Human Capital Expert Dr. Jac Fitz-enz and SuccessFactors Prove That Smarter Human Capital Management Leads to Better Financial Performance

Industry-First Study Examines 40 Companies to Show a Direct Correlation Between Smart Human Capital Management Practices and Financial Performance

SAN MATEO, Calif.--()--Dr. Jac Fitz-enz, CEO of Workforce Intelligence Institute and author of eight books on the subject of human capital management, and SuccessFactors, the global leader in on-demand performance and talent management solutions (http://www.successfactors.com), today released How Smart HCM Drives Financial Performance, a breakthrough study that demonstrates that smart human capital management leads to better financial performance.

SuccessFactors and Workforce Intelligence Institute joined forces to study 40 corporations and research the impact that the individual companies human capital management systems (varying from highly sophisticated to less advanced) had on their individual financial performance. The quantitative and qualitative analyses in the study reveal where human capital management practices do and do not affect a companys financial performance. Financial performance was tracked based on return on equity, revenue growth and net income during the last 12 months, as well as each companys financial performance compared with its industry mean.

SuccessFactors and Dr. Jac Fitz-enz collected the quantitative data and also personally interviewed directors and other executives from participating companies. Additional information was sourced from SuccessFactors on-demand business model, which enabled a live, aggregate view of performance management trends (http://www.successfactors.com/research/financial-advantages/) from over 2 million users across more than 50 industries. During the course of the interviews, both Fitz-Enz and SuccessFactors also examined the following key areas:

1. Connections of people with management processes

  • What is the sophistication of a companys systems?
  • What is the frequency and constancy of application usage?
  • What is the consistency of usage across the organization?
  • What were the individual estimates of the applications effectiveness?

2. Effects of goal alignment discussions and evaluations

  • What is the impact of discussions between supervisors and employees regarding personal performance objectives and their connection to corporate goals?

3. Application of process management tools

  • What are the value adding effects from investments in performance management technology?

Comprehensive analysis of this survey data led to the following key findings:

  • 67% of companies with stronger financial performance cover all manager and some levels below with their performance management systems. Only 28% of the weaker performers do.
  • 63% of the high growth companies review performance more than annually. 22% of the low growth companies do.
  • 83% of the high growth group has the ability to act on performance issues after the yearly review cycle and 34% can track and act upon this on an ongoing basis leveraging technology. 52% of the companies in the low growth group have no clear visibility into performance issues.
  • 44% of the stronger performers have almost 100% aligned goals at the managerial level. None of the weaker performers do.
  • 82% of the strong performers have a consistent process for assessing the potential of their people. 19% of the weak performance group has the same ability and none have it as a standard ongoing process.

Ive been involved in the analysis and study of human capital management for more than 30 years and forward thinking companies have always intuitively understood that if you understand and manage the performance of your people, you will perform better as a business, said Dr. Jac Fitz-enz. Until now, however, this relationship has been largely a theory. We have been able to demonstrate, through scientific study and evaluation of real-world companies that in fact, smart human capital management is a direct driver of financial performance.

The aggregate findings provided by SuccessFactors on-demand business model enable a level of insight into human capital management practices, patterns and behaviors previously unattainable and helps pinpoint the key important leverage points within different vertical industries, stated Erik Berggren, director of customer results, SuccessFactors. This joint research study clarifies the true impact that smarter human capital management has on top and bottom line performance and provides a springboard for SuccessFactors to continue analyzing the most important human capital management trends and behaviors shaping the worlds best performing companies.

For more information on this study, SuccessFactors will host a webinar detailing the study results on Tuesday, December 12, at 10:00 a.m. (PST). To register, please visit http://www.successfactors.com/promo/campaigns/drjac-webinar/?Campaign_ ID=70130000000ClQC&TAG=Q4_06_EmailBlast_CultMktg_JacErik_HTML&CmpLeadS ource=Email%20Blast (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)

About SuccessFactors Research

SuccessFactors Research is focused on advancing the art and science of Human Capital Management by analyzing three sources of information. The team analyzes the actual usage traits and patterns of SuccessFactors customers only available via the pure on-demand model, correlates those findings with financial performance, and adds insights from detailed research and learning from working with individual customers. The insights uncovered through these thought leadership and research initiatives illuminate unique trends in Performance & Talent Management, and uncover the optimal environment for achieving business results.

Find out how we turn insight into results at http://www.successfactors.com/research/overview/ or contact us at research@successfactors.com.

About Workforce Intelligence Institute

Workforce Intelligence Institute is the research arm of Human Capital Source, based in San Jose, California. The Institute researches and publishes data on the effects of human capital technology investments on employee productivity and turnover, organizational operations, and financial performance. It publishes the semi-annual Workforce Intelligence Report that consolidates data from hundreds of corporations and over 30 research centers and human resources vendors. For more information, contact source@netgate.net or call 408 223-7750.

About SuccessFactors

SuccessFactors delivers performance and talent excellence, on demand. The companys software promotes visibility, accountability, and results, enabling organizations to eliminate the politics that destroy motivation and impede performance. Fueled by the industry's highest renewal rate, SuccessFactors has grown from 300 customers and 1 million users at the end of 2005 to close to 1,000 customers and close to 2 million users in 139 countries, across 40 industries, in 18 languages all while becoming easier to use everyday. The company has almost doubled the employee base, currently employing close to 400 talented people in 2006. Carefully designed and executed internal growth has allowed the company to provide the same caliber of absolute excellence in execution for customers that catapulted SuccessFactors into the product, customer and revenue leader in the performance and talent management market space. Customers include MasterCard Worldwide, British Telecom, Textron, Salesforce.com, Cooper Tire & Rubber Company, Volkswagen of North America, Reebok, Pep Boys, Lancaster General Hospital and Grant Thornton. The company continues to execute on a level of global excellence through the provision of an industry leading, scalable and secure global hosting operation. Founded in 2001, SuccessFactors has 15 worldwide offices collaborating for strong local support of customers. For more information, visit http://www.successfactors.com or call +1 800 809-9920.

Contacts

LaunchSquad
Jesse Odell, 415-625-8555
successfactors@launchsquad.com

Contacts

LaunchSquad
Jesse Odell, 415-625-8555
successfactors@launchsquad.com