The Hindu Business Line : `Best employers' beat peers on financials: Hewitt study

The `Best Employers' have highly engaged workforce, significantly lower attrition and superior people practices. They, therefore, have the right people working to their potential, in an enabling environment with the right leaders.

New Delhi , Dec. 10

IF the Hewitt Associates' `Best Employers of India 2004' is anything to go by, it really pays to be better employer.

Hewitt Associates' analysis of the financial performance of the `Best Employers' since 2000-01 clearly suggests that they outrun their peers in generating higher return on assets and capital employed and consistently improving the efficiency with which they generate turnover, while also delivering superior returns to investors.

More importantly, the scale on which the `Best Employers' are outperforming the industry average has been consistently going up over the last four years.

The analysis examines key business measures such as the strength of balance sheet of companies, their operating performance and price-to-earnings ratio. Individual company measures were, subsequently, divided by the matched industry figure to calculate the ratio between company and industry performance. The results clearly show that the `Best Employers' outperform the industry on key metrics.

For instance, with respect to the return on total assets - which measures how well a company has been utilising assets to generate profits - the `Best Employers' have consistently outperformed their industry peers and the gap, except for a slight dip in 2002-03, has been widening over the last four years.

A similar trend is seen in case of the return on capital employed, which measures the utilisation of invested funds. In terms of operating margins - which measures efficiency in operations - the `Best Employers' performance has steadily risen from below industry average in 2000-01 to significantly above the average in 2003-04.

On the price-to-earnings ratio - which measures the faith reposed by investors on the company's ability to create shareholder value - the `Best Employers' have maintained better performance than the industry average.

According to Hewitt Associates' Head India Consulting, Ms Smita Anand, the results are not surprising. The `Best Employers' have highly engaged workforce, significantly lower attrition and superior people practices. They, therefore, have the right people working to their potential, in an enabling environment with the right leaders.

The `Best Employers' receive nearly 66 per cent more applications, have a 35 per cent less overall attrition level and invest nearly 2.5 times as many hours in each employee's training.

"The trend in India is in sync with the findings of global research by Hewitt Associates on `Best Employers' in other countries including China," Hewitt's Managing Director, Asia-Pacific operations, Mr Mick Bennett, told Business Line.

However, what is striking in India is the level of public sector participation in the survey, which is growing every year.

In comparison, in other countries of the region a beginning is just being made, Mr Bennett said. Hewitt's Head of Leadership and Talent - Asia Pacific, Mr Andrew Bell, hoped that the trend of best employers outperforming their peers on financials could only become more pronounced over the years.