Growing Human Capital Gap Between Highest and Lowest Performing Companies

There is a gap in the human capital management practices of the highest and lowest performing companies that only promises to grow over time. This is one of the key findings of "The Best Get Better: Critical Human Capital Issues of 2012," a study conducted by Institute for Corporate Productivity (I4CP).

More importantly, these high performers "have been consistently increasing capabilities in the areas they consider critical and have been doing so throughout the course of the global recession." As a result, these higher performers are up to seven times more effective than lower performing companies in several areas of human capital management.

The study found that high performing organizations are seven times more effective at managing learning and development than low performing organizations. Other areas with a significant differential in favor of high performers include leadership development, coaching and recognition (five times as effective) and building and managing teams, managing an aging workforce and building compensation strategies for different workforce segments (four times as effective).

Not only are lower performing companies not keeping up with the higher performing peers, these organization's efforts to improve have effectively stalled in some cases. Instead, these companies spend more time dealing with more immediate threats and problems than exploring and investing in opportunities and improvement. To no one's surprise, such an approach can create vicious cycle of continued low performance and low-to-no progress in human capital management.

By contrast, the report notes that "higher performers are able to identify areas for improvement and possess both the agility to increase competencies in those areas and the desire to continually set their sights on the next level of development."

Higher performing companies also have different priorities. While high performing companies focus on leadership development, succession planning, managing/coping with change, talent management and learning and development, lower performing companies focus on different issues. Those issues are managing/coping with change, leadership development, managing organizational change, performance management, and engagement.

Other findings include:

• High performers base talent management and planning decisions on rigorous data analysis linked to business outcomes, while lower performer are deemphasizing things like workforce planning and measuring human capital.
• Higher performers are also investing in efforts to leverage social media and human capital measurement and to understand the changing nature of the role of HR. The overall focus is on creating a business savvy and data-driven approach to HR.
• These higher performing companies see flexible work arrangements as a source of competitive advantage even though they are only slight better at managing these arrangements. "Flex work is often cited as a recruitment hook for younger talent and a must-have for broadening recruitment options on a global scale among skilled knowledge workers," the report states.
• High performers look outward toward innovation, sustainability and global markets and low performer focus inward on their own issues.