Reading C: Powering the Human Drivers of Financial Performance

You have to make sure the employee have the right intentions, skills and competencies to move your
company forward.

How can we improve the financial performance? it was driven the organization to spend millions dollars to
come up with and implement new ways to increase productivity, reduce costs, prioritize resources and
initiatives, revamp compensation, and try myriad other things to improve the bottom line.

As part of these initiatives, the job responsibilities of senior financial executives have expanded beyond
financial reporting to include more aspects of overall organizational performance. This is one of greatest
challenge of CFO/senior/high level executives to ensure that the strategic and operating plans of their
organization will achieve the financial objectives.

How do we measure employee performance? Economic value added (EVA) and the Balanced Scorecard
are two financial tools that many companies use to improve employee performance. A comprehensive
approach on optimizing human capital can achieve the aggressive goals in today global competitive
environment.

The Company must:

1. Assess it current human capital value in depth.
2. Analyse the corporate culture and its effect on human capital optimization.
3. Determine the required quality and value of its human capital in order to accomplish its corporate
mission, goals and objectives.
4. Develop a human capital strategic plan to achieve the needed human assets value.

Using Competencies to Measure and Quantify Human Capital

It’s important to use meaningful units of measurements in assessing the value of human capital. The
competency could define as behaviours, traits,and characteristic that differentiate superior performance in
a job, for example: initiatives, influence, results, orientation, strategic thinking and innovation.
Competency Rating:

Assessing the Current Human Capital

Key Competency at every position:

Analyzing the Corporate Culture

Corporate culture affect the degree to which people can make the most of their current level of
competency. Every organization has unwritten rules for how employees are supposed to act.

Corporate cultural factors to be analyzed: corporate values, rewards and recognition practices,
management styles, communication styles, decision making customs and authority dynamics.

Determining Your Human Capital Needs

To achieve the financial objectives must determine the level competency required at different levels. Also
can determine knowledge, skills and required experiences.

Developing a Human Capital Strategic Plan

Ideally, this include in how people are managed: hiring, appraisal, employee development, successing
planning, promotion, training, retention, compensation and reengineering.

In hiring process use the key competencies, training should focus on unproving competencies.
(research: competency based training has much higher ROI than skill based traning).

Succession planning should be based on competencies, skills and experiences.

A Worthwhile Effort

Some studies have shown that high performance human capital practices can contribute to up to 30% of
an organization market value. The investment is well worth.