One in four Irish firms surveyed as part of a Europe-wide index of "people management" were among the top 25 per cent in terms of best practice in human resources management.

The Watson Wyatt Human Capital Index report also revealed that firms that rely heavily on temporary workers do so at the expense of creating shareholder value, particularly in times of downturn.

The report found that of the 600 stock exchange-listed firms surveyed across Europe, those that minimised their disposable workforce increased shareholder value by an average of 5.6 per cent more than firms that did not. However, companies that minimised levels of developmental training of workers increased shareholder value by a further 5.2 per cent.

The survey concludes that while development training is not always bad for companies, very often it is not used properly or costs companies money. "We suspect that development training increases the value of the individual but does not necessarily increase the value of the firm - either the training is not put to good use or the costs of employment rise to match the new skill level," the report notes.

Those companies that practised best human resources practices raised their value by 89.6 per cent more than those firms in the lowest quarter of the index. Companies that practise "clear rewards and accountability" systems added 21.5 per cent to their value, while groups adjudged to practise "recruiting and retention excellence" added 14.6 per cent to their value.

"Collegial and flexible workplaces" raised a firm's value by 11 per cent while "communications integrity" added an average of 7 per cent to the value of companies.