Page 68 - 100 Great Business Ideas: From Leading Companies Around the World (100 Great Ideas)

• Measures are disconnected, unrelated to the firm’s strategy and

business priorities.

• Results are emphasized without necessarily providing an

adequate explanation of how they were achieved.

• Rewards are not in line with measures of performance;

consequently, the desired behaviors are not encouraged.

• Measurement is divisive, failing to support team-based working

and collaboration.

• Short-termism is encouraged, as measurement leads to an

intense focus on improving the next quarter’s results.

Watson and Wyatt’s Human Capital Index highlights the impact
of people management practices, with five issues directly affecting
profits:

1. Total rewards and accountability.

2. Collegial, flexible working place.

3. Recruitment and retention.

4. Open and honest communications.

5. Focused HR service technologies.

One approach to measuring the link between investments in people
and performance is provided by B&Q’s “Employee Engagement
Programme.” This prioritizes employee engagement and customer
loyalty. Every manager has a regular, one-page report summarizing
their performance in two areas: managing human capital and
managing traditional finance measures.

As a result, employee turnover reduced from 35 percent to 28
percent (each percentage point of attrition costs at least £1 million),
and profits increased, with turnover per employee rising from

100 GREAT BUSINESS IDEAS • 61