100 GREAT BUSINESS IDEAS • 61- Measures are disconnected, unrelated to the fi rm’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 fi ve issues directly affecting
profi ts:
- Total rewards and accountability.
- Collegial, fl exible working place.
- Recruitment and retention.
- Open and honest communications.
- 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 fi nance measures.
As a result, employee turnover reduced from 35 percent to 28
percent (each percentage point of attrition costs at least £1 million),
and profi ts increased, with turnover per employee rising from