Human-resources executives have long argued that superior people-management practices can significantly improve a company's bottom line. But hard numbers detailing how best to motivate and reward the people on your team and in your company were tough to find.

In search of this kind of data, Watson Wyatt Worldwide, a global human-capital consulting firm, explored and correlated the HR practices and financial fortunes of 750 companies in Canada, Europe, and the United States in 1999 and again in 2001. The resulting Human Capital Index study found that superior HR practices are not only correlated with improved financial returns, but are, in fact, leading indicators of increased shareholder value.