HR departments can add Dh50bn to GCC firms’ profits

Companies always push their sales teams in order to give fillip to revenues to achieve profit targets and ignore other departments. And least they consider is the human resources (HR) departments.

But a newly-released study claims that HR departments of the listed companies in the GCC can add a staggering over Dh50 billion to their profits annually.

Oxford Strategic Consulting (OSC) research showed that world-class HR team adds 12 per cent to a company's profit or effectiveness. In the GCC-listed companies, “world-class HR departments would yield an extra $14 billion (Dh51.38 billion) in GCC-listed company profits per year.”

Global Investment House said earlier this month that GCC corporate earnings in the first nine months of 2014 rose 13 per cent to $52 billion (Dh191bn) year-on-year.

The OSC study found that more effective HR departments will also help GCC professionals contribute to the achievement of national and organizational strategic goals.

The research showed that investing in national talent, a more sustainable resource than oil and gas, can achieve huge returns for relatively low costs and can create a stable economic future for the GCC.

The GCC companies, it said, should encourage entrepreneurs who actually contribute to job growth.

Many GCC countries promote entrepreneurism and SME development as part of their diversification strategies, but more can be done to identify which entrepreneurs are most likely to succeed. OSC research found, for example, that only 6 per cent of entrepreneurs actually contribute to employment growth. This means that targeted support to high-potential entrepreneurs, known as 'gazelles', would be more cost-effective than across the board funding of entrepreneurial projects.

It advised companies to embrace organisational models that work.

“Family firms, which account for 75 per cent of the GCC's private sector economy, are critical for growth and represent a proven advantage for GCC countries. Nearly 50 per cent of these family firms operate in more than 5 sectors, which means that they spread risk, are more resilient to downturns in one sector, and can rapidly move into growth markets. Moreover, family firms tend to outperform non-family firms by 15 per cent,” Oxford Strategic Consulting said in its research.

The most proactive GCC countries and organisations have already made great strides in developing national talent and improving human resource capabilities, yet more can be done.

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