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The People Factor: Driving Bottom-line Performance

Companies may proclaim that people are their greatest asset, but concern for the performance of individuals is often overlooked in the drive for short-term results. Research by Pam Jones and Viki Holton suggests that organisations need to think again to enable their people to deliver success in the future.

Organisations trying to improve their performance talk insistently about the mechanics of the process re-engineering. Managing head counts and cutting costs are just some of the endless adjectives which emerged from 20th Century management literature and practice. The message has been changed at any cost, particularly in times of difficulty and a downturn. These initiatives and ideas may have their place, but often they are implemented at the cost of people who make up the organisation. They ignore the human potential, the involvement and commitment of employees who play a vital role in delivering business results.
Evidence abounds to show that the people factor has a vital role to play in organisational success. Max Mckeown and Phillip Whitley in their recent book Unshrink cite research by the Hay Group which shows that the people skills of a leader contribute up to 70 % of the factors that determine the organisational climate and add 25% to business returns. Research by the Gallup Organisation linked people management to measures of profitability, productivity retention and customer satisfaction. David Maister’s research showed similar findings illustrating that employee attitudes are correlated with financial success and that higher levels of employee commitment cause a demonstrable and measurable improvement in financial performance.

Despite these findings our experience of working with managers indicates that while they may recognise these issues they find it hard to find the time for the relationship aspects of leadership, which we often refer to as people management. By people management we are referring to the skills that are used to build positive working relationships, to motivate others, influence effectively and build high performing teams.

The managers we meet lament that “People issues just fall off the agenda”; “70% of my time is directly chargeable to clients so that leaves very little for admin and planning, let alone people issues” and “I don’t invest enough time in thinking about the team – we are too task-focused.”

Given the well-publicised arguments in favour of people management, what is preventing managers from focusing on people management and what can organisations do to help the situation?

Our research took the form of focus groups, interviews and questionnaire responses received from 300 managers in the UK and Europe. It has since been followed up by action research meetings with human resource managers to shape and develop our ideas further. This is not a large-scale piece of research, but enough to provide some significant insights into the topic and highlight some areas where organisations can work to enhance the role of people management and subsequent organisational success.

Pam jones, portfolio director, ashridge Business School
Reprinted from: Innovations Magazine


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