Hack:
The Bill of Health Index: HR Metrics that Motivate Optimum Productivity for Sustained Growth and Business Continuity

This approach to institutionalising an HR that is precise, and prepared for a partnership that is sustainable; and not merely speaking the language of the bottom line, but going beyond it to ensure sustained optimum productivity; derives from the philosophy of Immanuel Kant.  He argued to the effect that nature has a secret plan that is unfolding in a universal history, which is to culminate in the institutionalisation of a culture that is capable of making the model human. This history has been noted in business, and HR; as well as in psychology and philosophy. In a broader context, the industrial and information revolutions actually define two, 2 phases of the evolution of human civilisation. Bottom line, the industrial revolution exposed the human propensity for waste. This became obvious with the advent of the six-sigma, 6σ technique, which also suggested the procedure as the solution. The information revolution sealed this suggestion with the emphasis on data. Data has been defined to include factual information, often in the form of facts or figures; including numbers, text, images, and sounds. The typical standard procedure is actually a system of facts, in series. Ultimately, the solution suggested in this work seeks to institutionalise a work culture, in which 20%ters are made.

The work culture that is suggested includes an appraisal model that evaluates the contribution of the workforce to sustainability as a function of customer satisfaction, C_SN and financial security, F_STY formally as follows:

While C_SN depends on productivity, X_TY and the return on investment, ROI the F_STY derives from reward, Rw and the business environment, E_B which are actually reciprocals. Formally:

The fundamental assumption that underlies this relationship is that reward is optimal at duality, for Rw = 2. Then E_B would be a measure of the person’s contribution to the business environment. For E_B > 1, this would indicate greed, as the person would have taken more than their due share of reward. And for E_B < 1, this would be an indication of waste; due to under employment, when the staff are not at their optimum. To motivate the optimum performance at task, the appraisal model operates on the following principles:

• One for all, all for one
• From each according to their ability, to each according to their need
• What gets measured, gets done
• What we reward, we get

The first, 1^st principle is typically military. It is operationalised on the model by varying the ROI. In the first, 1^st measure, the individual ROI, ROI_F is used. The model is run a second, 2^nd time with the organisational ROI, ROI_Org. This measures the capacity for sustainability for each personnel, SusF as well as the organisation, SusOrg. The observed appraisal, AppO is the ratio of the individual, on the organisational value. This figure is divided by the expected appraisal, AppE to find the appraised value for each person. This ensures that each one is evaluated uniquely against themselves, as well as against the group.

This model actually measures the person’s actual contribution of the ROI to the organisation. This means that the ROI that is used in the sustainability measurement, ROI_PC is a predicted value, from the following relationship:

The factor-C is actually a measure of the character of consistency or conduct. It is evaluated from the measure of phenomenological compression, Pc which is the capacity to reduce the infinite number of items that describe phenomena, for N = ∞ into the essential five, 5 for N = 5. This is operationalised in the approximation of the natural order, N-O by the personal order, P-O when the standard procedure is derived. This makes the standard procedure the analogue of the N-O. Then a person’s ability to perform at task would be determined by the capacity to approximate the standard procedure. And need would imply the deviance from this standard. In this case, skill is described as the capacity to perform at task by the standard procedure. This provides the basis to operationalise the second, 2^nd principle. Then, the synergy, S_GY that the person derives from the organisation is evaluated as the ratio of the appraised ROI, ROI_App on the predicted ROI, ROI_Pc. This measure distinguishes between the leaders and the others in the organisation, according to the following two, 2 conditions:

• In general for the leadership, individual synergy, S_GYF would be less than the organisation’s S_GYOrg for S_GYF < S_GYOrg
• It is sufficient however that individual synergy, S_GYF is less than duality, for S_GYF < 2

It is usually necessary to fulfil both conditions because of the unpredictability that characterises people who are not 20%ters. It confuses the data, as indicated on the tables presented below.

Thus, the typical organisation gives two, 2 kinds of reward as follows:

• ROI, for the 20%ters and
• Synergy, for the others, whose abilities or expertise are improved upon

When the ROI is monetised, ROI then the monetary reward is apportioned according to the ROI that each person contributes. This would be larger for the 20%ters than for the others, but the latter would have been compensated by their enhanced abilities. The ROI is monetised according to the following relationships:

ROI = Profit / ROI

        Profit = Sales – Costs

       ROI = Sales / Costs

This levels the playground, so that every staff is evaluated and rewarded according their contribution of ROI_App to the organisation. It does not matter whether they are engineers, accountants, sales and marketing, or HR; whether they are line or subsidiary staff.

For the establishment of this model, the ROI_App is related to the ROI_Pc by a factor of ten, 10 for ROI_App = 1/10 ROI_Pc, as indicated on the above tables. This relationship is repeated between the ROI derived by accountants, ROI_Acct  and the ROI derived from the perspective of HR, ROI_HR for ROI_HR  = 1/10 ROI_Acct as on the chart and data presented below:

These two, 2 relationships are bases to establish the measure of ROI, as well as its monetisation, ROI presented in this work. The underlying arguments are presented below:

Given the following two, 2 relationships, from accountancy:

Sales = Profit + Costs: Profit = Sales - Costs

Sales = VA + CM: Value Added, VA = Sales – Cost of Materials, CM

The desire would be to establish a third, 3^rd relationship, which predicts VA:

VA’ = 2Profit – ROI: ROI = CM

With the assumption that profit is optimum at twice the investment, the following two, 2 relationships would hold:

Profit = ½ Sales: Which values profit at two, 2 units, for profit = 2

Profit = Costs: Sales is valued at four, 4 units, for Sales = 4; from Sales = Profit + Costs

But Profit = Sales – Costs; from which the following two, 2 relationships are derived:

 ROI = Sales / Costs: ROI = 2; the ROI is actually the index equivalent of profit

ROI = Profit / ROI: ROI = 1; which reverts the index into its monetary equivalent

Then, the following hierarch would hold:

• Sales would have an index of four, 4 for Sales = 4
• The value added, VA would have an index of three, 3 for VA = ¾ of Sales
• Profit would have an index of two, 2 for Profit = ½ of Sales
• The ROI would have an index of one, 1 for ROI = ¼ of Sales

And, the quantity of entropy, ENT generated in the organisation, F_ENT would be evaluated as the ratio of the predicted value added, VA’ on the actual value, for F_ENT = VA’/VA. This is the sustainability index. It is optimum within the following limits: 0.7 ≤ F_ENT ≤ 1.43

The business continuity index, BCI is also evaluated by predicting the profit factor or bottom line, by the following relationships:

%VA = Value Added / Sales

% ROI = ROI / Sales

%Pr = Profit / Sales

%Profit’ = √ (%VA x % ROI)

When this factor is evaluated over a certain period of time, it is correlated with the actual measure for the period, to find the BCI as 2 – r, for r = the correlation coefficient. Recall the assumption that reward is optimum at duality. Then the BCI would be best at a unity, for BCI = 1.

A third, 3^rd index, the value creation index, VCI is also evaluated as the ratio of the ROI on the cost of materials, CM. Recall that the ROI actually predicts the CM. Like the F_ENT, this is an annual measure. And like the BCI it is also evaluated all time, over a certain period, by taking the correlation, r of ROI and CM. Then VCI = 2 – r. Notice that the BCI and VCI are evaluated on the same scale of measurement. Notice also that they are inverses. The relativity average of these factors is therefore taken, to measure the bill of health index, BHI for BHI = √ BCI x VCI). A sample data of these indices is presented for two, 2 organisations below:

These two, 2 organisations are radically different. The first, 1^st creates stupendous value, for VCI = 176.4386. Apparently, its expenditure on materials is minimal. But it is lower than the second, 2^nd on profit and bottom line, which’s expenditure on production materials, is enormous. When both the value creation and profitability scores are combined however, the second company turns out better, with BHI scores of 14.86 and 2.14 respectively. The first, 1^st organisation is closer to being occluded by its environment. It needs to check the pricing of its products, to make it commensurate with the cost of materials. The first, 1^st organisation manufactures cement, and is located at the source of materials; the second, 2^nd makes cars.

A third, 3^rd sample data is also presented below, for a service company. The value creation and profit indices are closer to the optimum, and this gives the organisation a better bill of health than the other two, 2. While the data on profit are related 98% of the times, the data on value creation are related merely 21% of the times.

The methodology employed in these analyses is founded on the following three, 3 principles:

• When the P-O is evaluated against the N-O a gap is observed, which defines Entropy
• This creates work, for which energy is required, to minimise gap and reduce entropy
• If greater entropy is not to be created, then work must be according to specifications

The entropy contribution is evaluated by measuring the observed gap, which is done on the f-scale, f0 and the correlation coefficient, r. Both of these are keyed to the normal curve, and therefore operate on the same scale of measurement. The energy component is evaluated as a slope, against the relativity principle, which is reduced to the number line. But it also anchors on the normal curve, which is achieved when the absolute of the number line is taken. The anchor is operationalised on the duality series, which has been assumed to outline the N-O. And the circle closes!!!

This defines self-containment, in which all the energy that is required within a system is given; so that it runs in circles, with no apparent beginning or end. This positions the intellect to resolve the paradoxes that characterise nature. It also defines the human potential, which the organisations participate to mould, when they create the opportunity for work. This paradox is embedded in the three, 3 assumptions that underlie this work:

• Reward is optimum at twice the investment, for sales = 2 profit and ROI = 2
• The cost of materials, CM predicts the monetised ROI, ROI for ROI = f CM
• The duality series outlines the natural order, N-O

The first, 1^st assumption feeds on the human propensity for greed, which is hardly fulfilled; and creates entropy when it is attained, as exemplified in the cement industry sampled above. While the aim would be to maximise profit infinitely, this only creates the potential for chaos, which people desire to avoid. In the second, 2^nd assumption, ROI and CM cannot be equal in reality. The ROI only increases when CM drops. These paradoxes are accounted for by the function, f that links sales and profit, as well as the ROI and CM. This would be defined as dual, for f = 2; which is the basis for the first, 1^st and third, 3^rd assumptions. In mathematical parlance, relativity, duality, and normality are represented by the following relationships, respectively:

• L = 1/A₂ F²: F = √ (LA); ROI = Sales / Costs: an index
• L = 2F ± 1: F = (L ± 1) / 2); Profit = Sales – Costs: a monetary value
• A₂ = 1: ROI = Profit / ROI : the monetary value is retained

The second, 2^nd relationship is the differential of the first, 1^st; as the third, 3^rd becomes. In other words, relativity or the paradox is resolved by duality only when the latter corresponds with normality. Duality is a differential and defines a vector quantity. The duality model therefore at once represents growth, +1 and depreciation, -1. Normality is a scalar, with no definite direction or sign. And relativity is actually an acceleration quantity, which defines the rate, F at which normality changes, in either direction. As a fraction, the factor-F depicts depreciation. And as an integer, it is growth that is depicted. This allows both scores to remain positive, albeit that they define antonyms. In terms of the specific quantity that defines value, the paradox is resolved by the following relationship:

           Z =   1 / (1 – 1 / X)

This converts a positive integer, X that is best at a unity, for X = 1 and depreciates as the value of X increases; into another positive integer, Z that is best at infinity, for Z = ∞ and depreciates as the value of Z decreases. Later in this work, the equality of unity and infinity is demonstrated, for 1 = ∞. These relationships recur through out the analyses.

For this appraisal model to be implemented however, following which the relevant indices can be derived, a knowledge bank needs to be created. This involves the systematic reduction of jobs into duties, activities, and subsequently, tasks; and then to standardise the procedure for the performance at each of the tasks. The jobs are derived from a consideration of the organisation’s vision, mission, objectives, and values. The bank creates a data base for the following analyses:

• Employment
• Performance Appraisal
• Skill Gaps
• Reward

For the skill gaps, skill, f0 is defined as the capacity to perform at task by the standard procedure. The score is best at a unity, for f0 = 1. This is when the standard is approximated exactly. It is optimum at f0 = 0.7, when only one, 1 of the four, 4 items on the scale is missed. And at f0 = 0.4, the staff would require to be trained on the particular skill, for missing out on two, 2 items. At f0 = 0.1, three, 3 items would have been misplaced and a change of departments, jobs, or profession might be advised. And at f0 = -0.2, which is the worst score when all four, 4 items are misplaced, a lay-off might be advised.

When the knowledge bank is created for organisations, it is the organisational kit, Org-K. It can also be prepared for professional institutes, as the kit for the particular institute. In these cases, the subjects are scored on the standard procedure, √n and core values, Vc respectively. This is based on the assumption that it is a person’s core value that determines their choice of professions. The goal is to ensure that job, profession, and talent are aligned. Talent is evaluated on the Pc-Kit and the Rn-Kit at once. While Pc defines phenomenological compression, Rn defines rationality as the capacity to reduce phenomena into the essentials. Talent is important because of another assumption that when it is found, work becomes a play. This is more so when the alignment is fully made. Then the effort that is involved in the learning process is made, willingly with minimum grumbles. Effort is a function of the following two, 2 factors:

• Attention, which is required at a 100%, for the period of …..
• Time, that is needed for the learning to be accomplished

This is different for individuals, according to their rates of absorption. Recall however that at play, this becomes a non-issue. It is at work that effort becomes a fuse, when the recommended alignment is out. This is manifested on the C-Score, which betrays both domain expertise and conduct, at once. Recall that this score predicts how much ROI that the person is able to make. Recall also that it is derived from the factor-Pc. And thirdly, apart from the 20%ters, for the others who may not be aligned, their appraised ROI_APP at work is not predicted by this score of the ROI_Pc. Note from the data however that the gap between the scores decrease as the factor-C improves and approaches unity, for C → 1 and Pc → 1. Fourthly, recall that the synergy, Sgy that is derived from the organisation is less for the 20%ter leadership who give, than for the others, who benefit expertise. It would therefore not make sense to employ a candidate who’s C-Score or ROI-Score is less than the organisation’s! This would only dilute the established culture.

In the same way as the factor-f0 is evaluated for each task uniquely, it is also evaluated all time, from the factors Rn and Pc. In both cases however, objectivity, f0 is evaluated as the approximation of the N-O. The following relationships hold in the latter derivation:

The factor-Fc is a measure of focus, which is the same as the measure of the factor-C, for C = (3Pc - 3) / 4. Moreover, focus actually derives from effort. The unit value of objectivity, f0 is measured on the F-Scale presented below:

Note the recurrence of ten, 10 as the index that connects sensation, Sn to objectivity, f0. As demonstrated on sales, 4 value added, 3 profit, 2 and the monetised ROI, 1 the first, 1^st second, 2^nd third, 3^rd and forth, 4^th items on the f-scale are indexed 4, 3, 2, and 1 respectively. When these values are summed, as required by the scale, it gives ten, 10.