Companies with Chief HR Officers Consistently Outperform Their Peers
Companies that Treat HR as a Critical Business Function Perform Better
SOUTH SAN FRANCISCO, Calif., Oct. 7, 2013
SOUTH SAN FRANCISCO, Calif., Oct. 7, 2013 /PRNewswire/ -- SuccessFactors, an
SAP AG (NYSE: SAP) company, today announced the results of a Fortune 500
research study, which highlights the importance of having Chief HR Officers
(CHROs) in the executive board. In addition, SuccessFactors also released
findings from a customer analysis, which indicates that effective talent
management is a key driver of business growth.
The audit of Fortune 500 companies identifies companies with an HR executive
in their C-suite as high performers. In fact, these companies are on average
105 percent more profitable than their industry peers, who don't have HR
representation in the executive board. By exploring how CHROs impact an
organization's bottom line, this study uncovers the value of HR in strategic
decision making. The research also presents the need for businesses to create
robust HR functions and invest in effective technology solutions.
According to SuccessFactors' customer analysis, proactive talent management is
one of the best practices embraced by CHROs. Notable tactics that correlated
to superior performance included exposing HR risks, such as the need to retain
key talent in annual reports and instituting ongoing reviews of goals and
performance throughout the year. Specifically:
oCompanies that identify HR risksin their annual reports outperform their
industry peers without risk identified inkey financial and market
metrics, such as return on assets (by 55 percent), operating profit (by 95
percent) and earnings pershare (by 54 percent).
oCompanies that review employee performance throughout the year more
consistently meet quarterly financial estimates and experience a better
average compound annual growth rate (CAGR) compared to their industry
peers that only review performance on an annual basis.
oCompanies with a higher percentage of goals aligned and completed do
better than their industry peers in key financial metrics – including
quarterly financial estimates, operating profit, earnings per share, and
"We found having a CHRO is correlated to a company's bottom line,
demonstrating the important connection between effective talent management and
business performance. But simply having a CHRO is not enough," said Shawn
Price, president, SuccessFactors, SAP Cloud. "Today companies equally benefit
from leveraging the insights that only come from advanced, connected HCM
solutions that manage the entire employee lifecycle – from recruit to retire –
taking the role from transactional to strategic and even predictive. The true
value of our applications is in how they support HR in understanding
tomorrow's needs before it's too late to proactively address them."
Traditionally, human resource professionals were aligned with administration
and finance – bogged down in paperwork and removed from C-level leaders.
Today, organizations are acknowledging the value of employees as their key
resource, and are calling on HR to become a strategic partner with the leaders
of the business. This shift in HR's role is driving a need for companies to
invest in advanced technologies that enable them to effectively manage the
workforce while allowing HR to spend more time focusing on making valuable
About SuccessFactors, an SAP Company
SuccessFactors provides the leading cloud-based HCM Suite, which helps HR
drive business execution with solutions that are beautiful and flexible enough
to start anywhere – optimizing your workforce today and preparing them for
tomorrow. SuccessFactors solutions are supported by a global partner ecosystem
and the experience and commitment of SAP. With approximately 22 million
subscription seats globally, we strive to delight our customers by delivering
innovative solutions, content and analytics, process expertise and best
practices insights from serving our broad and diverse customer base. Today,
with more than 3,700 customers, we serve organizations of all sizes across
more than 60 industries in more than 177 countries using our application suite
in 35 languages.
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