Employee-friendly practices pay off

The adoption of employee-friendly policies by corporations may or may not improve bottom-line performance, but they at least pay for themselves, contrary to many popular notions.

That’s one finding from a new review by Ted Baker of the business faculty. Baker reviewed more than 70 studies conducted on the effects of so-called high-performance work practices (HPWPs). Such practices include employment security, high wages, incentive pay, employee ownership, and professional development.

Among his findings:

• The adoption of HPWPs does not always improve financial performance, but it is consistently tied with strong or, at worst, neutral performance. In other words, a firm is unlikely to suffer by adopting well-planned sets of HPWPs.

  “Indeed,” says Baker, “most of the evidence points to the clear possibility that changes aimed at building a skilled workforce, permitting people to make contributions beyond the day-to-day routine and rewarding them for their results can pave the road to stronger financial performance and greater competitive advantage.”

  Baker also reviewed research on the effects of environmental practices – not a human resources issue per se but certainly germane to whether a firm can do well financially by doing good. His basic finding:

• There is a financial payoff to firms for environmentally conscientious policies. “The traditional perspective is that reducing pollution costs corporations money,” says Baker, “but the research points to a connection between being green and performing well.”

Baker’s findings are summarized in a book titled “Doing Well by Doing Good,” published by the Economic Policy Institute in Washington, D.C.