PR Newswire US, July 12, 2006, Wednesday

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PR Newswire US

July 12, 2006 Wednesday 1:15 PM GMT

HEADLINE: Gevity Institute Study: Small Businesses See 23 Percent Higher Profit Growth Using Effective Employee Management Strategies;
Fourth Phase of Gevity Institute and Cornell University Study Reveals Significant Link Between Effective Employee Management and Business Performance Outcomes

DATELINE: BRADENTON, Fla. July 12

BODY:
BRADENTON, Fla., July 12 /PRNewswire-FirstCall/ -- A four-phase landmark study, sponsored by the Gevity Institute (NASDAQ:GVHR) and conducted by Cornell University associate professor Christopher Collins, Ph.D., reveals that effective human resource practices directly affect business results, including revenue growth, profit growth and employee turnover reduction.
The Gevity Institute study shows that small businesses that implement Effective Employee Management Strategies experience a 22.1% higher revenue growth, 23.3% higher profit growth and a reduction in employee turnover by 66.8% than those companies that do not.
Human resource practices fall into three categories:
1) Administrative Relief, which includes practices such as processing payroll, taxes and insurance premiums and record keeping;
2) Business Protection, which includes up-to-date regulatory compliance, risk management practices and access to insurance programs;
3) Workforce Alignment, which includes employee management strategies such as employee selection, employee management, and employee motivation and retention practices.
Earlier studies have confirmed that employee management strategies within the third category - workforce alignment - in particular, have a greater impact on business results than practices within the other two categories combined. Companies with an aligned workforce perform 39% better than those with less optimal employee management strategies. In contrast, companies that have effective administrative support and business protection practices perform 8% better than those that do not.(*) Therefore this Gevity Institute and Cornell study focuses on the category with the most impact, workforce alignment.
"The results are definitive," said David Sikora, director of the Gevity Institute. "Through this unique and first-of-its-kind study, we have been able to quantify the impact that human resource practices have on small businesses. Rather than simply being an additional cost, investments in effective employee management strategies can help a small business grow sales and profits."
Effective Employee Management Strategies
The study identified the most effective strategies as they relate to employee selection, employee management and employee motivation and retention strategies. The strategies identified as most effective for small businesses are:
1. Hiring based on person-organizational fit, as opposed to only person- job fit - The study proved that hiring candidates who fit the culture of the company is more effective than hiring solely based on skills that fit a specific job.
2. Managing employees using a self-management strategy, as opposed to a controlling management strategy - The study shows companies that give employees greater discretion, trust and empowerment perform better than those that have tight controls and closely monitor their employees.
3. Motivating and retaining employees by implementing a family-like environment/community, as opposed to using individual monetary incentives - Companies that create a family-like environment in the workplace using employee socials, company-wide meetings and challenging employees see increased business outcomes than those who just use money as an incentive.
"The study is groundbreaking because we've proven that specific human resources strategies have a meaningful, and statistically significant, impact to small business financial performance," said Christopher Collins, Ph.D., associate professor at Cornell's ILR School and Center for Advanced Human Resources. "So much of existing research concerns large companies. However, the relative impact of a single person leaving a small business can be an even greater setback. Our research clearly supports the importance of having a formal employee management strategy as part of any small business plan - either in-house or outsourced to a professional like Gevity."
The research also demonstrated that implementing even a single strategy has a significant effect on business performance outcomes. The results are included below:
Strategy Implementation Type Revenue Profit Employee
Growth Growth Turnover
Improvement Improvement Reduction
All Effective Strategies 22.1 % 23.3 % 66.8 %
Employee Selection Strategy
Only 7.5 % 6.1 % 17.1 %
Employee Management Strategy
Only 11.5 % 3.9 % 15.1 %
Employee Motivation and
Retention Strategy Only 3.8 % 13.3 % 19.1 %

"The results are encouraging to Gevity as one of the only human resource services providers that includes workforce alignment support in its offerings," said Erik Vonk, Gevity's Chairman and Chief Executive Officer. "Our unique ability to implement effective employee management practices enables us to assist our clients drive revenue and profit growth, while reducing employee turnover."
Business Environment
The Gevity Institute research also looked at how different business environments affected the results and demonstrated in which business environments the human resource practices work best. The study looked at factors including the competitive environment, a company's growth strategy and the size of a company.
The overall result is those small businesses in highly competitive markets, with high-growth goals and with more than 50 employees experience significantly higher business impact from the use of Effective Employee Management Strategies. Specific highlights are included below.
Person-organizational Fit No Growth Goal High Growth Goal
One-Year Revenue Growth 7.1% 14.7%

Self-Management Under 50 Employees Over 50 Employees
One-Year Profit Growth 8.4% 15.8%


There is a similar positive impact when looking at the competitive environment in that having a family-like community is particularly effective.
Individual Family-like
High Competition Monetary Incentives Community
One-Year Employee Turnover 27.8% 7.9%

Gevity Institute Research
This fourth phase of the Cornell study is the culmination of more than two years of research performed not only to discover a link between human resources and small business performance, but also to identify the most effective strategies independently and part of an overall employee management program.
The fourth phase of the research studied data from 323 businesses with between eight and 600 employees across diverse industries. The average number of employees was 53. The data was acquired using both manager/owner surveys and employee surveys to minimize bias.
The First Three Phases
* First Phase - Research proved that employers understand that employee management practices have a direct impact on business results, but was unclear on which practices worked best.
* Second Phase - Research proved that human resource practices helped employers improve workforce alignment - defined as having the right people with the right skills in the right jobs - and that workforce alignment improves sales growth, profits and customer satisfaction.
* Third Phase - Research verified how employee management practices affect employee behaviors; including effort, cooperation and trust, and that these employee outcomes positively impact business performance.
Full results and executive summaries of all Gevity Institute research are available at http://www.gevityinstitute.com/ .
About Gevity Institute
The Gevity Institute was established to identify and quantify the link between human resource practices and small- and medium-sized business performance. The Institute strives to become a unique and recognized authority on how effective people management practices impact business success, both financially and strategically.
The Gevity Institute sponsors research at leading universities and business organizations. The Gevity Institute's objective is to establish an ongoing stream of information, data and recommendations focused on effective people management for small- and medium-sized businesses. Additional information is available at http://www.gevityinstitute.com/ .
About Gevity
Gevity (NASDAQ:GVHR) helps clients increase profits, grow sales and improve customer satisfaction through our comprehensive employment management solution. We serve as the insourced human resource department to small- and medium-sized businesses nationwide. Our unique approach integrates three key drivers of business success: workforce alignment, administrative relief and business protection. We deliver our solution through our innovative people, processing and portal approach, combining the resources of our highly skilled human resource consultants and our scalable, Web-enabled technology platform.
A copy of this press release can be found on the company's Web site at http://www.gevity.com/ .
(*) Data based on research adapted from "Improving Business Results With HR Technology." Gevity Institute White Paper, 2005.
CONTACT: Anne-Marie Megela, Vice President, Investor and Media Relations,
of Gevity, +1-800-2GEVITY (+1-800-243-8489), x4672, or
annemarie.megela@gevity.com
Web site: http://www.gevity.com/
http://www.gevityinstitute.com/
SOURCE Gevity

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