Ultimate Performance: Measuring Human Resources at Work

Modeling Employee Contribution

Many measurable factors within the work environment have an impact on, or can be related to, employee asset value. Unicru has coined the term Incremental Employee Contribution, or IEC Model, as a label for the model that has been developed to help organizations address key questions that relate to the value of their employees, and to examine alternative interventions aimed at optimizing the asset value of their employee pool. To date, the IEC model has been used successfully to examine relationships among length of service, time to competency, productivity, the value of retention, employee asset value, and, ultimately, employee profitability.

Developing a meaningful framework relating Human Capital to outcomes relevant to an organization on a financial performance basis requires an asset model applicable to that Human Capital. The key concept is the development of an understanding of employees as an asset rather than as an expense.

To illustrate, let’s describe a simplified employee asset model applicable to many environments in the service and manufacturing sectors in which employees are paid hourly with a well-defined and understandable set of tasks in their job description. Their role is understood, and their productivity can be measured directly or indirectly. We also have an estimate of the cost of acquisition. This information, including a few assumptions, allows us to build a simple but fairly robust model.

The foundation of the employee asset ...