Better business performance, as measured by higher stock prices, faster revenue growth and more favourable perception of companies’ employer brand, is correlated both with company-wide certification of HR best practices and with the employment of a proportion of HR-certified professionals, according to new research conducted by the Top Employers Institute and HR Certification Institute (HRCI).
“Certification of HR best practices applied by employers as well as HRCI certification of HR professionals correlates with improved business results and companies’ employer brand perception,” says Top Employers Institute chief executive David Plink. “Our findings build on previous research to deliver the clear message that exceptional human resource management — from applying HR best practices to the competencies of the HR professionals who design and implement them — can demonstrably and positively contribute to the bottom line.”
More specifically, the joint research conducted this year by Top Employers Institute, an independent global organisation that certifies excellence in HR practices and the employee development environment of employers, and the HRCI, the leading professional credentialing organisation for HR professionals worldwide, found:
• Stock prices during 2011-2015 of companies certified by Top Employers outperformed the stock indices in their respective countries by an average of 51%;
• Compounded revenue growth rates of companies certified by Top Employers outperformed relevant industry average compounded growth rates by 14% during the 2010-2014 period;
• Stock prices of companies with more than five HRCI-certified professionals increased by an average of 95% during 2011-2015, while the relevant indices increased an average of 38% over the same five-year period. Therefore, companies with more than five HRCI certified personnel outperformed relevant stock indices by 57% over the five-year period;
• Compounded revenue growth rates of companies with more than five HRCI-certified professionals increased 33% during 2010-2014, while the rate of relevant industries increased 8% over the same period. Therefore, companies with more than five certified HRCI personnel outperformed the relevant industry average by 25% over the five-year period.
“HRCI certification correlates both with better results for the individual certified HR professional, as we previously demonstrated through our 2015 large-scale value of certification study, and also for the companies that employ them, as these new findings suggest,” said HR Certification Institute chief executive Amy Dufrane.
“HRCI certification helps companies identify individuals who have expert knowledge of HR best practices as well as the strategic mind-set, situational awareness, and sound judgment required to adapt those best practices to their company’s unique needs.”
Positive correlations between employer brand perception and both certification of companies by Top Employers and companies employing more than five HRCI-certified professionals were found as follows:
• The average rating for Top Employers-certified companies on Kununu is 3.5 stars (out of five) vs. the overall Kununu average of 3.1. The average rating for Top Employers certified companies rated on Glassdoor is 3.5 stars vs. the overall Glassdoor average of 3.2.
• The average rating on Glassdoor for companies with more than five HRCI certificants is 3.5 stars versus the overall average of 3.2.
These findings, as compiled by independent international data analysts, are part of “Emerging Evidence: Business Performance and the Validation of HR Best Practices” published by Top Employers Institute and HRCI. The paper examines the strong precedent for best practices in general and how they benefit companies, and then looks at how the uptake of best practices in the more subjective realm of HR management compares to that in more process-driven or “scientific” organisational functions.
“There is widespread agreement that people are an organisation’s most valuable asset,” said Plink. “But what has been missing is a way to more systematically manage and optimise the effectiveness of that asset. With rigorous validation of HR practices at the company-wide and individual HR professional level, which comprises a systematic way to apply, evaluate, adapt and measure the impact of HR best practices, we are showing a way forward.”
The paper concludes that HR best practices can have the most impact on business performance when they are embraced company-wide, starting at the top, and adapted smartly and sensitively by expert professionals. For a full copy of the research paper visit hr-insights.top-employers.com/emerging-evidence