by William Schiemann
Recessions, globalization, increased competition and talent scarcity have challenged many organizations in recent years. One of the biggest challenges is attracting, motivating and retaining top talent. Yet some organizations have thrived in spite of these hurdles.
For example, HCL Technologies, a global IT services firm, headquartered in India, has revitalized its business from a ‘barely ran’ to a major force to be reckoned with, now challenging and taking business from its huge rivals. Vineet Nayar, the CEO, attributes this success to his focus on people. Garry Ridge, the CEO of WD-40, a global ‘squeak remover,’ places special emphasis on employees, which fuels productivity and allows his company to generate $1.5 million in revenue per employee.
These firms are living examples that attest to the importance of leveraging something we call People Equity — the extent to which talent is leveraged to create value. Our research over the past decade (reported in Reinventing Talent Management) has identified three factors that drive high People Equity: Alignment, Capabilities and Engagement (ACE). These elements are the organizational DNA of high performance. For example, in a recent study covering 2,000 organizations that was conducted by the Metrus Institute with the American Society of Quality, we found that organizations with high ACE scores were more likely to be successful financially, to have higher quality and to enjoy one-half the loss of talent than low People Equity organizations.
When we examine the three ACE factors carefully, we find that each plays a unique role in contributing to business outcomes. Alignment — the line of sight from employees to the strategy and customers — drives financial and operational excellence. Capabilities — having the talent, information and resources to meet customer expectations — is a major determining factor in customer loyalty and buying behaviors. And Engagement — having employees who are strong advocates for the organization — is a powerful driver of employee energy, productivity and desire to remain with the organization.
William A. Schiemann is CEO of Metrus Group and author of Reinventing Talent Management. He is founder of the Metrus Institute, the research and learning division of Metrus, created to develop and identify fact-based information that helps organizations better implement practices that lead to success.