4G Human Capital

Application

Linking Behaviour to Bottom Line Performance

Increasing Profits per Employee

While profits per employee are a good measure of human capital, the real
challenge is knowing how to increase them.

Human Capital Benefits Human capital formance over the long term.
> Increase profits per employee
> Link behaviour to the bottom line As organisations grow, retaining and As an antidote, one might place greater
> Quantify the amount of friction in teams improving financial performance emphasis on the role of intangibles and
> Optimise the deployment of people becomes increasingly difficult. The human capital as a focus for driving
> Raise the quality of working relationships need to develop efficient processes and continued success.
to generate superior returns are just
Please note, this document is intended to two examples of this. In light of this, the importance of intan-
accompany the human capital demonstra- gibles and their impact on financial
tion of the Visual Team Builder. This can be The challenge of balancing size and performance only increases. When we
found at the link below. financial performance is compounded speak about intangibles, we do so with
by two other factors. The first is that the idea that brands, technology, inno-
http://www.fourgroups.com/capital capital is no longer a scare resource. vation, knowledge and intellectual
While capital always seeks the best property all contribute significantly to
returns, its supply and availability has the profits and competitive advantage
increased such of their respective owners. What is also
An Example 4G Situation that it is unlikely apparent is that underpinning these
Degree of Psychological
Comfort to be a limiting intangibles are the people who make
No effort
Minimal effort
factor on a com- them a reality.
Some effort
1Si Significant effort pany’s growth.
The second is the If the superior management of people
2Ti increasing speed outlines one possible route to
of technological improved organisational performance,
innovation and how can we measure and define this
2Fe
how it shapes financially? Perhaps the simplest
1Ne industries and answer is to look at profits per employ-
competition. The ee. When measuring intangibles or
3Te
upshot of these human capital, profits per employee
factors suggests has a number of advantages.
it is becoming
2Ti
tougher to main- • It can be compared over different
3Fi tain superior per- periods and benchmarked against com-
Increasing Profits per Employee
petitors
• Comparing across different capital
structures and accounting rules is possi-
ble
• It takes into account different sized
organisations
While profit per employee is a good
measure of human capital and the con-
tribution it makes to financial perform-
ance, the real challenge is knowing
how maximise its impact.
Our solution
In order to raise profits per employee,
Four Groups have created a formula
linking people’s behaviour and their
relationships to measures of financial
performance. Called Relationship
Friction, the formula allows organisa-
tions to ask ‘what if’ questions about
the best means of deploying their peo-
ple. In answering the questions, the
formula outlines a series of steps that
generate an increase in profits and
profits per employee.
What is the human capital applica-
tion for Relationship Friction?
By linking Relationship Friction data to
existing financial measures such as rev-
enues or costs, it is possible to link the
behaviour of individuals and groups to
the bottom line. Having placed a finan-
cial value on a historically intangible
measure (you can’t manage what you Who are we?
can’t measure), two broad applications Four Groups work with a new approach to human
for human capital follow. capital. Our focus is on measuring and increasing
the economic returns from intangibles such as
The first application looks at linking behaviours, relationships and culture.
behaviours to indicators such revenues
aggregate or segmented calculation of
or costs for example. The focus is on
profits per employee can also be used.
how people are best deployed and
what tasks and roles provide the great-
Many organisations are likely to have a
est financial return. The formula for
combination of groups, some of whose
Relationship Friction makes it possible
performance is directly linked to a
to create more financially efficient cir-
financial measure and some whose
cumstances for teams and individuals.
performance isn’t. However, the two
In the case of teams, it is possible to
groups can be combined, allowing an
manage team composition, reporting
entire organisation to manage and
lines and overall organisational design
increase their profits per employee.
against the backdrop of Relationship
This is done regardless of how the
Friction and financial performance.
organisation is structured and how its
From an individual perspective, lower-
financial information is measured.
ing each individual’s Relationship
Friction contributes to an increase in
How does Relationship Friction
their own and overall group perform-
work?
ance.
The formula for Relationship Friction is
While Relationship Friction lends itself
based on a new approach to behav-
very well to groups and teams whose
iours, relationships and culture called
performance has a direct link to a
4G. Collecting the data pertaining to 4G
financial measure, showing a return on
is the starting point before one can cal-
human capital when this isn’t the case
culate Relationship Friction.
requires a different approach. In this
instance, activity based costing and
Collecting the data for 4G is a very
profits per employee provide a method
quick and simple process. People gen-
to link the performance of these groups
erally need an hour, split between a
back to a financial measure. Activity
short briefing, an online personality
based costing enables a more precise
questionnaire and a feedback session .
application of Relationship Friction.
When using 4G for Relationship
However, if this is not available, an
 Increasing Profits per Employee

Friction, there is also a need to know

the relevant individual’s salaries. Once
this data has been collected, it is possi-
ble to calculate and analyse
Relationship Friction, making specific
recommendations and changes as
appropriate.

While the exact formula for

Relationship Friction is proprietary to
Four Groups, Four Groups are happy to
make it available to interested clients,
if requested.

What is 4G based on?

Building on the information for

Relationship Friction, 4G is a proprietary
approach to predicting relationships,
behaviour and group cultures. Based in
part on the work of Swiss psychiatrist
Carl Jung, 4G incorporates measures of
people’s strengths, creativity, motiva-
tion and weaknesses. The model con-
tains 16 definitions of individual’s
behavior, 14 different relationship
types and 4 examples of group culture.

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