Results

Research Component

Sylvie Guerrero, Ph.D., (Professor at the University of Quebec at Montreal, UQAM) worked with the HR pilot project team regarding the measurement and evaluation of the project results. Her profile can be found at the university’s website:

http://www.orh.uqam.ca/Pages/guerrero_s_cv.aspx

National HR Pilot Project Results Summary

Note : All results, analysis and conclusions contained in this document have been taken from reports prepared by Ms. Sylvie Guerrero, Ph.D.

The hypothesis of this project was that implementing HR tools in small businesses would facilitate their growth and effectiveness. In order to scientifically measure the evolution of this hypothesis the project team, over 3 years, chose to measure the following HR performance indicators:

1.Putting in place HR practices that are a source for good performance
We recorded an important progression of the following recommended HR practices.

Table 1: Number of « Yes » responses between 2007 and 2009

HR Practices Average 2009 Average 2008 Average 2007 Percentage of businesses that responded « YES » to half or more of the questions concerning the use of “best practices” in 2009
Strategy (score out of 7)
Recognition (score out of 3)
Hiring (score out of 12)
Communication (score out of 17)
Performance (score out of 5)
Training (score out of 10)
Remuneration (score out of 17)
Safety (score out of 4)
Total Score (out of 74)
5.24
1.67
10.37
17.55
4.46
6.48
16.22
3.21
65.20
4.81
1.52
9.35
15.63
3.54
5.63
14.25
2.81
57.53
2.83
1.64
6.55
9.61
2.61
6.07
12.06
1.69
42.50

87.5%
61.5%
94.4%
97.9%
90.6%
65.6%
100%
94.8%
97.9%

2.The use of effective leadership practices by the business owner
The business owners self evaluation was a little better in 2009, with the exception of leadership behavior towards “enabling others to act”.


Table 2: Leadership Behavior Self-Assessment between 2007 and 2009

  Average 2009 /5 Average 2008 /5 Average 2007 /5
Setting an Example
Inspire a Shared Vision
Challenge the Process
Enable Others to Act
Recognition
Total leadership
398
373
381
404
352
365/478
396
330
368
399
305
503/699

391
350
382
413
324
93/125



3.The employees perception of putting in place HR practices
The results of table 3 indicate improvements in the perceptions of employees, especially between 2008 and 2009. The percentage of satisfied employees was extremely high in 2009 at 84.04% and 74.14% of the employees were satisfied with the leadership confirming the business owners self evaluation.

Table 3: Employee perceptions between 2007 and 2009

  Satisfaction 2009 (%) Satisfaction 2008 (%) Satisfaction 2007 (%) Dissatisfied 2009
Engagement
Satisfaction
Hiring
Communication
Atmosphere
Training
Health & Safety
Performance
Remuneration
Leadership
Total
73.17
84.04
12.99
70.87
75.92
77.01
69.69
79.01
53.82
74.14
6707

70.75
80.02
13.58
67.30
70.12
72.61
63.09
71.04
56.39
69.30
62.67

72.10
81.51
-
74.82
-
81.19
67.11
74.45
57.92
-
7296
6.24%
4.62%
3.48%
9.97%
6.06%
5.73%
9.91%
6.31%
13.09%
7.08%
7. 25%



4.Absenteeism Rate
In 2009 the average rate of absenteeism was 4.08%, which is clearly less than 9% which has been recorded as the average for Canadian businesses.

5.Growth indicators between 2007 and 2009
During the project the number of jobs created increased, the rate of dismissal decreased and the only bankruptcy was reported in 2009. These results are exceptional considering the number of jobs dropped by 0.8% between 2008 and 2009 for small businesses in Canada with employees less than 100 employees. (Source: www.ic.gc.ca)

Table 4: Growth rates between 2007 and 2009

Growth Rate Indicators Between 2007 and 2009
Jobs Created
Dismissal Rate
Bankruptcy

Improvement : + 1.75%
- 17.09%
1 business

6. Salaries (Labour Costs)
The amounts paid out in salaries increased regularly over the course of the 3 years. Consequently the ratio « salaries/revenue » went from 31.67% in 2007 to 33.27% in 2009. These results indicate the willingness of employers to invest in human resources even in a time of economic crisis.

7. Investment in Training
The businesses maintained their investments in training and they even increased in 2009 compared with 2008 (investment in training went from 1.56% of salaries to 2.24%). Between 2007 and 2009 expense on training per employee went from $325.44 to $455.63. These results indicate that businesses are becoming more and more conscious of the importance of training for employees.

8. The productivity per employee and the return on investment
The HR indicators (# 1 to 7) have also allowed for the calculation of the return on investment of the project. In this case the costs associated with HR have been added together and compared with the gains realized by each employee (estimated from the sales figures). The results showed that the gains realized increased at a faster rate than the costs between 2007 and 2009, in this fashion the profitability of the businesses increased as time carried on.

Table 5: Costs associated with HR (per employee) between 2007 and 2009

  Average 2009 Average 2008 Average 2007
Labour Costs ($)
Training Costs ($)

Absenteeism Costs ($)


Turnover Costs ($)

Total HR Costs ($)
$29266
664 $
= 2,27% x 29.266$
1,191 $
= 4,07% x 29.266$
6,133 $
= 41,91% x 29.266 x 0,5

$36063



$27692
432 $
= 1,56% x 27.692$
595 $
= 2,15% x 27.692$
7,862 $
= 56,78% x 27.692 x 0,5

$35986
$25697
624 $
= 2,43% x 25.697$
594 $
= 2,31 x 25.697$
6,148 $
= 47,85% x25.697x0,5

$32460
Productivity per Employee
Return on Investment per Employee
$130205
$94888
$141613
$105627
$119907
$87438

When we compare the costs associated with employees to the revenues generated we notice that the return on investment realized in 2009 and 2008 is greater than that of 2007 (+$7,450 (2009) and +$18,190 (2008) per employee). If we consider the year 2007 as our year of reference we can conclude that the project allowed the participating businesses to free up in total $25,639 more per employee in 2 years, despite the economic crisis. With an average of 15 employees per businesses, the total return on investment for the 100 participating businesses equals $38,458,500.

9. Significant Link
The results analysis between 2007 and 2009 allowed for the realization of certain significant links:

- We found a significant positive link between leadership style and implementation of recommended HR practices.

- The more the business owner adopts a style of leadership that is mobilizing, less will be turnover rate

- The more emphasis the business owner puts on the recommended hiring practices the less he or she will have to hire. (hence hiring the right people from the start)

- The turnover rate is higher in businesses that do not put into place the recommended practices concerning remuneration and training.

- The turnover rate decreases the businesses performance, confirming the importance of putting into place HR best practices in small businesses.

- There was no significant link found amongst the following variables: province, sector of activity, etc.

10. Suggestions for the future

  • In the face of a labour shortage and the difficulty in developing loyalty, businesses have to take advantage of putting into place the best practices, in hiring, socialization and in remuneration in order to best attract and retain their employees.

  • The more the business owner adopts the recommended mobilizing style of leadership, the more he or she will realize the importance of good HR practices and will implement them. We therefore recommend to agents to put an emphasis on helping the business owners learn about leadership techniques in order to concretely mobilize their staff.

  • The business owners should continue to survey their employees every 24 months to find out if the level of satisfaction is maintaining, decreasing or increasing.

  • An annual meeting with the agent to discuss the best practices in HR would be useful as a reminder of the importance of managing HR and to maintain that passion and engagement experienced throughout the project.


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