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
Human Capital Benefits
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
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.
financial
to generate superior returns are just two examples of this.
Please note, this document is intended to
In light of this, the importance of intangibles and their impact on financial
accompany the human capital demonstration 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
http://www.fourgroups.com/capital
increased An Example 4G Situation Degree of Psychological Comfort No effort Minimal effort Some effort Significant effort
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such
of their respective owners. What is also
that it is unlikely
apparent is that underpinning these
to be a limiting
intangibles are the people who make
factor on a com-
them a reality.
pany’s
growth.
The second is the
If the superior management of people
increasing speed
outlines
of technological
improved organisational performance,
innovation
how can we measure and define this
and
one
possible
Perhaps
route
the
to
how it shapes
financially?
industries
and
answer is to look at profits per employ-
simplest
competition. The
ee. When measuring intangibles or
upshot of these
human capital, profits per employee
factors suggests
has a number of advantages.
it is becoming tougher to main-
• It can be compared over different
tain superior per-
periods and benchmarked against com-
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 the economic returns from intangibles such as
ble • It takes into account different sized
The first application looks at linking
organisations
behaviours to indicators such revenues or costs for example. The focus is on
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-
tribution it makes to financial perform-
est financial return. The formula for
ance, the real challenge is knowing
Relationship Friction makes it possible
how maximise its impact.
to create more financially efficient circumstances for teams and individuals.
Our solution
In the case of teams, it is possible to manage team composition, reporting
In order to raise profits per employee,
lines and overall organisational design
Four Groups have created a formula
against the backdrop of Relationship
linking people’s behaviour and their
Friction and financial performance.
relationships to measures of financial
From an individual perspective, lower-
performance.
Relationship
ing each individual’s Relationship
Friction, the formula allows organisa-
Friction contributes to an increase in
tions to ask ‘what if’ questions about
their own and overall group perform-
the best means of deploying their peo-
ance.
Called
ple. In answering the questions, the formula outlines a series of steps that
While Relationship Friction lends itself
generate an increase in profits and
very well to groups and teams whose
profits per employee.
performance has a direct link to a financial measure, showing a return on
What is the human capital applica-
human capital when this isn’t the case
tion for Relationship Friction?
requires a different approach. In this instance, activity based costing and
By linking Relationship Friction data to
profits per employee provide a method
existing financial measures such as rev-
to link the performance of these groups
enues or costs, it is possible to link the
back to a financial measure. Activity
behaviour of individuals and groups to
based costing enables a more precise
the bottom line. Having placed a finan-
application of Relationship Friction.
cial value on a historically intangible
However, if this is not available, an
behaviours, relationships and culture. aggregate or segmented calculation of profits per employee can also be used. Many organisations are likely to have a combination of groups, some of whose performance is directly linked to a financial measure and some whose performance isn’t. However, the two groups can be combined, allowing an entire organisation to manage and increase their profits per employee. This is done regardless of how the organisation is structured and how its financial information is measured. How does Relationship Friction work? The formula for Relationship Friction is based on a new approach to behaviours, relationships and culture called 4G. Collecting the data pertaining to 4G is the starting point before one can calculate Relationship Friction. Collecting the data for 4G is a very quick and simple process. People generally need an hour, split between a short briefing, an online personality questionnaire and a feedback session . When using 4G for Relationship
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 possible
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, motivation and weaknesses. The model contains 16 definitions of individual’s behavior, 14 different relationship types and 4 examples of group culture.
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