Upload
ali-anani-phd
View
2.792
Download
0
Embed Size (px)
DESCRIPTION
This presentation offers new indicators to measure employee performance, which are based on the modification of established financial ratios
Citation preview
Employee BankruptcyRatio
Ali Anani
Employees as Assets and Capital
Employees are assets and capital. So, why not apply financially-derived indicators to evaluate their performance?
Unfortunately when we and the systems we are in are under stress, we can become less flexible and less able to accept the uniqueness of individuals. The higher the stress, the more control we exhibit. The greater the control, the less likely people will function at their best.
Examples of Possible Applications
Employee Performance Score
instead of Financial Credit
Score
Employee Survival Ratio instead of
Company Survival Ratio
Survival Ratio of Companies
Human assetsTotal employee assets
Replace this with employeesknowledge
Retained Employees/ Total Employees
Survival Ratio
Notice the importance of assets. Employees may turn into liability and thus kill the company
Or, the bankruptcy predictor
Employee Value CalculatorPerformance Bankruptcy Predictor
Cost of DisengagementRemember that disengagement renders the employee as liability instead of assetThe cost is both financial and psychological
Motivation
Disengagement
Disengagement Cost Calculation- Base Scenario
Notice that the cost of the annual cost totals $ (564408)
http://www.baselinemag.com/c/a/Projects-Management/How-Much-is-an-Employee-Worth/
0000000
Disengagement Cost Calculation
Notice that lowering the percentage of disengaged employees from 60% to 30% and increasing the moral of disengaged employees from 40% to 60% reduces the annual cost of disengagement to almost one third. The human factor is of overriding importance
0000000
Net Worth Value Of an Employee
I developed this dynamic worksheet based on the grand work of Paul A. Strassmann. The net worth of an employee is negative. Replace this value with the net worth value in the Almans’ Z-Score and the survival of a company becomes critical
Net Worth Value Of an Employee- 2
Notice how reducing the number of employees from 10 to 6 renders the net worth of an employee positive. This shows how employees may be an asset or a liability greatly influencing the survival ratio of a company
A Great Lesson to Learn
The previous discussion highlighted the sensitivity of the survival ratio to
the human factorI propose the development of an Employee Survival Ratio to better
predict the insolvency and possible bankruptcy of companies
Financial Credit Score
Like we have a financial credit score per employee why not
consider developing Performance Credit Score per
employee
Credit Formula CalculationPayment history is 35% Work History is 35%
Employees who conform to work hours and completion of tasks on time with high credit
Credit Formula Calculation
Debt level is 30% Employee Benefits Level (30%)
Employees who conform to work hours and completion of tasks on time with high credit
Credit Formula Calculation
Length of credit history 15%Length of Performance History 15%
Dynamic evaluation system as it takes time into consideration
Credit Formula Calculation
Inquiries are 10% Too Many Complaints 10%
Frequent complaining lowers productivity
Credit Formula Calculation
Mix of credit is 10% Mix of activities 10%
Lack of focus of employee
Conclusion
We need to turn financial ratios into human employee
performance ratio to arrive at better prediction of the future