Does the way people are treated at work make a difference to the performance of the organisations that employ them? Are there returns to investment in human capital in a similar way to investments in physical capital? These seem straightforward enough questions but they have generated huge amounts of debate. On one side, there is plenty of evidence strongly suggesting that investment in people has important business performance benefits, and yet on the other hand, the research that arrived at this conclusion has been subject to detailed criticism. And whilst academics gather and dispute the evidence, it would seem that practitioners are not completely convinced either.The take-up of what have been termed High Performance Working Practices (HPWPs) has been slow and many organisations do not adopt them. The doubts of practitioners reflect concerns over what it might mean for individual firms and sectors, and confusion over which people management practices are likely to show the greatest link to performance. Many studies adopt complex measures which are outside the capabilities of most firms to replicate.
In terms of a step change in employer behaviour what is needed are some measures that have been linked to performance, that employers can capture for themselves and which do not require considerable academic resource to make useful. Against this background, this study takes into account concerns from both academics and practitioners, and provides a convincing argument that the investments firms make in their workforce make a difference.