Hewitt Finds Retaining Top Performers Increases Shareholder Value

January 8, 2007 (PLANSPONSOR.com) - Hewitt Associates has found in its research that the attraction and retention of pivotal employees plays a critical role in increasing shareholder value for organizations, and is offering a solution companies can use to optimize their human capital investments to impact business results.

Results of Hewitt’s research showed the flow of pivotal employees – defined as employees in the top quartile of their peers in pay progression – into and out of an organization is a strong predictor of changes in Cash Flow Return on Investment (CFROI) and shareholder value, according to a Hewitt press release. Hewitt captures this relationship in a human capital metric called the Talent Quotient (TQ).

According to Hewitt’s research, a 10% increase in TQ score for the average Fortune 500 company adds approximately $70 million to $160 million to its bottom line over the next few years. Hewitt’s data also shows a range of TQ performance within industry sectors, helping firm’s compare their TQ performance to their competitors’ performance.

In its press release Hewitt said its TQ can provide:

  • A prioritization of investment dollars in people programs,
  • An objective ranking of the firm’s track record in attracting and retaining pivotal employees compared with other organizations,
  • An understanding of the flight risk of pivotal employees, and
  • An evaluation of people programs to bolster information from employee surveys.

Hewitt said its solution can model the financial impact of future workforce decisions, thereby helping a firm prioritize human capital investments. Companies can use Hewitt’s analysis to measure the impact on pivotal employees of different human capital investments, such as base pay or bonuses.

A Hewitt report detailing more information about Hewitt’s Human Capital Forecast is  here .