New Human Capital Performance Metrics Maximize Workforce Productivity

The 80/20 Rule has long been an axiom for executives who tend to apply it to nearly every aspect of their businesses. The Rule postulates that 80 percent of results stem from 20 percent of activities; e.g. 80 percent of sales revenue is generated by 20 percent of the sales team—a soft metric for projecting the quality of workforce output.

            The 80/20 Rule is a troubling and unacceptable statistic. Why don’t more CEOs or managers question this dubious proposition that only 20 percent of the team is capable of producing optimum results? Perhaps the answer lies with standards and qualifications new hires and current team members are supposed to have. Despite the best efforts by human resource management, only a few become top performers. Something is missing.

            Development of a human capital performance metric through scientific research offers resolution of this ongoing workforce productivity issue. Workforce performance transformation is the goal of these science-based systems. A technologically-driven statistical formulation provides more accurate judging of the contributions of current employees and future hires. This approach focuses on replicating the top 10 percent, rather than the top 20 percent, of performers so that the rest of the organization can mirror their work habits, through practical results driven tools and outcomes. What is different is the basis of the data—the mapping of brain algorithms.

            Unfortunately, talent has always been perceived as a soft skill—a perception that only the few do the best work and are more responsible for increasing revenue than their peers. That changed with development of sustainable human capital metrics on productivity and outcomes to drive the strategy and enhance profitability.

Human capital metrics and brain algorithms

            Algorithm formulations that comprise human capital metrics were originated through a discipline seemingly unrelated to workforce optimization—psychotherapy. Psychotherapists have applied the mapping of brain algorithms for pain management. Since the algorithms proved invaluable for pain reduction, why could they not be mapped to influence productivity and outcomes? The goal is two-fold: discover and apply performance thinking algorithm mapping to replicate the thought processes and actions of the top-10 percent of performers; enhance profitability through application of these attributes to the rest of the team and future hires. Five years of research, study, testing and validation led to development of performance drivers referred to as Performance Thinking Quotient™ (PTQ), the software DNA of human capital performance metrics.

Scalable productivity

            PTQ is designed to be a scalable and sustainable metric to improve and especially enhance enterprise-wide productivity—in other words, a top-to-bottom data analysis of human performance execution. The mapped algorithms or PTQ of the top-10 percent are the foundations of a cloud-based software system of analysis for such productivity necessities as task execution, sales, operational efficiencies and process awareness. Its purpose: sustainably improve the bottom line.

            The technology serves as tool and a roadmap for executives who want to replicate the top-tier performers through four data points with the upper echelon 10 percent as the baseline:

1. Measurement: Quantify and qualify those drivers responsible for success.
2. Benchmarking: Every position and job family category is individually benchmarked, which is another example of applying scalability to the data.
3. Hiring: This is a crucial data point for most executives who want to make certain that new hires have the necessary performance execution skillsets and thought processes necessary to duplicate the 10 percent performers. In other words, achieve a goal of hiring top talent with a 90 percent success rate.
4. Development: Apply PTQ, human capital metrics and productivity tools to key employees and management teams to help them replicate the best practices of the top performers to their skillsets. The outcome eliminates the downside of the 80/20 Rule, by extending the quantity and performance increase by 10 to 30 percent throughout the workforce.

When business applies PTQ metrics

            The use of PTQ metrics represents a solution to one of the biggest challenges for HR departments and the executives who oversee them: measurement of productivity balanced against the value of the time and money spent on workforce management. Technological advancement has lessened the costs of investment and results have been dramatic.

            While serving as chief executive officer of an agribusiness company in California, James Lucas decided to use performance thinking algorithms in an effort to increase the hiring success rate and to enhance executive team understanding of personal performance drivers.  Lucas admitted his executives were skeptical at first, but quickly changed their minds.

            “These tools enabled managers to better identify areas within our existing employee base in need of development,” he said. The approach clearly worked because, according to Lucas, after one year of applying the metrics technology, the company’s sales “experienced double-digit growth (well above industry trends).” Lucas said retention rates at the facility more than doubled while he was CEO.

            Nexgen Pharma, a specialty pharmaceutical firm in Irvine, Calif., concentrated its use of the metrics and PTQ to target the best job applicants and found them to be of high value in assessing candidates during the front end of the hiring process. “It helped us define those who were in line with our needs (and) ensured a better fit to the job and our business, which saved us time and money,” said Jean Alfieri, Nexgen’s human resources director.

Lessons learned from human capital metrics

            There are three important guidelines when applying human capital metrics:

1. CEOs need to identify top talents and performance thinking that makes them successful. Consider them intellectual property.
2. Isolate key performance drivers during the hiring process through metrics.
3. Develop the talent to absorb and apply productivity thinking and processes of the top 10-percent performers.

            The ultimate outcome is the ability to sustainably improve the bottom line through leveraging scientific and objective metrics. By using human capital metrics based on top talent performance thinking, businesses have the ability to achieve more effective hiring, increase productivity and develop a competitive advantage.

About the Author

Gary Morais is chief executive officer of Bottom Line Results, LLC, Santa Barbara, Calif.  He developed brain mapping technology into a SaaS transformational software suite to improve business productivity and performance. For more information, please call 805 331-4964 or send email to gary@10Rule.com.