Thursday, March 30, 2006

For CEO's and CFO's - Workforce Performance Improvement Tools

Workforce Performance Improvement -
the challenge for CEO's and CFO's
Since the beginnings of modern business, CEO's have complained that tools for predicting and improving the bottom-line performance of their workforces did not exist. For many years they were right. (But no longer - see below.)

The reason for the lack of tools lies in the myopic and narrow focus the human capital (HR) industry has had on the individual as unit of measure. And the past as predictor of future performance.

However, work outside the HR industry has generated both research and tools:
for CEO's to use as instruments of improvement;
for CFO's to measure and predict by.

Research and Articles
Research on 100 companies by McKinsey and London School of Economics (LSE) has recently been published that shows the powerful impact changing the Operating Dynamic of the workforce has on profits and performance. (The Operating Dynamic is an attribute of the company - not the individual.)

The study showed that improving the operating dynamic by 20% is the (total factor productivity) equivalent of increasing the workforce by 25%. Other startling findings also.

Every ambitious CEO should know about this. And every CFO, whose role is that of diagnostician and forecaster.

The research is summarized at Companies Increase Financial Returns by 40%. (A link to the full McKinsey / LSE paper is provided there.)

Two articles on using the Operating Dynamic (the organization as unit of measure) as both a predictive (CFO) and a transformative (CEO) tool can be accessed below. These were based on empirical observation of more than 200 organizations over twenty years - independent of McKinsey/LSE study. The first paper appeared in Corporate Finance Review, the second in American Banker.

Action Step
CEO's and CFO's who are interested in triggering a significant (10%+) surge in bottom-line performance, and are not afraid to look at the operating dynamic of their companies, should contact Tom FitzGerald at There is, of course, no obligation; we know this is not for everyone.

Thursday, March 23, 2006

What No CEO Should Do . . . without

 CEO's are required to play guessing games about a measure that is more significant than either the financials or the KPI's.

No CEO would attempt to run a company without a careful eye on its financials. If there were the slightest question, they would be looked at again and again.

No managing officer would take responsibility for the success of an organization without staying on top of its KPI's and process metrics.

In any professionally run company, these measures are prepared regularly. No board would permit the company to be without. No manager would guess at them or take someone else's word for them. Or even his own "gut feel." They would be measured; they would be analyzed. The company's survival is on the line.

However, there is a measure of even greater importance that is missing. It is the Operating Dynamic Index - The ODI. It is almost never made available. Yet it is the measure that allows managers to:
Trigger significant bottom line improvements*
Predict future performance **

The Operating Dynamic is that complex of organizational and human factors that underlies, drives and impels performance - present and future. The Index is the full organizational analog of the balance sheet or P&L.

While the financials and the KPI's both measure the past, the Operating Dynamic is actually, in the moment, creating the future, its measures are predicting the future. And the value of this Operating Dynamic is being GUESSED!!. As if it cannot be measured. As if it is too "soft" for hard numbers.

But this is not the case. It is possible to quantify the Operating Dynamic - with hard numbers - easily, quickly and reliably.

We have been measuring and working with the Operating Dynamic of companies since 1980. Now, with advances in technology, we can offer that service more rapidly and more reasonably than ever.

It is something no manager should be without. As an added bonus, the ROI's are very high*.

For more information, contact us at 847-599- 9960 or by email at There are, of course, no strings attached.

* For a short piece on this subject see Companies Increase Financial Returns by 40%
** See Predicting and Preempting the Corporate Heart Attack

See also our Home Page and Chapter of the Week