‘Study Links HR Practices With the Bottom Line | Mize": human capital effec- tively is the No. 1 reason suc- cessful companies make money, according to a new study from con- sultants Watson Wyatt Worldwide cof more than 500 North American companies. Giving employees rewards that are commensurate with their contri- butions is among the most impor- tant HR practices contributing to the bottom line, the study found. Other bottom-line boosting prac- tices include flexible working condi- tions, strong recruiting of talent and focused use of technology. But some common HR practices actually lose money for many ‘employers, the report found. These practices included 360-degree reviews, long-term developmental training and implementing HR technologies with “soft” goals. “Our hypothesis is that, while there is nothing inherently wrong with these practices, many organi- zations implement them in misguid- ed ways,” the report states. For ‘example, some employers provide workers with training they cannot use in the short term—then never realize the return on their invest- ment because these workers take their newly acquired skills to anoth- er employer. Study author Bruce Pfau, nation- al practice director for organization effectiveness at Watson Wyatt, found strong, statistical support for the claim that managing human cap- ital isthe most important single rea- son for corporate financial success. With this report, “HIR professionals 14 HR Magazine December 2001 Executive Briefing | Strategic Intelligence | are seeing a quantification of some of the things they felt all along,” he says. “There's no question it pays to manage people right.” Executive Search Business ‘In Crisis, Reynolds Claims the executive search industry is “in criss” and needs to establish an accreditation program, says indus- try pioneer Russell S, Reynolds Jr. Reynolds, who founded a recruiting firm that bears his name and now is chairman and CEO of ‘The Directorship Search Group, said offering curriculum leading to accreditation would raise the bar for expertise and ethics among recruiters, thereby strengthening the industry's eredibility with The executive search business has received negative press in recent years, in part for lapses in back- ‘ground checks on executive clients. Asa result, Reynolds says, “we must establish in the minds of CEOs, boards and HR executives of ‘great companies that our business has the ethical standards and the training to do for them what they cannot do themselves.” Focus on Employees And Core Assets ‘eminding workers how valuable they are can help firms navigate rough economic seas, according, to two directors of the Bain & Com- pany consulting firm. In an essay published in the Har- vard Business School's Harvard Management Update, Chris Zook and Darrell Righy warn executives not to place too much attention on their most troubled businesses at By Steve Bates the expense of their core functions, and not to lay off good workers just because of temporary red ink. “Reinforcing your core assets helps recession-proof your compa- ny,” write Zook and Rigby. “Explain to [employees] in detail how their efforts can help protect core assets,” say the authors, and remind workers just how highly the ‘company values their actions. Use Branding to Drive Home Your Message to Employees 66[E mployer branding,” an inter- nal version of the “corporate branding” by which companies ‘establish an image of their products or services among customers, is a fast-growing trend that helps reta and motivate employces, according to the Conference Board. In a study of 138 companies, the Conference Board found that employer branding helps workers internalize a company’s values, understand and embrace an employ: er’s mission and enhances the fitm’s reputation as an employer of choice. The report found that employer branding is going on even “among employers that have no formalized branding effort” as HR profession- als communicate their values and strategies to employees. ‘The Internet and intranets are increasingly popular and effective channels for such efforts, the report notes, and employer branding it particularly valuable in companies experiencing “ide because of mergers, acquisitions or other shake-ups. ‘ity crises” Steve Bates is senior writer for HR Magazine.