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A new report from McKinsey Global Institute, “Performance through people: Transforming human capital into competitive advantage,” discovered that when companies invest in people, it pays off for workers.

The survey found that skills learned on the job contribute 46% of the average person’s lifetime earnings. Furthermore, companies making these investments will likely “propel their employees into higher earnings brackets over the course of a career.”

As is the case with any investment a company makes the question, a key concern is a return on investment. It turns out that companies that train their employees have more consistent earnings.

As to retention -- that holy grail -- companies that invest in their workforce have an attrition rate that is 5 percentage points lower than companies not making this investment.

The study calls out a segment of companies: People + Performance Winners. This group is able to put its people first and deliver top-tier profitability at the same time.

Eventually, this segment become large-scale “superstars.” And where do you find these “superstars? Across all industries, the report notes. And profit follows with an average of more than $1 billion in economic profit.

What’s unique about these types of organization, is that they both challenge and empowers employees while fostering bottom-up innovation. Those not in this category are more top-down and transactional.

The 40-page report goes into great detail and concludes that:

Not every company will choose to follow the P+P Winner template. Some are singularly driven by financial results; focusing on people may not be in their DNA. Remaking organizational culture is a difficult, ongoing commitment that requires energy, self-reflection, and a willingness to change familiar patterns.

But companies that adopt a more people-oriented focus along with a more challenging and empowering organizational culture have a lot to gain. In addition to boosting financial returns, they can improve their consistency, resilience, talent retention, employee loyalty, and reputation—and these are the hallmarks of companies that thrive over the long term.

Courtesy EHS Today