Magazine article New Zealand Management

How to Lift Human Capital Value. (Upfront)

Magazine article New Zealand Management

How to Lift Human Capital Value. (Upfront)

Article excerpt

Evidence that companies with good people management practices substantially outperform the market comes from a recent survey that rates New Zealand's corporate efforts at around B-minus.

The Watson Wyatt Human Capital Index (HCI) survey involved more than 500 enterprises in 12 Asia-Pacific countries and included 20 publicly listed Kiwi companies.

It revealed that local companies had some real strengths and real weaknesses, according to Watson Wyatt New Zealand managing director Paul Loof.

But, he says, the overall message is that good HR practices pay dividends.

"By improving human capital management, New Zealand firms can improve their bottom line. And, from the HCI we now know which practices contribute most value."

Using sophisticated methodology, the HCI identified 41 specific practices across five key HR dimensions that are sources of additional value.

1. HR function effectiveness. Having the right focus and capability in this area can increase the value of firms by 31.5 percent. Locally sampled companies rate fairly well here in terms of running very lean HR functions but, according to Watson Wyatt's human capital head of practice Christian Dahmen, would probably benefit from further investment in the area.

2. A collegial, flexible, customer-focused workplace. Get this right and, according to the HCI, you add 21.5 percent shareholder value, the bulk of which is linked to customer focus. …

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