Copyright 2001 by Accenture,IICR and Saratoga InstituteThese slides must be accompanied by a PDF document(HCStudy.pdf)entitled:“Human Capital ROI:Written Report”Human Capital Study:SlidesDr.Nick BontisDr.Nick BontisMcMaster Universitywww.Bnbontismcmaster.caCopyright 2001 by Accenture,IICR and Saratoga InstituteList of Participating Organizations1.01.0ABN 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 GroupHartford 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 InstituteQuantitative Metric Model2.02.0Human CapitalEffectivenessHuman CapitalValuationHuman CapitalDepletionHuman CapitalInvestment+_Copyright 2001 by Accenture,IICR and Saratoga InstituteDescriptive Statistics for HCV Sample-MeansFull-time regular employees13,149Part-time regular employees676Regular employees13,795Contingent employees1,820Total headcount16,353Total Full-time equivalents21,006Headcount:Executive3.2%Headcount:Supervisor12.7%Headcount:Professional41.7%Headcount:Administrative42.3%Average age:Executive48 yearsAverage age:Supervisor42 yearsAverage age:Professional38 yearsAverage age:Administrative38 yearsTenure:Executive15 yearsTenure:Supervisor:11 yearsTenure:Professional8 yearsTenure:Administrative7 yearsTotal compensation cost$998,173,818Average year of incorporation1902Total workforce trained12,823Total training cost$45,582,889Revenues$8,534,652,304Operating expenses$7,510,438,534Net profit after tax$659,560,770Return on assets4.86%2.12.1Copyright 2001 by Accenture,IICR and Saratoga InstituteHC Effectiveness-Revenue Factor2.2.12.2.1$0$100,000$200,000$300,000$400,000$500,000$600,000$700,000Revenue 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 IndustriesSaratoga Institute HRFR 1998 SampleCopyright 2001 by Accenture,IICR and Saratoga InstituteHC Effectiveness-Expense Factor2.2.22.2.2$0$100,000$200,000$300,000$400,000$500,000$600,000Expense 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 IndustriesSaratoga Institute HRFR 1998 SampleCopyright 2001 by Accenture,IICR and Saratoga InstituteHC Effectiveness-Income Factor2.2.32.2.3$0$10,000$20,000$30,000$40,000$50,000$60,000$70,000$80,000$90,000Income 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 IndustriesSaratoga Institute HRFR 1998 SampleCopyright 2001 by Accenture,IICR and Saratoga InstituteHC Effectiveness-Human Capital ROI2.2.42.2.40.000.501.001.502.002.503.00HC ROI2.702.141.771.502.072.002.15HCV Sample Banks Insurance-All Insurance-H&L Insurance-PCP Non-Bank Financials All IndustriesSaratoga Institute HRFR 1998 SampleCopyright 2001 by Accenture,IICR and Saratoga InstituteHC Valuation-Compensation Revenue Factor2.3.12.3.10.0%5.0%10.0%15.0%20.0%25.0%Comp Rev Fac13.3%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 IndustriesSaratoga Institute HRFR 1998 SampleCopyright 2001 by Accenture,IICR and Saratoga InstituteHC Valuation-Compensation Expense Factor2.3.22.3.20.0%5.0%10.0%15.0%20.0%25.0%30.0%Comp Exp Fac15.2%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 IndustriesSaratoga Institute HRFR 1998 SampleCopyright 2001 by Accenture,IICR and Saratoga InstituteHC Valuation-Compensation Factor2.3.32.3.3$0$10,000$20,000$30,000$40,000$50,000$60,000Comp 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 IndustriesSaratoga Institute HRFR 1998 SampleCopyright 2001 by Accenture,IICR and Saratoga InstituteHC Valuation-Executive Compensation2.3.42.3.4$0$50,000$100,000$150,000$200,000$250,000$300,000$350,000Exec 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 IndustriesSaratoga Institute HRFR 1998 SampleCopyright 2001 by Accenture,IICR and Saratoga InstituteHC Valuation-Supervisory Compensation2.3.52.3.5$0$10,000$20,000$30,000$40,000$50,000$60,000$70,000$80,000Super 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 IndustriesSaratoga Institute HRFR 1998 SampleCopyright 2001 by Accenture,IICR and Saratoga InstituteHC Investment-Development Rate2.4.12.4.10.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%100.0%Develop Rate82.2%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 IndustriesSaratoga Institute HRFR 1998 SampleCopyright 2001 by Accenture,IICR and Saratoga InstituteHC Investment-Training Investment2.4.22.4.2$0$200$400$600$800$1,000$1,200$1,400$1,600$1,800Train Invest$1,693$317$874$459$456$636$617 HCV Sample Banks Insurance-All Insurance-H&L Insurance-PCP Non-Bank Financials All IndustriesSaratoga Institute HRFR 1998 SampleCopyright 2001 by Accenture,IICR and Saratoga InstituteHC Investment-Training Cost Factor2.4.32.4.3$0$500$1,000$1,500$2,000$2,500Train 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 IndustriesSaratoga Institute HRFR 1998 SampleCopyright 2001 by Accenture,IICR and Saratoga InstituteHC Depletion-Voluntary Turnover2.5.12.5.10.0%2.0%4.0%6.0%8.0%10.0%12.0%14.0%16.0%18.0%20.0%Voluntary13.1%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 IndustriesSaratoga Institute HRFR 1998 SampleCopyright 2001 by Accenture,IICR and Saratoga InstituteHC Depletion-Involuntary Turnover2.5.22.5.20.0%1.0%2.0%3.0%4.0%5.0%6.0%Involuntary4.2%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 IndustriesSaratoga Institute HRFR 1998 SampleCopyright 2001 by Accenture,IICR and Saratoga InstituteHC Depletion-Total Separation Rate2.5.32.5.30.0%5.0%10.0%15.0%20.0%25.0%Total Depletion17.1%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 IndustriesSaratoga Institute HRFR 1998 SampleCopyright 2001 by Accenture,IICR and Saratoga InstituteSignificant Pearson Correlations2.62.61st measure and 2nd measurePearsonHuman Capital EffectivenessRevenue Factor Average tenure at company of Supervisors0.696*Revenue FactorAverage tenure at company of Administrative0.670*Expense FactorAverage tenure at company of Executives0.632*Expense FactorAverage tenure at company of Supervisors0.624*Expense FactorAverage tenure at company of Administrative0.647*Income FactorAverage tenure at company of Supervisors0.640*Human Capital ValuationCompensation FactorHeadcount percentage breakdown of Executives0.686*Human Capital InvestmentTraining cost per trained employeeAverage age of Executives-0.847*Training cost per trained employeeAverage age of Professionals-0.942*Training cost per trained employeeAverage tenure of Professionals-0.895*Human Capital DepletionVoluntary turnoverAverage tenure at company of Administrative-0.705*Copyright 2001 by Accenture,IICR and Saratoga InstituteAreas of Concern3.13.125567910111213172329303105101520253035Relational CapitalStructural CapitalKnow ledge GenerationEducationValue AlignmentMotivationKnow ledge SharingHuman CapitalKnow ledge IntegrationEmployee SatisfactionEmployee CommitmentProcess ExecutionRetention of Key PeopleBusiness PerformanceManagement LeadershipCopyright 2001 by Accenture,IICR and Saratoga InstitutePerceptual Means:Lowest and Highest 103.23.2LOWEST 10LOWEST 10P77Information systems include employee knowledge.3.243.24P39Our systems(e.g.,files and databases)contain knowledge that is easily accessible.3.473.47P61Our time to market for new products and services is better than our competitors.3.493.49P42Our organization has methods for capturing and retaining the knowledge of its workforce.3.513.51P40We have a system for continually refreshing our knowledge base.3.523.52P58Our organization exploits new business opportunities quickly.3.573.57P76Our organization has effective mechanisms for capturing individual employee knowledge anpackaging so that it can be shared with others.3.643.64P44Our organization captures and utilizes information from suppliers.3.683.68P75Employees systematically document and pass on their knowledge.3.683.68P46Our organization captures and utilizes information from trade associations.3.713.71HIGHEST 10HIGHEST 10P36Our employees generally have the intelligence and aptitude to succeed.5.535.53P47We nourish our corporate relationship with the community.5.445.44P7Employees commit to their assigned tasks to completion.5.435.43P33Competitors target our key personnel for recruitment.5.415.41P80Our companys reputation in the marketplace is favorable.5.405.40P38Our systems(e.g.,files and databases)contain useful knowledge.5.245.24P32Recruits perceive that our employees are well respected within the industry.5.195.19P35Employees have the necessary knowledge,skills,and competencies to succeed.5.125.12P81We provide adequate value to our shareholders.5.035.03P11Employees are highly qualified for their positions.5.035.03NOTE:Items based on Likert-type scales from 1(strongly disagree)to 7(strongly agree).Copyright 2001 by Accenture,IICR and Saratoga InstituteSample Item Statistics-Satisfaction,Commitment and Education3.3.13.3.1EMPLOYEE SATISFACTION(Alpha=0.8509)P1Employees are satisfied working here.4.831.030.8400.7190.806P2The workplace environment/climate would be described as satisfactory.4.881.130.8060.6710.818P3Employees are generally satisfied with their roles and responsibilities.4.771.020.8900.7980.785P4Employees are satisfied with working conditions.4.991.070.7070.5650.846P5Employees are satisfied with their opportunities for advancement.4.361.020.7160.5710.843EMPLOYEE COMMITMENT(Alpha=0.8916)P6Employees demonstrate commitment to the organization through high performance.4.931.290.8560.6120.862P7Employees commit to their assigned tasks to completion.5.431.120.8150.6130.877P8Employees are dedicated to achieving the overall strategy.4.881.210.8760.6790.856P9Employees feel a sense of belonging to the organization.4.711.400.8070.6060.878P10Employees would say they feel a sense of ownership regardingorganization success/results.4.421.280.8280.6380.867EDUCATION(Alpha=0.8641)P11Employees are highly qualified for their positions.5.031.080.6830.5340.869P12The general level of education in the organization is relatively high when compared to the industry.4.811.060.7760.6490.846P13Employees receive the appropriate training for their jobs.4.371.160.8730.7810.813P14Training and development is available to anyone who needs it.4.431.380.8660.7720.813P15The company has established the mindset and systems necessary to support employees continuing education needs.4.231.400.8260.7140.830 Mean Std.Loading Item to Alpha if Dev.Construct deletedCopyright 2001 by Accenture,IICR and Saratoga InstituteCorrelation Matrix of Constructs-Part 13.4.13.4.1 1 2 3 4 5 6 7 1Employee Satisfaction1.0000.7250.4470.7810.7140.5710.585 2Employee Commitment0.7251.0000.5000.7710.6280.7240.696 3Education0.4470.5001.0000.4590.6000.5070.691 4Employee Motivation0.7810.7710.4591.0000.6490.6730.734 5Value Alignment0.7140.6280.6000.6491.0000.7150.565 6Retention of Key People0.5710.7240.5070.6730.7151.0000.650 7 Human Capital0.5850.6960.6910.7340.5650.6501.000 8Structural Capital0.4190.3570.3170.4200.4290.3390.335 9Relational Capital0.3810.2700.1840.3880.4230.4130.27510Management Leadership0.5990.5530.5020.6780.7710.7220.52611Process Execution0.5350.4360.3390.4810.4280.3820.42112Knowledge Generation0.5000.5150.3580.5480.6150.5150.51513Knowledge Sharing0.6630.6350.4740.7270.7120.6700.61514Knowledge Integration0.4380.4240.5240.4640.5470.5830.60915Business Performance0.3940.5600.3070.5660.3790.4010.501NOTE: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 InstituteCorrelation Matrix of Constructs-Part 23.4.23.4.2 8 9 10 11 12 13 14 1Employee Satisfaction0.4190.3810.5990.5350.5000.6630.438 2Employee Commitment0.3570.2700.5530.4360.5150.6350.424 3Education0.3170.1840.5020.3390.3580.4740.524 4Employee Motivation0.4200.3880.6780.4810.5480.7270.464 5Value Alignment0.4290.4230.7710.4280.6150.7120.547 6Retention of Key People0.3390.4130.7220.3820.5150.6700.583 7 Human Capital0.3350.2750.5260.4210.5150.6150.609 8Structural Capital1.0000.2880.5260.5740.6250.4700.356 9Relational Capital0.2881.0000.3740.3180.3790.3560.48310Management Leadership0.5260.3741.0000.3990.6150.7090.51511Process Execution0.5740.3180.3991.0000.7040.5060.45012Knowledge Generation0.6250.3790.6150.7041.0000.6090.48613Knowledge Sharing0.4700.3560.7090.5060.6091.0000.59014Knowledge Integration0.3560.4830.5150.4500.4860.5901.00015Business Performance0.4830.3210.3960.5230.5360.4970.290NOTE: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 InstituteHC Conceptual Model4.04.0ManagerialLeadershipValueAlignmentRetention of Key PeopleHuman CapitalDepletionBusinessPerformanceEmployeeSatisfactionEmployeeCommitmentEmployeeMotivationEducationHumanCapitalRelationalCapitalHuman CapitalEffectivenessStructuralCapitalProcessExecutionKnowledgeIntegrationKnowledgeGenerationKnowledgeSharing0.7510.5060.4750.5300.3260.3600.3580.7340.4560.4290.4300.285-0.233-0.372-0.3370.3270.4390.5430.4910.3940.2620.3070.442R2=28.5%R2=28.5%R2=68.2%R2=44.1%。