program, and fewerthan 40% of executives offer job rotation and job shadowing.

• Less than 25% of companies use learning to boost retention. Just 23% of executives offer education to keep employees loyal and engaged.

We’ve all got to up our game to really do right by employees. But the companies that are getting it right(er) are reaping benefits.

Defining “high performers”

In the Workforce 2020 report, high-performing companies have achieved superior financial results over the past three years. Of the executives surveyed, 15% reported above-average revenue growth (vs. 32% below-average) and 14% reported above-average profit-margin growth (vs. 37% below-average).

So what’s driving this high performance?

High performers put their workforce first. For starters, they’re more focused on changing demographics. They’re more likely to identify Millennials entering the workforce as the top labor market shift affecting workforce strategy, for example.

Higher performers also are more likely to develop employees. Companies with higher profit margin growth are significantly more likely to offer their employees supplemental learning programs as a benefit, and 58% of high-performing companies have a mentoring program vs. just 50% of low-performing companies.

But here’s perhaps the most telling differentiator: the more successful companies surveyed bake workforce strategy into the way they operate. It’s not surprising that 64% of executives at high-revenue-growth companies say workforce issues drive strategy at the board level vs. 49% of low-revenue-growth companies, and 59% of executives among high performers report their company has an execution plan for achieving its vision of workforce management vs. 51% among low performers.

It’s also unsurprising that 25% of underperformers say workforce issues are a business planning afterthought. No wonder they have a harder time finding workers with base level skills (52% vs. 36% of high-performing companies). Especially given the recent economic recovery and rising minimum wage trends, who’d seek work at a company that didn’t invest in its people?

Mirroring another key study

Workforce 2020 reflects similar findings as that granddaddy of employee engagement reports, Gallup’s State of the American Workforce. Some leaders still shudder at their dreary 2013 findings that only 70% of American workers are engaged, with 18% actively disengaged.

Yet Gallup also identified three key ways to grow engagement, each mirroring a Workforce 2020 conclusion:

1. Select the Right People – As noted above, it’s easier for high performers, who invest in the #2 and #3 drivers (below)
2. Develop Employees’ Strengths – Also characteristic of high-performing vs. low-performing companies in the study
3. Enhance Employees’ Wellbeing – This, too, reflects Workforce 2020 findings:
   1. 86% of high-performing companies offer competitive compensation vs. just 38% of low-performing companies
   2. 57% offer flexible schedules vs. just 26% of low performers
   3. 79% offer broad healthcare benefits vs. just 38% of low performers

It comes down to culture

I often talk about the critical importance of a learning culture, and the Workforce 2020 results bear this out. Development drives results because it’s part of a corporate culture ecosystem that highly values equipping people to do their best and build meaningful careers. These high performers are strategic about their workforce and thus do right by their employees. And in return, their employees deliver superior products, services and financial results.

This article is published in collaboration with The SAP Community Network. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Jenny Dearborn is a writer at The SAP Community Network.

Image: Workers on the assembly line are seen. REUTERS/Chris Keane.