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People Management Magazine - CIPD

Poor quality people management costs employers 84 billion a year

Hayley Kirton 10 Sep 2015 Comments0 comments

Financial and healthcare sectors have most to gain from improving standards

UK businesses are missing out on 84bn a year because of poor quality people
management, a study by Investors in People (IIP) has found.

The report, People Management Benchmark: Impact on Investing in People,

found that adopting sustainable good quality practices would have the biggest
positive impact for an organisations bottom line. For example, ensuring
managers always have the opportunity to develop and update their own people
management skills and giving them access to the latest information and

Following this, the next set of management improvements that can boost a
companys value were recognising and rewarding performance adequately and
having a strong set of values.

The report also found that particular HR initiatives could benefit particular
industries. For example, developing strong and inspiring leaders would benefit
the construction industry the most, it said, while recognising and rewarding
performance would bring the greatest results for the manufacturing industry.

However, one practice examined by the IIP, structuring work, had a positive
impact in medium and large firms but actually had a negative impact on small
firms. The results would suggest that smaller firms benefit from a more fluid way
of working rather than the formalised structuring where tasks or team work is
aligned with business goals.

In monetary terms, the professional and financial services sector has the most to
gain from boosting the quality of its people management as the research
estimated that implementing best practice would generate an efficiency gain of

Proportionally, the health and social care industry had the most potential to
improve its performance, with a boost of 8.9 per cent to its efficiency. Such
development would also help to reduce workforce disengagement, an issue that
was highlighted earlier this year in a separate survey. It showed that seven out of

10 NHS employees felt undervalued in their job and more than half were ready to

Paul Devoy, head of IIP, said: Its obvious that a skilled, confident workforce is
essential to a productive enterprise. However, it is difficult to determine the true
impact on the bottom line, so sometimes business leaders can forget the
importance of good people management. This study provides the evidence that
focusing on excellence in people management can lead to significant
performance gains for the sector and economy as a whole.

Jost Wahlen, head of learning and development at Allianz Insurance and an

advocate of good quality management, said that developing strong leaders had
helped strengthen his business. We have a range of leadership programmes at
each level of the organisation. Employees need to be well prepared when they
are asked to take responsibility for managing other people, so we take it quite

The study, which was co-authored by economic research consultancy TBR, was
based on a survey with 8,750 businesses as well as data from the Office for
National Statistics.