Human Capital Expert Dr. Jac Fitz-enz and SuccessFactors Prove That Smarter Human Capital Management Leads to Better Financial Performance

Business Wire, Dec 5, 2006

Industry-First Study Examines 40 Companies to Show a Direct Correlation Between Smart Human Capital Management Practices and Financial Performance

SAN MATEO, Calif. -- Dr. Jac Fitz-enz, CEO of Workforce Intelligence Institute and author of eight books on the subject of human capital management, and SuccessFactors, the global leader in on-demand performance and talent management solutions (http://www.successfactors.com), today released "How Smart HCM Drives Financial Performance," a breakthrough study that demonstrates that smart human capital management leads to better financial performance.

SuccessFactors and Workforce Intelligence Institute joined forces to study 40 corporations and research the impact that the individual companies' human capital management systems (varying from highly sophisticated to less advanced) had on their individual financial performance. The quantitative and qualitative analyses in the study reveal where human capital management practices do and do not affect a company's financial performance. Financial performance was tracked based on return on equity, revenue growth and net income during the last 12 months, as well as each company's financial performance compared with its industry mean.

SuccessFactors and Dr. Jac Fitz-enz collected the quantitative data and also personally interviewed directors and other executives from participating companies. Additional information was sourced from SuccessFactors' on-demand business model, which enabled a live, aggregate view of performance management trends (http://www.successfactors.com/research/financial-advantages/) from over 2 million users across more than 50 industries. During the course of the interviews, both Fitz-Enz and SuccessFactors also examined the following key areas:

1. Connections of people with management processes

* What is the sophistication of a company's systems?

* What is the frequency and constancy of application usage?

* What is the consistency of usage across the organization?

* What were the individual estimates of the applications' effectiveness?

2. Effects of goal alignment discussions and evaluations

* What is the impact of discussions between supervisors and employees regarding personal performance objectives and their connection to corporate goals?

3. Application of process management tools

* What are the value adding effects from investments in performance management technology?

Comprehensive analysis of this survey data led to the following key findings:

* 67% of companies with stronger financial performance cover all manager and some levels below with their performance management systems. Only 28% of the weaker performers do.

* 63% of the high growth companies review performance more than annually. 22% of the low growth companies do.

* 83% of the high growth group has the ability to act on performance issues after the yearly review cycle and 34% can track and act upon this on an ongoing basis leveraging technology. 52% of the companies in the low growth group have no clear visibility into performance issues.

* 44% of the stronger performers have almost 100% aligned goals at the managerial level. None of the weaker performers do.

* 82% of the strong performers have a consistent process for assessing the potential of their people. 19% of the weak performance group has the same ability and none have it as a standard ongoing process.

"I've been involved in the analysis and study of human capital management for more than 30 years and forward thinking companies have always intuitively understood that if you understand and manage the performance of your people, you will perform better as a business," said Dr. Jac Fitz-enz. "Until now, however, this relationship has been largely a theory. We have been able to demonstrate, through scientific study and evaluation of real-world companies that in fact, smart human capital management is a direct driver of financial performance."

"The aggregate findings provided by SuccessFactors' on-demand business model enable a level of insight into human capital management practices, patterns and behaviors previously unattainable and helps pinpoint the key important leverage points within different vertical industries," stated Erik Berggren, director of customer results, SuccessFactors. "This joint research study clarifies the true impact that smarter human capital management has on top and bottom line performance and provides a springboard for SuccessFactors to continue analyzing the most important human capital management trends and behaviors shaping the world's best performing companies."

For more information on this study, SuccessFactors will host a webinar detailing the study results on Tuesday, December 12, at 10:00 a.m. (PST). To register, please visit http://www.successfactors.com/promo/campaigns/drjac-webinar/?Campaign_ ID=70130000000ClQC&TAG=Q4_06_EmailBlast_CultMktg_JacErik_HTML&CmpLeadS ource=Email Blast (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)