Can HR impact the bottom line?

Companies are failing to adopt human resource practices that would improve financial performance.

Is your company one of them?

Employee Commitment

According to often conducted employee commitment surveys, commitment arises from a combination of various factors. Some of the most common factors that determine commitment levels of the employees are: job satisfaction, recognition, appreciation from managers, remuneration, job challenges, job security, responsibilities and healthy competition etc. Employee satisfaction is generally viewed as the employee's feelings about their salary, working climate and the training opportunities offered to them for professional growth. Committed employees have displayed better performance in terms of serving customers, willingness to accept new problems, high quality work performance and desire to stay for long periods with the company.

The most striking aspect of committed employees is their values. They have high personal values which, not surprisingly, are quite similar to those of the company. They possess a sense of attachment with the company and care about its future and fortune. Committed workers feel proud to be a part of the company.

In his book Authentic Leadership, former Medtronic CEO Bill George makes an obvious point that business leaders rarely say out loud:  "Missions motivate, dollars don't." What he means is that purpose is what drives employee commitment, not the financial rewards that come to others.  Employees don't get up in the morning and say, "Gee, I can hardly wait to get to work today to maximise shareholder profits."  Even when employees are shareholders who can benefit from improved financials, what draws people to their chosen careers is the work itself and its purpose in the world, more than the profit possibilities.


Organisational behaviour experts agree that there are five key practices that make a significant positive impact on employee commitment.

• Training - Investment in training to build skills and competence activates the basic human instinct of "reciprocity". If the company has invested in the employee, they will feel some obligation to reciprocate that investment with greater effort and commitment.
• Sharing information so people can understand the business and have the data to make better judgements about what to do and how to do it. Sharing information with another party signifies trust, which is then likely to be reciprocated.
• Decentralised decision making and self managed teams that permit trained and motivated employees to influence decisions about work. Decentralising decisions to self managed teams engages the power of social relations in the workplace. People are social creatures and so are concerned with their relationships with others and are influenced by what others say and do.
• Rewards dependent on individual but also group and organisational performance. Employees expect to benefit when their efforts improve their employer's financial performance. Dissatisfaction arises when senior managers and shareholders enjoy the benefits of the improvement and not staff, resulting in a lack of perceived fairness.
• Job security - A culture of mutual commitment and job security with expectations of a long-term employment relationship also activates employee reciprocity; if the company makes a long term commitment to a person, they will reciprocate.

Why aren't all organisations then applying these principles and making the associated improvements in their financial performance? Is it the cost? If the improvements are as significant as research suggests, upfront costs will definitely be worth it. Often the practices can however, appear costly because the cost of employee remuneration, benefits and training are easily and regularly measured, whereas the gains made from reduced turnover, higher trust and engagement, reduced absenteeism and more discretionary effort typically aren't measured at all.

Another reason is because companies tend to copy other companies in their industry and do things the ways others do. A third reason is around power. The decline of the union movement has reduced the power and influence of HR departments to bring about change. Finally, managers tend to assume that employees are self interested and effort averse, which definitely isn't the case, particularly if the 5 key practices are followed.

For more information on how employee engagement can help your bottom line, contact Greg Halse at Crossroads Human Resources on 9862 5900.