Increasing Profits per Employee - Four Groups


Published on

While profits per employee are a good measure of human capital, the real challenge is knowing how to increase them.

Published in: Business, Economy & Finance
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Increasing Profits per Employee - Four Groups

  1. 1. 4G Human Capital Application Linking Behaviour to Bottom Line Performance Increasing Profits per Employee While profits per employee are a good measure of human capital, the real challenge is knowing how to increase them. Human Capital Benefits Human capital formance over the long term. > Increase profits per employee > Link behaviour to the bottom line As organisations grow, retaining and As an antidote, one might place greater > Quantify the amount of friction in teams improving financial performance emphasis on the role of intangibles and > Optimise the deployment of people becomes increasingly difficult. The human capital as a focus for driving > Raise the quality of working relationships need to develop efficient processes and continued success. to generate superior returns are just Please note, this document is intended to two examples of this. In light of this, the importance of intan- accompany the human capital demonstra- gibles and their impact on financial tion of the Visual Team Builder. This can be The challenge of balancing size and performance only increases. When we found at the link below. financial performance is compounded speak about intangibles, we do so with by two other factors. The first is that the idea that brands, technology, inno- capital is no longer a scare resource. vation, knowledge and intellectual While capital always seeks the best property all contribute significantly to returns, its supply and availability has the profits and competitive advantage increased such of their respective owners. What is also An Example 4G Situation that it is unlikely apparent is that underpinning these Degree of Psychological Comfort to be a limiting intangibles are the people who make No effort Minimal effort factor on a com- them a reality. Some effort 1Si Significant effort pany’s growth. The second is the If the superior management of people 2Ti increasing speed outlines one possible route to of technological improved organisational performance, innovation and how can we measure and define this 2Fe how it shapes financially? Perhaps the simplest 1Ne industries and answer is to look at profits per employ- competition. The ee. When measuring intangibles or 3Te upshot of these human capital, profits per employee factors suggests has a number of advantages. it is becoming 2Ti tougher to main- • It can be compared over different 3Fi tain superior per- periods and benchmarked against com-
  2. 2. Increasing Profits per Employee petitors measure (you can’t manage what you Who are we? • Comparing across different capital can’t measure), two broad applications Four Groups work with a new approach to human structures and accounting rules is possi- for human capital follow. capital. Our focus is on measuring and increasing ble the economic returns from intangibles such as • It takes into account different sized The first application looks at linking behaviours, relationships and culture. organisations behaviours to indicators such revenues aggregate or segmented calculation of or costs for example. The focus is on profits per employee can also be used. While profit per employee is a good how people are best deployed and measure of human capital and the con- what tasks and roles provide the great- Many organisations are likely to have a tribution it makes to financial perform- est financial return. The formula for combination of groups, some of whose ance, the real challenge is knowing Relationship Friction makes it possible performance is directly linked to a how maximise its impact. to create more financially efficient cir- financial measure and some whose cumstances for teams and individuals. performance isn’t. However, the two Our solution In the case of teams, it is possible to groups can be combined, allowing an manage team composition, reporting entire organisation to manage and In order to raise profits per employee, lines and overall organisational design increase their profits per employee. Four Groups have created a formula against the backdrop of Relationship This is done regardless of how the linking people’s behaviour and their Friction and financial performance. organisation is structured and how its relationships to measures of financial From an individual perspective, lower- financial information is measured. performance. Called Relationship ing each individual’s Relationship Friction, the formula allows organisa- Friction contributes to an increase in How does Relationship Friction tions to ask ‘what if’ questions about their own and overall group perform- work? the best means of deploying their peo- ance. ple. In answering the questions, the The formula for Relationship Friction is formula outlines a series of steps that While Relationship Friction lends itself based on a new approach to behav- generate an increase in profits and very well to groups and teams whose iours, relationships and culture called profits per employee. performance has a direct link to a 4G. Collecting the data pertaining to 4G financial measure, showing a return on is the starting point before one can cal- What is the human capital applica- human capital when this isn’t the case culate Relationship Friction. tion for Relationship Friction? requires a different approach. In this instance, activity based costing and Collecting the data for 4G is a very By linking Relationship Friction data to profits per employee provide a method quick and simple process. People gen- existing financial measures such as rev- to link the performance of these groups erally need an hour, split between a enues or costs, it is possible to link the back to a financial measure. Activity short briefing, an online personality behaviour of individuals and groups to based costing enables a more precise questionnaire and a feedback session . the bottom line. Having placed a finan- application of Relationship Friction. When using 4G for Relationship cial value on a historically intangible However, if this is not available, an
  3. 3. Increasing Profits per Employee Friction, there is also a need to know the relevant individual’s salaries. Once this data has been collected, it is possi- ble to calculate and analyse Relationship Friction, making specific recommendations and changes as appropriate. While the exact formula for Relationship Friction is proprietary to Four Groups, Four Groups are happy to make it available to interested clients, if requested. What is 4G based on? Building on the information for Relationship Friction, 4G is a proprietary approach to predicting relationships, behaviour and group cultures. Based in part on the work of Swiss psychiatrist Carl Jung, 4G incorporates measures of people’s strengths, creativity, motiva- tion and weaknesses. The model con- tains 16 definitions of individual’s behavior, 14 different relationship types and 4 examples of group culture. Four Groups Ltd 5 St. Johns Lane London EC1M 4BH, United Kingdom Tel: +44 (0) 20 7250 4779 Email: © 2007 Four Groups Ltd, 5 St. Johns Lane London EC1M 4BH, United Kingdom. All rights reserved. No part of this document may be reproduced without Company Number: 4650494 express written permission from Four Groups Ltd. VAT Number: 817 7962 85 Registered in England and Wales