New Research Documents Positive Link Between Corporate Human Resources Policies and Investment Outcomes

Webinar on May 11th at 2 PM ET Review Findings

NEW YORK, NY, April 23, 2015 – A new research study connects the dots on the relationship between corporate human resources (HR) policies and investment outcomes such as return on equity, return on investment and profit margins. Of the many studies of human capital policies, the new paper examines 92 that focus on the links to corporate financial performance. The authors find that a large majority of the studies — conducted over several decades and encompassing dozens of countries and industries — reported positive correlations.

Human Capital Studies


Financial Effect

Positive Mixed None Negative
Training (36 Studies) 22 8 5 1
HR Policy (56 Studies) 45 9 2 0
Total Number of Studies 67 17 7 1

The research offers compelling evidence that human capital management can be material to a company’s financial performance. However, investors face significant challenges in attempting to incorporate human capital metrics into investment analyses. For example, there are no standard metrics or definitions and there is no clear consensus about which HR policies in what combinations have the most impact on financial outcomes.

The Materiality of Human Capital to Corporate Financial Performance is authored by Aaron Bernstein and Larry Beeferman, both with the Pensions and Capital Stewardship Project at Harvard Law School’s Labor and Worklife Program. The research was supported by the Investor Responsibility Research Center Institute (IRRCi). Download the research here. Register here for a webinar to review the report findings on Monday, May 11, 2015, at 2:00 PM ET.

“It is intuitive that companies that have sound human resources policies and invest in employee training will perform better. Now, we have a meaningful connection between human capital management and financial performance,” said Jon Lukomnik, IRRCi executive director.

“For this information to become actionable for investors, there needs to be a level of disclosure and standardization that does not exist. To date, there hasn’t been an outcry from research providers or investors pressing companies to report publicly on their human capital policies and outcomes. Perhaps this will change now that we can clearly see significant relationships to financial performance,” Lukomnik said.

“Decades of research offer powerful evidence that human capital factors can be material to financial performance,” says study co-author Aaron Bernstein. “This should give companies the incentive and confidence to provide information to investors about their HR policies and practices.”

The report says investors should consider asking companies for the following information with respect to HR and training:

  • A description of the company’s training policy.
  • How a firm’s overall HR policy relates to its business strategy.
  • The kinds of employees trained and whether training is provided in or outside the company.
  • Whether and how the company measures the direct and indirect costs of the training.
  • Outcomes that characterize successful implementation of policies and how they are measured. These might be immediate in terms of increased worker knowledge and skills resulting in improved productivity or customer satisfaction. Or, they might result in lower turnover with associated cost savings.
  • Measures of the impact that implementation has had on company profits and other measures of financial performance.

The study also recommends that investors seek similar kinds of information about the bundles of HR policies the companies employ.

The Investor Responsibility Research Center Institute is a nonprofit research organization that funds academic and practitioner research that enables investors, policymakers, and other stakeholders to make data-driven decisions. IRRCi research covers a wide range of topics of interest to investors, is objective, unbiased, and disseminated widely. More information is available at

The Pensions and Capital Stewardship Project at Harvard Law School’s Labor and Worklife Program was established in 2004 to education interested parties on issues related to retirement security, pension fund governance, management, investment and related matters through conferences, training and research.

IRRC Media Contact:
Kelly Kenneally
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