The impact of Investors in People on firm performance
Summary report
IIP_Impact_StudyReport_CBP 080930.pdf
Date of the research
2007-2008
Purpose
This research looks at the extent to which Investors in People (IiP) affects HR policies, the organization social climate, human capital flexibility and, ultimately, firm performance.
Method:
In depth case studies and survey research
Findings:
This study has found a body of evidence that clearly shows the link between the adoption of the IiP Standardand business performance together with the mechanisms of how the Standard creates a better return on investment. Our research finds that adopting IiP sets up a chain of impact ending in better financial performance. Organizations that adopt the practices embedded in the IIP Standard adapt their HR policies. These changes in policy have and impact on two important aspects of the company. Firstly, the HR policies create a positive organizational social climate, creating higher levels of trust, cooperation and people engagement. Secondly, the HR policies increase human capital flexibility - the skills and behaviours needed for the organization to change. The changes in human capital flexibility and organizational social climate have an impact on non-financial performance. Companies that have better non-financial performance also reported in the survey better financial performance and delivered higher returns on their assets as shown in their published annual reports. The case study research demonstrated how IiP was delivered in practice across a range of organisations. In the case study companies, we identified a prevalence of direction setting practices specifically designed to cascade strategic goals right down to individual targets and objectives. We also identified a number of HR practices that developed employee engagement and commitment. Our conclusion is that organisations perform better when employees have clear goals and supportive HR practices. IiP is a tool that helps organizations to develop these strengths.