Wednesday, 3 July 2013

Measuring the Impact of Employees On the Balance Sheet


It is evident that it is the employees who generate the revenue of a company. It is also clear that a well managed, integrated and motivated workforce performs better and therefore is able to impact the business bottom line in a more positive fashion. The question is if this relationship can actually be measured. The answer is affirmative. This blog describes how this can be done and with what concrete results. All it takes, is two innovative software tools:

  • SurveyTelligence™ – an organizational HR tool by InfoTool 
  • OntoNet™ - a quantitative complexity management system by Ontonix

SurveyTelligence™ is a system which helps organizations measure success. For years, organizations have relied heavily on historical financial data to measure their success, and consequently, misinterpreted the voices of their employees and customers. Employees, suppliers and customers constitute a remarkably rich source of organizational performance data, and are a ready-made early warning system to your business' health. InfoTool has helped clients measure, track and analyze their stakeholders' opinions by providing vital feedback and guidance on key performance indicators, and changing market needs. Because SurveyTelligence™ provides real time data, it business leaders to optimize their organizations' strengths, anticipate problems and leverage market opportunities.

OntoNet™ is the World's first system which enables one to measure the complexity of a business process and to relate this measure to its exposure or vulnerability. OntoNet™ is an unusual tool - it does not resort to any conventional mathematics, such as statistics, neural nets, autonomous agents or cluster analysis. Instead, the approach is model-free. Models always add uncertainty to a given problem. Every model requires assumptions and these may not always hold. With OntoNet™ this issue no longer exists because we don't use models to analyze data. OntoNet™ works with MS-Excel spreadsheets transforming them into intuitive Business structure Maps which are crucial towards the understanding of how dynamical systems function.

A small SurveyTelligence™ survey data sample is illustrated below.

Such data may be analyzed using statistical procedures such as those implemented in SurveyTelligence™. However, the same data may be processed by OntoNet, in order to reveal the data’s structure as well as other important information. An example is illustrated in the figure below.

In the above Business Structure Map (known also as Complexity Map) the parameter “Right strategies” is indicated as the so-called hub and represents a dominant parameter in the entire data set. The “neighbors” of this parameters are clearly indicated. 

Financial performance, on the other hand, is measured using Cash Flow, Consolidated Income statements of Balance Sheets. A small example of such data is illustrated below, where the rows in the array represent quarterly values of the corresponding parameters.

The question, at this point, is how to combine survey results with financial performance data in order to establish a direct and quantitative impact between, say, “Net income” and “Resourcefulness” or “Inspiration” within an organization. This is precisely what Ontonix and InfoTool have done. An example is depicted in the figure below.

In the above Complexity Map it is indicated how, for example, “Software Revenue” in a multinational software company, is related to the following organizational assessment-type parameters:

  • Task relevance
  • Effective on-boarding
  • Strong follow-through
  • Values/behavior/alignment

With similar quantitative information it is possible to establish how to best go about changing/modifying an organization in order to improve its bottom line. The process for tying HR-specific aspects of an organization with its financial performance has therefore been established.