The Investors in People Standard has long been acknowledged as a business improvement tool, helping organisations of every size, type and location to gain more from their people in support of business goals. In the first half of 2004, we conducted a detailed study to try and quantify the impact that achieving the Standard has on business performance.

Background

The study was a telephone research exercise, which involved surveying a total of 1,600 companies, equally divided between:

• recognised public sector organisations
• recognised SMEs (5-249 employees)
• recognised large employers (250+ employees)
• non-recognised companies.

Interviews were conducted between 1 March and 25 March 2004.

Key findings

• Organisational changes made by Investors in People recognised employers are twice as profitable as changes made by other companies.
• Changes made over the last three years by Investors in People recognised organisations increased profit by 7.16% of sales or £505 per employee per year¹, as opposed to 3.78% of sales or £197 per employee per year for other companies.

• The profit attributed to working with the Investors in People Standard, by size of organisation, is as follows:

• Small organisations - £303 per employee per year (accounting for 4% of total increase)
• Medium organisations - £602 per employee per year (accounting for 60% of the total increase)
• Large organisations - £41 per employee per year (accounting for 36% of the total increase)

• If these findings were projected to cover all Investors in People recognised organisations in the UK, it would show an increased profit of around £756 million attributable to working with the Standard.

• 94% of recognised employers within the study saw value in continuing to work with the Investors in People Standard after accreditation.

¹ An average of £353 per employee of this increase is through their commitment to the Investors in People principles.

Themes in more detail

1. The Investors in People Standard acts as a catalyst for business improvement:

• For 64% of recognised employers, the Standard was either crucial or very influential in making changes. It was very important or influential for:

• 55% of small sized businesses
• 53% of medium sized businesses
• 41% of large sized businesses.

• Recognised employers make many types of change more effectively than non-recognised companies:

• 32% of recognised employers had made changes to training and development, compared to 16% of non-recognised companies. The increase in profit per employee arising from these changes was £146 for recognised employers, but only £4 for unrecognised organisations
• 28% of recognised employers had made changes in the area of appraisals and feedback, compared to 17% of non-recognised organisations. The increase in profit per employee arising from these changes was £136 for recognised employers, but only £6 for unrecognised organisations
• Recognised employers making changes in organisational objectives gained an increase in profit per employee of £51. The increase in profit per employee arising from such changes for non-recognised organisations was only £18

2. The Investors in People Standard helps organisations increase profits by empowering employees

• Recognised employers involve staff more effectively and gain a greater profit increase as a result. In our study, 91% of recognised employers had made changes that involve staff, leading to 82% of their total profit increase. By contrast, only 36% of non-recognised organisations had made changes that directly involve staff (delivering less than 25% of the total increase for non-recognised organisations).

3. Improving benefits increases productivity

• For recognised employers, the Standard is exceeding expectations in terms of staff benefits (e.g. more motivated staff, lower turnover and absenteeism) and in terms of cost benefits (e.g. improved efficiency and productivity, less waste, increased sales).

4. Support at senior levels leads to greater return on investment

• 87% of the companies working with the Investors in People Standard had top management support for becoming recognised. 13% of companies felt that top management were not completely supportive, and in these companies fewer financial benefits resulted from recognition. Recognised businesses—with commitment from top management—have seen an average annual profit increase of £886 per employee compared to an average annual profit increase of £350 per employee for companies without such commitment.

5. Greater employee buy-in helps meet objectives

• Working with the Investors in People Standard helped more than 80% of recognised employers improve employee understanding of how they can help the organisation meet its objectives. 

For more information on this study or Investors in People in general, contact the Investors in People press office on 020 7544 3118 or visit www.investorsinpeople.co.uk