Paradigm shift: “People” as the key
factor for corporate performance

Amidst ever-dynamic market developments, changes in the business world and social trends, a strategic aspect of performance management is becoming more important than ever: people. Employees must cope with urgent transformations, from site changes and sustainability to the integration of AI technologies – alongside changing working conditions and a generational shift.

People have a direct impact on the financial performance of organizations, both in terms of revenue and costs. Motivated teams perform better, ensure higher customer loyalty, enrich and strengthen a positive corporate culture, and promote innovation. When it comes to costs, lower staff turnover reduces restaffing and onboarding expenses. Strong employer branding lowers the cost of recruiting and retaining talent. 

These findings are moving into the focus of board members. As our current study shows, “people topics” are just as important as sustainability and digitalization for 75 percent of CxOs – and must be addressed with the right capacities and priorities to stay competitive. 

In board meetings, people-related issues already take up more than two-fifths of the time. However, no more than 40 percent of companies are implementing solutions in any of these fields of action. There is a lack of concrete approaches to this key issue: 

How can companies make the best use of their "human capital" to boost performance in the future? 

We recommend focusing on the following aspects: 

  1. Establishing a "people make the difference" mentality and organizational culture 
    To strengthen employee development initiatives, it is vital to establish a collective "people make the difference" mentality throughout the organization. After all, it's not just the HR department that needs to have employees as a top priority. Rather, this idea must be firmly anchored in the minds of all executives, especially C-level managers. CxOs must actively exemplify this "people make the difference" mindset, as it is the only way to establish a culture that offers individuals and teams numerous benefits. For example, this involves putting the issue of talent, crucial talent development and the potential need for successors on the agenda early on – not just in the CxO department, but across the company. Furthermore, there must be strategic discussions about what expertise is needed in which parts of the world and to what extent. 
     
  2. Moving from operational HR to a "C-level people strategy"  
    These days, an isolated HR strategy with a mostly operational focus is outdated. Our study clearly shows that companies have some catching up to do, as 77 percent of the executives surveyed believe that the issue of "people" should be approached more holistically and decentralized in their organization. Compared to traditional HR strategies, a people strategy is characterized by its long-term, cross-functional focus and continuous alignment with the overall corporate strategy. It focuses on the entire employee lifecycle and ensures that the experience of employees and thus their performance can be optimized at any time.  
     
  3. Using new technologies to empower people 
    The ever-growing potential of innovative AI applications means that many companies see them as THE solution to the current skills shortage. Our study also shows that the majority of those surveyed believe it is likely that new AI applications will reduce staffing needs by at least 20 percent by 2030. However, while technology may reduce the workload of employees by handling all or at least part of certain tasks, it will not eliminate the need for "real" workers. On the other hand, AI should serve as a means to empower workforces at every stage of the employee lifecycle. When it comes to recruiting staff, modern technologies can handle various time-consuming tasks, such as finding talent, screening job applications and scheduling interviews. This leads to a more efficient and effective recruitment process and thus more satisfied existing and future employees. AI applications can also significantly support talent development with personalized training and continuous feedback through performance insights. Lastly, artificial intelligence can also be used for effective succession planning by using HR data to identify "high potentials,” recommend alternative career paths, and identify future bottlenecks when it comes to skills and roles. 
     

Satisfied employees as a strategic competitive advantage

Companies now have the chance to turn their employees into driving forces, supporters and ambassadors to make the necessary transformations a success. Organizations that recognize and fully leverage the potential of people will go on to reap the benefits of sustainable corporate performance. 

Horváth-Study

From Human Resources to People Performance – How to succeed in the new "People" Age

To the study

Interview with Oliver Maassen, CHRO at TRUMPF

“More HR expertise in supervisory boards, please!”

To the interview