SEP 20, 2012

Sluggish economic performance and mixed confidence has led to more and more organizations either cutting costs or holding back from investing.  One business leader I met recent opened the conversation with, ‘I have no money.  None.  Zip.  Nada.  And yet the development of people is a strategic priority and I’m hearing daily from customers that we need to improve the performance of the entire function.’  So, investing in the best people remains a focus, but given the cost of recruitment and training and the time it takes to see any tangible benefits, are HR practices like developing people really worth it?

The research has been mixed; in 2007, Scott Newbert reported that just 11 out of 33 tests supported the idea that human capital leads to better organizational performance. But it’s a tricky one to assess. Many studies only look at one snapshot in time, so don’t account for the lag between implementing a development program and reaping the rewards. It also depends what you’re measuring; focusing on global outcomes like profit misses the impact on important operational measures like customer satisfaction, efficiency or employee engagement.