New Tool Helps Organizations Track Future Equity Value Creation Through People
Identifying the Return on People
Designed to Make Better People Management Decisions
Tracking the Critical Intrinsic and Extrinsic Factors
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Using Irrational Capital’s Human Capital Factor® Ratings System, independently validated to predict future equity value creation, organizations with
100 or more people can now identify the strengths and weaknesses of their employee engagement process; the degree to which people management can impact future value creation, and areas to address to enhance people performance.The Enterprise Engagement Alliance is making the Human Capital Factor Ratings Systgem available to qualified organizations in its community with at least 100 employees or more or having clients of that size or greater.
Identifying the Return on People
The new assessment service consists of two levels of surveys—one providing a snapshot, the other providing a deep dive—enabling organizations to pinpoint the specific strengths and weaknesses of their people management strategies and outcomes, pinpointing those with a proven impact on future equity value creation independently validated by J.P. Morgan’s quantum analytics department. The process includes the ability to benchmark results against an already created database of thousands of companies.
As explained by Bart Houlahan, Partner at Irrational Capital, West Conshohocken, PA and a Co-Founder of B-Lab, organizations of any type with at least 100 or more people can use the Human Capital Factor survey to more precisely identify the strength and weaknesses of their people management strategy as well as the areas in need of improvement. Organizations can conduct a lower-cost preliminary survey to get a snapshot of the current state of people management; or skip to the comprehensive report predictive of future equity value creation.
The Human Capital Factor was launched in 2017 by Dan Ariely, Ph.D., a Duke University professor and David van Adelsberg, an experienced entrepreneur and financial services executive, to develop investment opportunities based on quantifying the relationship between employers and employees. The company’s Human Capital Factor®, an independently verified investment factor, identifies publicly traded companies with the potential to deliver market outperformance tied to the exceptional qualities of their workforces.
Designed to Make Better People Management Decisions
Originally developed for the investment community, the company’s signal methodology can be used not only to make better investment decisions, it can also help organizations identify the areas where enhancing their relationship with their most important assets, their people, will potentially pay a rich reward in the form of future equity value. Both these opportunities – for investors and companies – is unique, the company claims.
As reported in ESM, The Holy Grail of Investing and HR: New Solution Connects Human Capital to Return on Equity, “According to the J.P. Morgan report published this month, the HCI (Human Capital Index) exhibits a perfect track record for calendar year performance, outperforming the benchmark in every single year of our sample. While it only did so marginally in three years, the overall performance record for this period is stellar. Even in 2024 year to date, it has managed to outperform a benchmark that has so far returned in excess of 20%...The implication is that since human capital is not accounted for on balance sheets, there exists the opportunity to gain enhanced returns by correctly identifying those companies which have superior human capital.”
The opportunity, and perhaps the key, is that the company uses this systematic rating system underpinned by up to 17 years of data. The alternative to access such a longitudinally rich data set would require years of waiting to ensure statistical significance and confidence, the company says.
Tracking the Critical Intrinsic and Extrinsic Factors
The elements which are tracked include the seven dimensions mentioned below:
Intrinsic Factors (Those element that are deeply personal, emotional and human and difficult to count.)
- Management (Direct and Senior): mutual respect, confidence, assistance, personal contribution, empathy, personal development.
- Emotional Connection: expectation, confidence, appreciation, purpose/meaning; psychological safety.
- Engagement: Retention, pride.
- Innovation: Diversity of perspective; new ideas.
- Organizational Alignment: values, strategic direction, open communication.
- Organizational Effectiveness: inter-departmental cooperation, quality, respect, potential, psychological safety, positive business outlook, positive culture outlook.
- The basics: Compensation (level), benefits (level), training hours, physical environment and more.
Click here for an article with more details on the implications of the Human Capital Factor for designing more effective people management strategies.
For More Information
Bruce Bolger, Founder
Enterprise Engagement Alliance
914-591-7600, ext. 230
Bolger@Theeea.org
Enterprise Engagement Alliance Services
Celebrating our 15th year, the Enterprise Engagement Alliance helps organizations enhance performance through:
1. Information and marketing opportunities on stakeholder management and total rewards:
- ESM Weekly on stakeholder management since 2009. Click here to subscribe; click here for media kit.
- RRN Weekly on total rewards since 1996. Click here to subscribe; click here for media kit.
- EEA YouTube channel on enterprise engagement, human capital, and total rewards since 2020
Management Academy to enhance future equity value for your organization.3. Books on implementation: Enterprise Engagement for CEOs and Enterprise Engagement: The Roadmap.
4. Advisory services and research: Strategic guidance, learning and certification on stakeholder management, measurement, metrics, and corporate sustainability reporting.
5. Permission-based targeted business development to identify and build relationships with the people most likely to buy.
Contact: Bruce Bolger at TheICEE.org; 914-591-7600, ext. 230.
