Human Capital: A Driver of Sustainable Performance for Companies
By Aymeric Gastaldi, Fund Manager International Equities at Edmond de Rothschild Asset Management
Edmond de Rothschild’s latest strategy on the Human Capital theme harnesses academic research, stock-picking expertise and responsible investing. It reflects strong convictions on companies that champion human capital practices while meeting environmental, social and governance criteria.
In concrete terms, a company that invests in the skills of its employees and their working conditions benefits from strong positive externalities.
The first is an improvement in productivity. Ongoing training helps combat the obsolescence of human capital, improve know-how, facilitate adaptation and ultimately generate productivity gains.
Investing in human capital also means improving working conditions and more generally investing in the well-being of employees. This fosters motivation, commitment and a sense of belonging among employees, which is a powerful driver of performance for any company.
Lastly, a company’s commitment to human capital will influence its ability to attract and retain talent. It will also serve to further strengthen its human capital and feed a virtuous circle of employee development and increased operational performance to enable the financing of more internal programs.
Firms standing out for their sustainable effort to train their employees tend to outperform their competitors. Companies like Hermès or Accenture have built their success on the excellence of the goods and services they sell. This culture of excellence is the result of their continuous HR development policy, setting them apart from their peers.
Hermès provides an average of 30 hours of training per year to each of its employees, for all categories of employees. At the same time, the luxury group has formed local partnerships with schools or academies in the regions where it operates.
«Great Place to Work»
The consulting firm Accenture invests more than 2 percent of its turnover in training, representing $2'000 per employee each year. A champion of mobility and internal promotion, 88 percent of its employees describe Accenture as a «Great place to work».
The Covid-19 crisis has been a real crash test for human resource departments, whether through worker protection (hand sanitizers, masks and vaccinations, etc.), business continuity plans after a surge in teleworking, and efforts to maintain a good work environment.
At the same time, structural trends like aging populations and increasing recourse to new technology have prompted companies to invest in human capital to boost performance and avoid obsolescence. Since the 2015 Paris Agreement, responsible finance players have focused on environmental emergencies. But the Covid crisis has put social themes like public healthcare, supply chains, jobs, inequalities and human resources back in the spotlight.
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This material has been issued by Edmond de Rothschild (Suisse) S.A.(hereinafter «Edmond de Rothschild») located at 18 rue de Hesse, 1204 Geneva, Switzerland, a Swiss bank authorized and regulated by the Swiss Financial Market Supervisory Authority (FINMA). It is not intended for persons who are citizens of, domiciled or resident in, or entities registered in a country or jurisdiction in which its distribution, publication, provision or use would infringe existing laws or regulations. This material has no contractual value and is provided to you for information purpose only and should not be construed as personalized investment advice or a recommendation or solicitation or offer to buy, sell or hold any security or financial instruments or to adopt any investment strategy. The figures, comments, analyses contained in this material reflect the feeling of the Edmond de Rothschild group on the markets, based on its expertise, its economic analyses and on the information in its possession at publication, which may therefore change. The figures, comments, analyses and investment research contained in this document may be incorrect, obsolete or irrelevant when read by investors because of the date on which the document was published or of changes in the market. Every investment entails risks, particularly the risk of fluctuating prices and returns. Past performance and volatility are no indication of future performance or volatility and are not constant over time. EDMOND DE ROTHSCHILD (SUISSE) S.A. Rue de Hesse 18, CH - 1204 Genève. T +41 58 201 75 40.
