What HR functions offer the highest tangible impact in support of the business in terms of growth and profit? This has been a topic of discussion in organizations ever since HR managers started to realize the importance of identifying measurable returns of HR functions and activity. Now, according to a study last year by the world renowned Boston Consulting Group (BCG), the HR function that provides the highest impact is recruiting…
The research study by BCG included 4,288 respondents from 102 countries across a broad range of industries and compared the difference in revenue growth and profit margins at firms with “very high capability” individual HR functions to the business impacts of low capability HR functions.
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The list of HR functions studied in the research and the corresponding impact (highest impact functions come first) is as follows:
1- Recruiting
2- On Boarding and Retention
3- Managing talent
4- Employer Branding
5- Performance Management and Rewards
6- Developing Leadership
7- Mastering HR Processes
8- Global People Management
9- Enhancing Employee Engagement
10- Providing Shared Services and Outsourcing
Some mid-ranking and low-ranking (in terms of impact) HR functions included:
-Managing Diversity
-Delivering Critical Learning Programs
-Activities related to Corporate Social Responsibility
-Health and Security Management
-Managing Work-Life Balance etc
The study also seems to suggest and caution that in many cases, HR managers were investing time and effort in “low” impact activities such as work-life balance – the fact that work-life balance is important for employee morale and work environment does not take away from the fact that it is not a significant contributor to the growth/profit dimension.
Why is recruitment the highest impact function? The study confirms that getting the right people in the right jobs with the right skills is what drives an organization’s performance like no other function can.