The People-Profit Chain™: A Model to Increase Market Performance By Up to 3x
While there is no shortage of models connecting people practices to business results, what's been lacking is evidence--empirical data linking specific human capital activities and initiatives to performance outcomes--bringing to light what really works. Until now.
Decades of i4cp research have revealed the organizational performance indicators and people practices that have the greatest influence on market performance. These fit within one of five human capital domains: Market, Strategy, Culture, Leadership, and Talent. Each of i4cp's Five Domains of High Performance™ yield distinct and consistent outcomes that drive market performance as well as a consistent set of key performance indicators (KPIs) for each outcome--25 KPIs in total. When linked together, these outcomes and their associated KPIs form a new model of how to impact business performance: the People-Profit Chain™.
i4cp's five domains, their associated outcomes, including an over-arching KPI for each domain and the correlation of each to market performance is highlighted in the graphic below.
The People-Profit Chain™ takes a business view of human capital, and unlike previous models, starts with the desired outcome. Rather than a traditional HR view, which begins with how HR programs can be applied to the business, the People-Profit Chain™ starts by understanding the desired outcomes and works backwards.
Clearly, the ultimate outcome--high market performance--is directly affected by satisfied and loyal customers who become so through the delivery of products, services and experiences that best meet their needs. This requires a sound business strategy that's effectively executed. Sustained successful execution of strategy demands an organizational culture that is responsive to change and supportive of the right values and behaviors. Compelling leadership drives employee engagement and development, but it's not just the leadership at the top. To create and sustain an engaged workforce, line managers and supervisors must be equipped to be effective people managers. With effective talent management in the trenches, high-performance organizations create the necessary agility and well-rounded talent throughout the enterprise to meet and exceed customer expectations.
Several i4cp member organizations have utilized i4cp's People-Profit Chain™ model to build or improve their human resources and overall business strategies. One such organization is Choice Hotels International. Check out this video presentation by Choice Hotel's CEO Steve Joyce, who was featured on an episode of the CBS show "Undercover Boss" and chief HR officer Patrick Cimerola, to learn about their business strategy transformation.
The People-Profit Chain™ provides a framework to align the roles and practices of human resource (HR) to the drivers of market performance. It can be used by all business leaders (HR and line of business) to:
- Assess the degree to which their organizations reflect the characteristics that drive high market performance.
- Build consensus and alignment among individual executives about objectives and priorities and gain better understanding of how executives view the organization's strengths and weaknesses.
- Guide productive conversations among all human capital leaders (line of business and HR leadership) on the strategies and initiatives for improving workforce capabilities and practices that drive market performance.
- Pinpoint disconnects between strategies, tactics, and outcomes.
Download a copy of i4cp's new eponymous research study The People-Profit Chain™.
Register for the October 17, 2013 People-Profit Chain webinar during which i4cp's Jay Jamrog and Kevin Martin will provide details and insights as to how to put the People-Profit Chain to work at your organization.
