This preview shows page 1. Sign up to view the full content.
Unformatted text preview: yee.
Algebra is used to factor in the number of people employed (P):
R – MC – D
Value added Average
per person cost per employed
(ACP) The equation determines an average personnel cost per
person employed (ACP) and the value added per person
(VAP). What exactly does VAP reveal? To answer this
question, consider the following simple graphic:
D Employees generate revenues (R) from their customers,
so the simplest productivity metric is revenues per person
(R/P). Many companies use this metric. But to generate Workonomics (continued)
A More Useful Way to Calculate Profit
revenues, employees need materials, which are represented by MC (material costs), and they use machines and
other assets that are accounted for through depreciation
(D). They add value by leveraging these inputs. So a more
sophisticated productivity metric recognizes material
costs and depreciation through the following equation: ductivity per employee and the average personnel cost
per employee, multiplied by the number of employees.
This equation links the control of HR performance with
the key ﬁnancial metric. If a company uses a ﬁnancial
metric other than EBIT (such as economic proﬁt), the
equation could be readily adjusted. (R – MC – D) / P These new HR metrics are easy to calculate for companies or business units. Value added per person can be the
starting point for understanding the productivity of business units and for adequately compensating value-added
performance, as well as for controlling personnel costs
and head counts. The resulting insights into people performance will enable companies to make smarter and
better-balanced decisions, especially if their goal is to cut
costs wisely in times of crisis. This term in the second equation is referred to as value
added per person. Therefore, EBIT can be written as: = (VAP – ACP) P
In this restated version, EBIT is expressed through three
people-oriented metrics as the diﬀerence between pro- Total Workforce Management at Deutsche Telekom Deutsche Telekom, the global telecommunications group,
rolled out a successful implementation of strategic workforce planning in two-thirds of its German business units
in 2008 and 2009. By 2010, the company was ready to widen the scope of the program to launch Total Workforce
Management (TWM). Alongside the existing quantity and
cost dimensions, Deutsche Telekom added skill, demographic, and quality dimensions, and then rolled out the
new program internationally. Concurrently, HR integrated
itself not only in the planning process but also throughout
the entire management cycle, including strategic and ﬁnancial planning, monitoring, and controlling processes.
The program has three goals:
◊ To develop a systematic approach that will optimize
medium-term internal and external capacities
◊ To derive strategic HR initiatives from a comprehensive
and detailed view of all relevant workforce dimensions
◊ To enable HR business part...
View Full Document
This document was uploaded on 09/30/2013.
- Fall '13