Copyright © 2001 by Accenture, IICR and Saratoga Institute
These slides must be accompanied by a PDF document (HCStudy.pdf) entitled:
“Human Capital ROI: Written Report”
Human Capital Study:Slides
Dr. Nick BontisMcMaster University
Copyright © 2001 by Accenture, IICR and Saratoga Institute
List of Participating Organizations1.0
ABN AMRO North America Inc. Allstate Insurance CompanyAMP Australia AMP UK Andersen Consulting Aon AXA Client Solutions Blue Cross Blue Shield of Florida Blue Cross Blue Shield of Illinois / Texas Blue Cross Blue Shield of North Carolina CNA Commercial Insurance EquitaxFarmers Insurance Group
Hartford Financial ServicesHewitt Associates, LLCIntermountain Health Care International Monetary Fund Merrill LynchNational City Corp. Northwestern Mutual LifePenn National InsurancePNC BankSavings Bank of UticaUnited Health Group Zurich U.S.
Copyright © 2001 by Accenture, IICR and Saratoga Institute
Quantitative Metric Model2.0
Human CapitalEffectiveness
Human CapitalValuation
Human CapitalDepletion
Human CapitalInvestment
+
+
_
Copyright © 2001 by Accenture, IICR and Saratoga Institute
Descriptive Statistics for HCV Sample - Means
Full-time regular employees 13,149 Part-time regular employees 676
Regular employees 13,795 Contingent employees 1,820
Total headcount 16,353 Total Full-time equivalents 21,006
Headcount: Executive 3.2% Headcount: Supervisor 12.7%
Headcount: Professional 41.7% Headcount: Administrative 42.3%
Average age: Executive 48 years Average age: Supervisor 42 years
Average age: Professional 38 years Average age: Administrative 38 years
Tenure: Executive 15 years Tenure: Supervisor: 11 years
Tenure: Professional 8 years Tenure: Administrative 7 years
Total compensation cost $ 998,173,818 Average year of incorporation 1902
Total workforce trained 12,823 Total training cost $ 45,582,889
Revenues $ 8,534,652,304 Operating expenses $ 7,510,438,534
Net profit after tax $ 659,560,770 Return on assets 4.86%
2.1
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Effectiveness - Revenue Factor2.2.1
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
Revenue Factor $602,039 $226,411 $528,648 $478,446 $399,369 $315,368 $357,567
HCV Sample
Banks Insurance -
All Insurance -
H&L Insurance -
PCP Non-Bank Financials
All Industries
Saratoga Institute HRFR 1998 Sample
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Effectiveness - Expense Factor2.2.2
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
Expense Factor $526,417 $178,582 $413,398 $450,073 $375,260 $252,057 $282,500
HCV Sample
Banks Insurance -
All Insurance -
H&L Insurance -
PCP Non-Bank Financials
All Industries
Saratoga Institute HRFR 1998 Sample
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Effectiveness - Income Factor2.2.3
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
Income Factor $36,514 $42,037 $64,612 $18,107 $61,373 $78,379 $64,112
HCV Sample
Banks Insurance -
All Insurance -
H&L Insurance -
PCP Non-Bank Financials
All Industries
Saratoga Institute HRFR 1998 Sample
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Effectiveness - Human Capital ROI2.2.4
0.00
0.50
1.00
1.50
2.00
2.50
3.00
HC ROI 2.70 2.14 1.77 1.50 2.07 2.00 2.15
HCV Sample Banks Insurance -
All Insurance -
H&L Insurance -
PCP Non-Bank Financials
All Industries
Saratoga Institute HRFR 1998 Sample
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Valuation - Compensation Revenue Factor2.3.1
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Comp Rev Fac 13.3% 15.8% 8.1% 14.8% 9.8% 15.5% 22.8%
HCV Sample
Banks Insurance -
All Insurance -
H&L Insurance -
PCP Non-Bank Financials
All Industries
Saratoga Institute HRFR 1998 Sample
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Valuation - Compensation Expense Factor2.3.2
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Comp Exp Fac 15.2% 20.0% 9.5% 12.2% 12.0% 21.8% 27.0%
HCV Sample
Banks Insurance -
All Insurance -
H&L Insurance -
PCP Non-Bank Financials
All Industries
Saratoga Institute HRFR 1998 Sample
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Valuation - Compensation Factor2.3.3
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Comp Fac $54,024 $32,509 $41,046 $37,588 $40,900 $46,531 $44,445
HCV Sample Banks Insurance -
All Insurance -
H&L Insurance -
PCP Non-Bank Financials
All Industries
Saratoga Institute HRFR 1998 Sample
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Valuation - Executive Compensation2.3.4
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
Exec Comp $290,082 $93,353 $192,192 $153,703 $150,013 $166,139 $217,299
HCV Sample
Banks Insurance -
All Insurance -
H&L Insurance -
PCP Non-Bank Financials
All Industries
Saratoga Institute HRFR 1998 Sample
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Valuation - Supervisory Compensation2.3.5
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
Super Comp $71,271 $57,241 $72,296 $68,914 $73,653 $70,259 $74,035
HCV Sample
Banks Insurance -
All Insurance -
H&L Insurance -
PCP Non-Bank Financials
All Industries
Saratoga Institute HRFR 1998 Sample
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Investment - Development Rate2.4.1
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Develop Rate 82.2% 56.9% 74.2% 87.9% 61.1% 59.1% 66.3%
HCV Sample
Banks Insurance -
All Insurance -
H&L Insurance -
PCP Non-Bank Financials
All Industries
Saratoga Institute HRFR 1998 Sample
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Investment - Training Investment2.4.2
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
Train Invest $1,693 $317 $874 $459 $456 $636 $617
HCV Sample
Banks Insurance -
All Insurance -
H&L Insurance -
PCP Non-Bank Financials
All Industries
Saratoga Institute HRFR 1998 Sample
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Investment - Training Cost Factor2.4.3
$0
$500
$1,000
$1,500
$2,000
$2,500
Train Cost $2,083 $740 $767 $966 $1,352 $1,036 $1,019
HCV Sample
Banks Insurance -
All Insurance -
H&L Insurance -
PCP Non-Bank Financials
All Industries
Saratoga Institute HRFR 1998 Sample
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Depletion - Voluntary Turnover2.5.1
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Voluntary 13.1% 18.8% 12.6% 12.6% 11.9% 18.6% 14.7%
HCV Sample
Banks Insurance -
All Insurance -
H&L Insurance -
PCP Non-Bank Financials
All Industries
Saratoga Institute HRFR 1998 Sample
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Depletion - Involuntary Turnover2.5.2
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Involuntary 4.2% 5.5% 5.1% 5.4% 3.0% 4.4% 4.9%
HCV Sample
Banks Insurance -
All Insurance -
H&L Insurance -
PCP Non-Bank Financials
All Industries
Saratoga Institute HRFR 1998 Sample
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Depletion - Total Separation Rate2.5.3
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Total Depletion 17.1% 23.4% 19.0% 18.3% 13.9% 23.4% 19.1%
HCV Sample
Banks Insurance -
All Insurance -
H&L Insurance -
PCP Non-Bank Financials
All Industries
Saratoga Institute HRFR 1998 Sample
Copyright © 2001 by Accenture, IICR and Saratoga Institute
Significant Pearson Correlations2.6
1st measure and 2nd measure Pearson
Human Capital Effectiveness
Revenue Factor Average tenure at company of Supervisors 0.696**
Revenue Factor Average tenure at company of Administrative 0.670**
Expense Factor Average tenure at company of Executives 0.632**
Expense Factor Average tenure at company of Supervisors 0.624**
Expense Factor Average tenure at company of Administrative 0.647**
Income Factor Average tenure at company of Supervisors 0.640**
Human Capital Valuation
Compensation Factor Headcount percentage breakdown of Executives 0.686**
Human Capital Investment
Training cost per trained employee Average age of Executives - 0.847**
Training cost per trained employee Average age of Professionals - 0.942**
Training cost per trained employee Average tenure of Professionals - 0.895**
Human Capital Depletion
Voluntary turnover Average tenure at company of Administrative - 0.705**
Copyright © 2001 by Accenture, IICR and Saratoga Institute
Areas of Concern3.1
2
5
5
6
7
9
10
11
12
13
17
23
29
30
31
0 5 10 15 20 25 30 35
Relational Capital
Structural Capital
Know ledge Generation
Education
Value Alignment
Motivation
Know ledge Sharing
Human Capital
Know ledge Integration
Employee Satisfaction
Employee Commitment
Process Execution
Retention of Key People
Business Performance
Management Leadership
Copyright © 2001 by Accenture, IICR and Saratoga Institute
Perceptual Means: Lowest and Highest 103.2
LOWEST 10
P77 Information systems include employee knowledge. 3.24P39 Our systems (e.g., files and databases) contain knowledge that is easily accessible. 3.47P61 Our "time to market" for new products and services is better than our competitors. 3.49P42 Our organization has methods for capturing and retaining the knowledge of its workforce. 3.51P40 We have a system for continually refreshing our knowledge base. 3.52P58 Our organization exploits new business opportunities quickly. 3.57P76 Our organization has effective mechanisms for capturing individual employee knowledge an
packaging so that it can be shared with others. 3.64P44 Our organization captures and utilizes information from suppliers. 3.68P75 Employees systematically document and pass on their knowledge. 3.68P46 Our organization captures and utilizes information from trade associations. 3.71
HIGHEST 10
P36 Our employees generally have the intelligence and aptitude to succeed. 5.53P47 We nourish our corporate relationship with the community. 5.44P7 Employees commit to their assigned tasks to completion. 5.43P33 Competitors target our key personnel for recruitment. 5.41P80 Our company's reputation in the marketplace is favorable. 5.40P38 Our systems (e.g., files and databases) contain useful knowledge. 5.24P32 Recruits perceive that our employees are well respected within the industry. 5.19P35 Employees have the necessary knowledge, skills, and competencies to succeed. 5.12P81 We provide adequate value to our shareholders. 5.03P11 Employees are highly qualified for their positions. 5.03
NOTE: Items based on Likert-type scales from 1 (strongly disagree) to 7 (strongly agree).
Copyright © 2001 by Accenture, IICR and Saratoga Institute
Sample Item Statistics - Satisfaction, Commitment and Education3.3.1
EMPLOYEE SATISFACTION (Alpha = 0.8509)P1 Employees are satisfied working here. 4.83 1.03 0.840 0.719 0.806P2 The workplace environment/climate would be described as satisfactory. 4.88 1.13 0.806 0.671 0.818P3 Employees are generally satisfied with their roles and responsibilities. 4.77 1.02 0.890 0.798 0.785P4 Employees are satisfied with working conditions. 4.99 1.07 0.707 0.565 0.846P5 Employees are satisfied with their opportunities for advancement. 4.36 1.02 0.716 0.571 0.843
EMPLOYEE COMMITMENT (Alpha = 0.8916)P6 Employees demonstrate commitment to the organization through high
performance. 4.93 1.29 0.856 0.612 0.862P7 Employees commit to their assigned tasks to completion. 5.43 1.12 0.815 0.613 0.877P8 Employees are dedicated to achieving the overall strategy. 4.88 1.21 0.876 0.679 0.856P9 Employees feel a sense of belonging to the organization. 4.71 1.40 0.807 0.606 0.878P10 Employees would say they feel a sense of ownership regarding
organization success/results. 4.42 1.28 0.828 0.638 0.867
EDUCATION (Alpha = 0.8641)P11 Employees are highly qualified for their positions. 5.03 1.08 0.683 0.534 0.869P12 The general level of education in the organization is relatively high when
compared to the industry. 4.81 1.06 0.776 0.649 0.846P13 Employees receive the appropriate training for their jobs. 4.37 1.16 0.873 0.781 0.813P14 Training and development is available to anyone who needs it. 4.43 1.38 0.866 0.772 0.813P15 The company has established the mindset and systems necessary to
support employees' continuing education needs. 4.23 1.40 0.826 0.714 0.830
Mean Std. Loading Item to Alpha if Dev. Construct deleted
Copyright © 2001 by Accenture, IICR and Saratoga Institute
Correlation Matrix of Constructs - Part 13.4.1
1 2 3 4 5 6 7
1 Employee Satisfaction 1.000 0.725 0.447 0.781 0.714 0.571 0.585 2 Employee Commitment 0.725 1.000 0.500 0.771 0.628 0.724 0.696 3 Education 0.447 0.500 1.000 0.459 0.600 0.507 0.691 4 Employee Motivation 0.781 0.771 0.459 1.000 0.649 0.673 0.734 5 Value Alignment 0.714 0.628 0.600 0.649 1.000 0.715 0.565 6 Retention of Key People 0.571 0.724 0.507 0.673 0.715 1.000 0.650 7 Human Capital 0.585 0.696 0.691 0.734 0.565 0.650 1.000 8 Structural Capital 0.419 0.357 0.317 0.420 0.429 0.339 0.335 9 Relational Capital 0.381 0.270 0.184 0.388 0.423 0.413 0.27510 Management Leadership 0.599 0.553 0.502 0.678 0.771 0.722 0.52611 Process Execution 0.535 0.436 0.339 0.481 0.428 0.382 0.42112 Knowledge Generation 0.500 0.515 0.358 0.548 0.615 0.515 0.51513 Knowledge Sharing 0.663 0.635 0.474 0.727 0.712 0.670 0.61514 Knowledge Integration 0.438 0.424 0.524 0.464 0.547 0.583 0.60915 Business Performance 0.394 0.560 0.307 0.566 0.379 0.401 0.501
NOTE: > 0.307 correlation is significant at the 0.01 level (2 tailed)> 0.270 correlation is significant at the 0.05 level (2 tailed)
Copyright © 2001 by Accenture, IICR and Saratoga Institute
Correlation Matrix of Constructs - Part 23.4.2
8 9 10 11 12 13 14
1 Employee Satisfaction 0.419 0.381 0.599 0.535 0.500 0.663 0.438 2 Employee Commitment 0.357 0.270 0.553 0.436 0.515 0.635 0.424 3 Education 0.317 0.184 0.502 0.339 0.358 0.474 0.524 4 Employee Motivation 0.420 0.388 0.678 0.481 0.548 0.727 0.464 5 Value Alignment 0.429 0.423 0.771 0.428 0.615 0.712 0.547 6 Retention of Key People 0.339 0.413 0.722 0.382 0.515 0.670 0.583 7 Human Capital 0.335 0.275 0.526 0.421 0.515 0.615 0.609 8 Structural Capital 1.000 0.288 0.526 0.574 0.625 0.470 0.356 9 Relational Capital 0.288 1.000 0.374 0.318 0.379 0.356 0.48310 Management Leadership 0.526 0.374 1.000 0.399 0.615 0.709 0.51511 Process Execution 0.574 0.318 0.399 1.000 0.704 0.506 0.45012 Knowledge Generation 0.625 0.379 0.615 0.704 1.000 0.609 0.48613 Knowledge Sharing 0.470 0.356 0.709 0.506 0.609 1.000 0.59014 Knowledge Integration 0.356 0.483 0.515 0.450 0.486 0.590 1.00015 Business Performance 0.483 0.321 0.396 0.523 0.536 0.497 0.290
NOTE: > 0.307 correlation is significant at the 0.01 level (2 tailed)> 0.270 correlation is significant at the 0.05 level (2 tailed)
Copyright © 2001 by Accenture, IICR and Saratoga Institute
HC Conceptual Model4.0
ManagerialLeadership
ValueAlignment
Retention of Key People
Human CapitalDepletion
BusinessPerformance
EmployeeSatisfaction
EmployeeCommitment
EmployeeMotivation
EducationHumanCapital
RelationalCapital
Human CapitalEffectiveness
StructuralCapital
ProcessExecution
KnowledgeIntegration
KnowledgeGeneration
KnowledgeSharing
0.751
0.506
0.475
0.530 0.326 0.360
0.358
0.734
0.456 0.429
0.430
0.285 - 0.233
- 0.372
- 0.337
0.327
0.439
0.543
0.491
0.3940.262
0.307
0.442
R2 = 28.5%
R2 = 28.5%
R2 = 68.2%
R2 = 44.1%