Human capital is the most important asset of every company. Without it, you can’t maintain clients or grow your business. This aspect of due diligence is so critical in the M&A process to see whether or not you are looking at the right company to acquire. Many of us would have felt by now that somehow, there is a relationship between human capital performance and corporate financial performance. But how do we exactly calculate the return on investment in human capital? Is it even calculable in financial terms? Joining Domenic Rinaldi to give some clarity on this is Dr. Solange Charas, a human capital metrics expert and the Founder and CEO of HCMoneyball, a technology company that provides an application for organizations to calculate their human capital metrics. It is inevitable that we are going to see a radical change in how we view human capital. Listen in to take a sneak peek of this exciting future!
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Dr. Solange Charas: Running The Numbers On Human Capital ROI
The human capital of a company is by far its most important asset. The people and the systems and programs that support those people can make all the difference in a company’s success or failure. Which is why this aspect of due diligence during an acquisition is critical to ensuring whether or not this is the right company to acquire. My guest, Dr. Solange Charas, is an expert in human capital metrics. In addition to her adjunct teaching positions at universities such as Columbia, NYU and USC, Dr. Charas has built a successful consulting practice and one of her proprietary tools is the HC Moneyball platform. This platform helps executives and M&A professionals understand, monitor, calculate and project ROI in human capital. She can do this without ever speaking with employees. Confidentiality is maintained and also limits the distractions to the employee base.
Her platform utilizes all the aggregate HR content in the data room or financial systems so acquirers and executive team that can obtain an objective view of the human capital. I found Dr. Charas’s information incredibly compelling and a must-read to anyone struggling with how to evaluate the people in an acquisition or how to properly manage the existing human capital in your own company to have the most successful and significant impact on the top and bottom line.
Before we get into this episode, if you want to avoid common deal pitfalls and the risk of losing substantial dollars, you need to know how ready you are for a transaction. I believe proper preparation is critical to your ideal success. I have developed a five-minute assessment that will allow you to immediately gauge how ready you are to buy or sell a business. You can access these free assessments and other free resources on our website at www.K2Adviser.com/resources. Being prepared is critical to ensuring that you maximize returns and minimize risks. Thank you for being here. I hope you enjoy this episode. Dr. Charas, it’s nice to have you here.
Thank you. I’m delighted to be with you.
We have got a great topic. I’m excited to talk to you about this. Before we get into it, if you could give everybody a short bio on yourself, I think they’re going to be fascinated with this topic.
I am in that human capital function. I’m an expert in human capital metrics. I got there in the strangest way that you would imagine. I got there through finance. My MBA is in Accounting and Finance with a minor in Taxation, which is not your typical background for an HR person. My entire career, I’ve always approached the HR function through this financial lens. I speak a completely different languages than most HR people speak. My clients used to say, “I’ve never met an HR person like you before.” I’ve always been at the cutting edge and done HR as if I were managing a financial function in the organization. I’ve been the Chief Human Resources Officer for three organizations, two financial services and one professional service. I was a consultant for Ernst & Young, Arthur Anderson and their tax group.
What I do now post-PhD is I spend about half of my time educating. I’m an Adjunct Professor at Columbia, NYU, and University of Southern California. I teach essentially three subjects. I teach Finance for Human Capital Management, Data Analytics and Quantitative Model Building, and also Human Capital Analytics, so it’s the same area, and I teach Total Rewards because typically the largest line-item expense for an organization is what they pay people. I’m teaching the next generation of HR professionals to look at human capital through a financial lens, through an operations lens versus a subjective HR management lens. Not that there’s anything wrong with that, but we need to think about human capital in a different way because it is impactful to an organization, so much so that the SEC has now said it’s material. We need to teach the next generation to understand the materiality of human capital management.
My view on that is your human capital is your number one asset more important than anything else. Without good human capital, you can’t maintain clients and you can’t grow your business. I always contend that’s your number one asset. You spend half of your time teaching and the other half?
The other half I spend dedicated to my company called HC Moneyball. It is a technology company that provides an application for organizations to instantly calculate their human capital metrics and be able to correlate the performance in human capital to corporate financial performance. We have the only platform that combines human capital information with financial information. In one visual, you can say, “My HCROI is going up and that’s corresponding to my EBITDA going up. We must be doing something right,” or identify where the problems are in the organization by tracking human capital performance.
I have to admit we had gotten introduced. When you told me what you did, you are the first person I’ve ever come across that’s put human capital into this context. The subjective part of it is important, but try to look at the financial metrics. You also have an extensive background in M&A as well.
I have been doing M&A since the mid-‘90s. I completed over 65 due diligence exercises or events from different perspectives from the board because I was a public company board director of a highly acquisitive organization. I’ve seen transactions from the board level. I’ve done it from the buyer side. When I was in one of my companies, we acquired about 25 companies in a year. As a buyer, I was doing all the HR due diligence. From the seller side, as a corporate executive, I prepared two organizations for sale. I know what it’s like to be a seller preparing a company. Also, as a transaction advisory services consultant, as a third-party providing input and guidance on understanding the economic value of a target organization.
Why don’t we start off with what are human capital metrics?
Human capital metrics is essentially a way to understand the trends and the accretive impact of the collective human capital in the organization. We’re looking at human capital in the aggregate. We’re trying to understand the trends and relationships of those performance indicators to financial performance indicators. There are about five human capital metrics that we know are closely related to a company’s financial performance. When I talk about financial performance, I’m typically talking about EBITDA, which is bottom line. This has been studied for about 40 years in the research community, in the academic community. The enlightened human capital and financial practitioners in the commercial world understand that there is a link between human capital and corporate financial performance.
The driver is typically a financial person who is not interested in digging down into Bobby Sue’s and Sally Jones’ experience in the Dallas office. That’s not what we look at. We don’t look at individuals. We look at trends in human capital in the organization. What are those trends? The biggest one is human capital return on investment. It is an algorithm. It’s easy to calculate. You don’t need to talk to anybody. We know that there is a strong relationship between Human Capital ROI or HCROI and EBITDA performance. We examined that and that’s an easy thing to calculate. We look at it month by month to see what the trends are and we can curate data from the data room. We don’t have to talk to anybody in the company. We’re purely doing financial analysis on human capital performance using secondary data. HCROI, productivity, investment in training and development has been shown to have a big and strong correlation to employee productivity, and employee productivity has a strong correlation to profitability. We look at things like attrition. When you have a lot of attrition in the organization, it is extremely costly.
Is this part of the five metrics attrition?
No, it’s the second level down. The five metrics are HCROI, Human Capital Value Add, which is essentially the rate each employee contributes to profitability. We look at the employee productivity in the organization. We look at expense ratio so the percent of total expense that goes to employees and employee programs, and we look at income ratio. We want to see a correlation between income ratio and expense ratio. We want to see that HCROI and HCVA are going up over time. We’re adding another indicator now called HEVA, Human Economic Value Add. It’s another algorithm. It’s another lens through which you can look at the organization and have a top line assessment as to whether or not your investment in human capital is generating a return for the organization.
That’s things like education programs, management succession programs and things like that.
It’s training, recruitment success and retention. Who are you retaining? It’s management stability. It’s the amount of training and development. We look at mobility, whether or not you move people through the organization. We know that organizations that have high mobility tend to have longer tenure. Employees want to move within the organization so they’ll stay with you. We look at all things related to equity. We look at pay equity and diversity in the organization. We don’t have to talk to anybody. This data already exists in the data room.
Does it exist in the data room? Aren’t you probably needing information that the normal financial transaction professionals are not asking for? I’ve seen a lot of data rooms and I’m not certain they get down to some of these levels when it comes to human capital.
In the human capital folder in the data room, we’re going to have I-9s. We’re going to have payroll records, however often the payroll is processed. Sometimes it’s monthly, bi-weekly, semi-monthly, but we’re going to have that. Usually, they put in org charts. We can see org charts by month or quarter. From an HR data perspective, if we’ve got listings of demographics by month, it’s a data dump from your HRIS system which is requested, or payroll by payroll period. We’ve got that data and then the other data we curate from the pre-closing trial balances for anything that’s coded to HR. That could be recruitment, onboarding, outside training or contractor costs. Anything that’s coded to HR is right there in the pre-closing trial balances. We curate that data and match it up to the payroll data and the employee demographic data dump, and we have everything that we need.
In a period that we’re in with COVID, how does that impact your modeling? Everything has been turned upside down. Some companies are benefiting from this and some are on the opposite end of the spectrum. How does your model accommodate for what’s going on?
The model accommodates based on the trend data. We know that COVID had an impact. A positive impact on some companies, a negative impact on others and a neutral impact on a segment of the market. We’re doing a lot of research in this area to understand how organizations have been impacted and what they need to do to prepare for the future of HR post-COVID. What we found is that there are a couple of industries that have been decimated. The food service industry with casual dining and elegant dining, the hospitality industry with hotels, cruise lines, airlines, they have been badly impacted. Other industries are thriving. Pharmaceuticals, the box shops like Costco and Amazon are exploding. Home improvement is exploding. We have to understand the exogenous variables, the outside variables to contextualize how an organization is going to perform in the future. We do that in my approach to due diligence.
We do a lot of internal analytics to understand trends over time, but we also do external analysis. We look at external competitiveness. We’ll pick 3 or 4 companies that are the most similar to the target that we’re doing the due diligence on that are publicly-traded. We look at their data over time. We know that COVID is an anomaly and as we emerge from COVID, some organizations are going to do great and others are going to have to rethink their business model. The way we’re looking at it is in a four-box. We have some organizations that are going to surge, some that need to do minor modifications to get back on track, some are going to have to do major modifications, and some are going to have to rethink their entire business model. We know what those organizations are based on some financial indicators like EBITDA to market cap and EBITDA to net debt. We can use financial indicators to place your company in the right box and then use that to inform what the strategy going forward should be to create a healthy human capital in your organization that is going to be sustainable, and support your financial projections going forward.
I would imagine many companies are trying to figure out what box are they in and what’s the right level of human capital resource that they should have. You’re hearing announcements every day, these big companies are going to furlough. Are they doing that in a vacuum? I’m assuming some of your modeling could help them think through what is the right amount of resource based on the trends.
There’s a strong correlation between HCROI and EBITDA and we can model the breakeven point. Human capital return on investment is a ratio. It’s measured as a dollar in and what’s the HCROI. For every dollar you invest in people and people programs in the organization, what return are we getting on that investment? For some organizations, it’s in the single digits. We always want it to be more than one because we don’t want for every dollar we invest in people to get a return that’s below our dollar. We’re always looking to make sure that the HCROI at a minimum is one. For some organizations depending on what industry you’re in, it could range anywhere between $1.80 or $4. I’ve looked at the mining industry, the energy extraction industry, and for a group of publicly-traded companies, their HCROI is in the $70s and $80s. For every dollar I invest in somebody, I get an $80 return back. It ranges and it’s based on your industry. That $70 or $80 might sound great, but if your competitors are getting $120 return, contextually you’re behind your competitors. You have to look at what your competitors are doing.
I would imagine during this period with M&A activity going on, if you’re looking at a target company that has suffered or one that’s doing well and maybe is looking for a premium valuation. Understanding these HR metrics are going to be critical for an acquire, to understand if that company’s right sourced. What’s going to happen if we come on the other side of COVID? If they’ve done well and they come back down to a level set, what does that mean for the whole operation?We need to teach the next generation to understand the materiality of human capital matters. Click To Tweet
It also matters on what you’re going to do with that company when you acquire it. Are you going to let it be a standalone and have a place in a portfolio? Are you buying that company to bolt onto and integrate into another? It’s important that you understand the metrics of both organizations if you’re going to integrate them. You could be harming your existing portfolio company by bolting on an organization that has lower human capital performance than the original company, and then expect that company to do even more. You’re hurting yourself. You need to understand whether or not these companies are aligned. Human capital ROI is a reflection of an organization’s philosophy around human capital. As you started this show, you said people are our greatest assets. The proof is in the pudding. If you’ve got one organization that does value and invest in human capital and one that doesn’t, you have an indication that you’ve got a culture clash.
The statistic is that 70% of all mergers and acquisitions fail to achieve the return on investment targets.
This is the time when I get to say, as Albert Einstein said, “Doing the same thing over and over again and expecting a different result is the definition of insanity.” These are 70% of the transaction that fails to meet their goals. It’s not that they’re failed transactions. They could be perfectly good transactions, but they failed to meet the goals established at the time of the transaction. We’re doing HR due diligence and financial due diligence the same way over and over again, and expecting a different result. What I’m suggesting is that we use a different and modern approach to HR due diligence that doesn’t look at the traditional things like compliance, unfunded liabilities, check the box on compensation, benefits, and on headcount.
It’s a balance sheet approach that is not telling us the whole story. You don’t look at a balance sheet of a company and expect to understand whether or not they’re a high or low-performing organization. You look at their income statement. You look at sources and uses of cash. You look at cashflow statement. You look at those things to get a story. Looking at human capital from a balance sheet perspective is not giving you the story. You have to look at human capital through an income statement approach. Look at things over trends. Understand how those trends are correlated to financial performance. If I could go back to one thing because I feel like I have OCD, which you can expect you’d want from somebody that’s doing due diligence. In my family, we have a little touch of OCD to the point where we don’t even call it OCD. We call it CDO because we want the letters in order.
My OCD kicked up because I didn’t get to finish answering one of your questions, which is how do we know whether or not we’ve got the right staffing levels and the right types of employees in the right jobs when we’re doing a transaction? I started to say that we can correlate HCROI which is like 1.8, 4.9, or whatever that trend of HCROI is to EBITDA, to find that break-even point. We can say that if your HCROI falls below 1.2, that’s when you start seeing a decline in EBITDA. We use that threshold level to prioritize and to analyze where we’re going to invest money, dollars in human capital. Does it make sense to put it all in cash payments? Does it make sense to invest in training and development? We can help organizations prioritize where they’re going to invest in human capital to improve that return number and not just guess because that’s what HR people do. As much as I love them, they run HR as if it were a belief system, a superstition, “I think we should do this or I think we should do that.” What I’m suggesting is you don’t need to base your decisions on superstition. You base it on data analytics and let the numbers tell you what to do.
How does this coexist with a management team’s thinking around how to invest in marketing or R&D? They’re looking at all of those other things and deciding how much money are we going to put in. How does this sit side by side with all of those other big questions that an executive team are asking themselves?
With human capital analytics, we have a way of comparing apples to apples. I’ll give you an example. I used to do this one when I was a Chief Human Resources Officer. I used to have people come to me to try to sell me things. Buy this technology-based performance management system or buy this technology-based applicant tracking system. My question to them is how much is it going to cost? What should my return on investment be? They would say, “This is going to cost you $250,000 and I’m not quite sure what your return on investment would be.” I would say to them, “Come back to me when you can tell me what my IRR, NPV, and ROI is going to be. How am I going to convince my CFO to pony up $250,000 to me when I can’t prove a return on that investment?” When the R&D guy is going to him or the operations guy is going to him and saying, “Give me $250,000 and I can guarantee this rate of return and this level of IRR.” You’re not giving me any ammunition to create a compelling argument. Human capital analytics is a way for you to value, cost and project the return on investment in human capital programs, human capital investment so that you can stand toe to toe with the other functions in the organization that speak a financial language while you’re out there speaking HR.
I would imagine it’s going to be tough for HR executives to get a seat at that table. They may have a seat t the table but they can’t talk while they’re there to get a mind share when people often equate cost with that function.
We know that it’s not simply an expense to the organization. It is an investment, an intangible asset, and it is material. That’s what the SEC said.
Do you have some specifics or some examples that you could point to especially if they’re in an M&A construct around how people would view this?
I’ll give you a good example of something that I did. This is a client example that was scrubbed. I’ll tell you the genesis of this. I was engaged to do an HR due diligence. I did this work in 2012. In 2012, we weren’t calling it human capital yet. We were still calling it HR. It’s a transaction for a technology-based organization. They were an $85 million company projected. The three-year projection was to grow to a $123 million revenue company with a cumulative $310 million. The projected EBITDA was $60 million. The cumulative EBITDA was about $64 million. That’s what the financial due diligence and the proformas had expected this company to produce.
Was this going to be on a stand-alone basis? Was this after the company would be integrated into the existing operation?
It’s a stand-alone. They brought me in and I did my traditional HR due diligence. This was back 2012, 2013. I’m looking at all the things, the traditional check the boxes, but then I also did my modern approach where I looked at the performance of the organization over time. I’m looking at competitors and at how the human capital aligns with the business strategy and the business model. The first clue was some of their metrics were a little wonky, so I wanted to dig into that. What metrics do is they tell you where you need to look. HR is a big topic. It’s like trying to find a needle in a haystack. It’s putting the organization through an MRI machine to figure out where the problem is and then you focus your attention there to unpack where the problem issues are.
One of the things that we identified was there was a mismatch in the organization structure to the business model. There was a sub-optimal approach to the staffing function. They had too many of one type of employee that was not driving revenue or profitability and not enough of another kind of employee. They were all engineers. We did some realignment so that we looked at employee productivity, we looked at the impact on EBITDA, and we made some recommendations on how they were staffing, how they were organized, and where they should be investing their human capital dollars.
Did the management have any inkling that maybe this was a problem before you did the analysis?
No, because the management designed that organization. They thought they were doing the right thing, but they were basing their human capital decisions on assumptions, guesses and beliefs. What we did is we showed them the data and they got it right away. The left-hand side is the proformas pre-acquisition. We changed the deal value because we said, “You will not be able to achieve your $310 million cumulative revenues with this organization structure.” We modeled it out and it resulted in a reduction in the deal price. In that instance, I was working for the buyer. Three years later out of curiosity, I went back to the organization and I said, “Will you share your actual performance with me? Just give me your three-year financial statements. I don’t need to see anything else.”
This is the actual performance achieved over that three-year period of time because they implemented my post-acquisition recommendations. We know that because I said to them, “You only need between 550 and 575 employees if you’re staffing your organization correctly. If you are staffing your organization at lower levels with less employees, you don’t need to add additional office space to house those extra 100 people.” If you looked at their proformas and the three-year projection, you can see that SGNA and real estate are the two biggest line item expenses for the organization. By being able to manage those two expense categories, we generated a much better outcome for them. You can see the proof is in the pudding. Another $37.5 million and cumulative EBITDA over the projected. Their profit margin went to 30% cumulative versus the 20% cumulative, which is an improvement of about 147%. It was a great story because they understood the inherent value of managing human capital the right way. We didn’t go in and change any of the programs. We just made strategic recommendations to them.
How do you know that the increase in revenue was a result of the HR strategies that you laid out for them and not some other program that was already in the works?
It’s hard to tease out exactly what the cause and effect were. We projected employee productivity. With technology companies, it’s all about productivity. You can see in the three-year actual company performance, they had much higher levels of employee productivity. Productivity is revenue divided by full-time employee, equivalent to FTEs. We might not have been the only reason their cumulative performance increased by about $25 million, but they couldn’t have done that if their employees weren’t as productive as they needed to be. We’ll take a little credit for that. We’ll take a lot of credit for EBITDA.
You had a model client that implemented your strategies. They hired you, paid you and they followed your model, which is sometimes a real challenge.
A lot of times organizations will say, “We don’t want to spend the money on that because we don’t think there’s any return there.” They spent between the due diligence work and the consulting work post-acquisition to help them with those HR strategies and the reorganization work. They spent about $90,000 on consulting fees with me and got a $37.2 million bump. That’s a nice return. Anything that they spend with me pre-due diligence gets rolled into the acquisition price and gets amortized. They didn’t even have that $80,000 hit in year one. They amortized it over three years.
What kind of information were you able to share with them ahead of time to support your findings? They had to get the comfort that you had some good numbers and you could show them you got a reduction in the purchase price for them. Not only did they buy into it, but the target company came to the realization that you were right. What kind of information were you able to share to get everybody comfortable?
That was the bitter pill that the company needs to understand that their human capital isn’t as healthy as they thought it was. You show them the numbers. I’m going to quote Mark Twain. He says, “There are three types of lies, lies, damned lies and statistics.” Just like your financial due diligence is using AI in some instances with sophisticated organizations to understand the financial performance of the company in each one of those expense and income categories, we’re using the same rigor. I don’t want to say I use AI, but I am using a form of AI. It’s not machine learning, but I am using feedback loops. I am using external data for benchmarking. I’m showing data. I’m showing you evidence.
It’s hard to not buy into that concept of data analytics when the proof is in the pudding. I chart out the relationships and they can see with their own eyes the correlation between HR analytics and corporate financial performance. Something that I had always thought intuitively is a relationship. You are now proving out with numbers and I can forecast those numbers too. I can look at trend data just as the financial due diligence experts. They’re looking at past performance and projecting out future performance. I can do the same thing with the HC information to understand the value that you’re buying and the accretive impact of human capital over time.
We’re looking for sustainability. That’s what everyone is looking for, but nobody looks at sustainability from their human capital, from their employees. We had one case where the financial due diligence guys went in. They gave the company a clean bill of health and at the last minute, they thought, “We’ve got about 500 employees. Maybe we should bring Solange to take a look at this.” What I discovered, which the financial due diligence people didn’t, and no offense to them but they don’t know what to look for, is that this organization had 77% attrition in its key-value driver position in the organization. No pun intended. They were drivers. This was a delivery company and their drivers were the key source of their revenue. They had 77% attrition.
Nobody picked that up in other diligence. How could they miss something like that?Don’t base your decisions on superstition. Base them on data analytics. Click To Tweet
Because they look at it like a balance sheet. They looked at headcount, January 1 and December 31. The numbers were close. It only showed that there were about 10% attrition in the starting balance and the ending balance. What they didn’t look at was the balance every month of a headcount because that’s an income statement approach and not a balance sheet approach. Everyone does human capital as a balance sheet. How many heads do we have? What are they costing us?
There must have been a tremendous loss of productivity. When you have that attrition, that’s got to wreak havoc on your company.
We were able to project the impact on productivity and the impact of productivity on revenue because we were able to understand the average level of revenue per employee. We calculated out this company that was doing about $55 million in revenue lost out on about $14 million of revenue because they had that instability in their revenue driver.
Did your client wind up walking away from that deal? Did they renegotiate it?
They renegotiated the deal. The other thing other than projecting out the impact on revenue, we were able to isolate that the cost of attrition was about $1.2 million, $1.3 million in hard dollar cost and recruiting costs. It’s not just the loss of productivity. It’s the out of pocket expense and recruiting 77% of your critical workforce. That $1.2 million could have fallen right to the bottom line if they had better management in place. I don’t want to blame the management for mismanaging. I’m blaming the management for not being aware. It was in their blind spot.
Somebody is going to be looking at those metrics and understanding that something is wrong.
We compared them to a benchmark set of organizations until the SEC or the investor community puts a stake in the ground about what needs to be reported for public companies and whatever public companies do. Private companies usually adopt it as best practices. We don’t know what the attrition rate is in other organizations or public companies. They don’t tell us, “We add 20% attrition.” They might in the future have to report that if employees are material, but we can get indicators from other things like HCROI, HCVA, and productivity because they tell us what their total headcount is. We curate data from other public sources as well for private companies like LinkedIn. If you buy a premium membership to LinkedIn, you can see information about the human capital of an organization. It’s not 100% reliable but it is close enough as they say for government work. We understood that the 77% attrition rate was high for the industry. It was high compared to their closest set of public company competitors. That’s not acceptable.
I know that you believe that the subjective has to go with the objective, that they’re both important pieces. You have to have the whole picture. For privately-held companies, there’s a ton of M&A activity going on in the lower middle market. Especially with companies who are somewhat healthy looking to pick up assets that are not healthy. They don’t have true HR departments. They can’t sometimes afford expensive consultants. Is there some advice that you would offer up to these lower middle-market private companies about how to approach this exercise, at least at the highest level to get a benchmark?
It’s not difficult to calculate some of these metrics. They are algorithms. They are in the public domain. The International Standards Organization, ISO, in January of 2019, released a standard called the Human Capital Governance Standard. It’s ISO 30-414. In that standard, which they issued because they believed that organizations that have higher levels of transparency perform better. They outperform organizations that have no transparency. This ISO standard is interesting because it’s not a standard that’s designed for investors for outside people. They want organizations to be transparent to their employees about an organization’s performance against these human capital indicators. They define HCROI. They define HCVA. I’ve written about it. If you Google me, I did an article for Financier Worldwide on doing HR due diligence in an M&A environment especially pre-COVID and post-COVID.
I defined the top five measures. You can also find that article if you go to HCMoneyball.com and look at our resource section. That will save you a need to do too many searches. I’ve given you the algorithm for all five top metrics. The thing about those top metrics is it’s like a treasure map. When you look at a target acquisition, you want to figure out where to dig either for the good stuff or for the bad stuff. What the HC metrics indicators do is it maps out that human capital landscape. It gives you an X mark to spot so that you can start digging where you need to dig and not think, “I’m in the Sahara Desert and everything looks exactly the same.”
It’s the first line of attack to say, “Do I have healthy or unhealthy human capital? If I have healthy human capital, what are those? What do I need to do to sustain that?” If the indicators are not good, then you need to figure out how to unpack that. Figure out if it’s a big fix or a little fix. That’s where we need those human capital experts, those program experts to dig down into the human capital area. I’m giving you the MRI view, then you hire your cardiologist, renal expert, the guy that works on your kidneys or your internist. You hire the specialist to deal with the issue that’s identified as being the problem.
These people are going to love this content. Human capital in my perspective is the most important thing, way more important than anything else. You’ve given people a platform to measure it. Thank you so much for being here. It’s been a pleasure.
Thank you, Domenic.
If people wanted to get in contact with you, how could they reach you?
They can write to me at [email protected]. You guys know about Moneyball. It’s the analytics approach to enhancing the Oakland A’s baseball, the Michael Lewis book. We’re doing the same thing. We’re optimizing the investment in human capital by using the rigor of data analytics to inform decision-making.
Thank you. It’s been a pleasure.
I hope you enjoyed this episode. If you enjoy our content, please remember to subscribe and review our show. I look forward to seeing you on the next episode. Until then, please remember that scaling, acquiring or selling a business takes time, preparation and proper knowledge.
- Financier Worldwide – article
- [email protected]
About Dr. Solange Charas
Human Capital expert with 25+ years experience as Consultant, Practice Leader, Top Corporate Executive, and Board Director across all industry sectors. Adept at the strategic C-Suite/Board level, as well as “roll-up-your-sleeves” tactical level. M&A Due Diligence expert with 70+ completed transactions.
PhD research proves a direct and statistically significant relationship between Boards (4% impact) and C-Suite teams (20% impact) and corporate profitability. Developed proprietary products to effectively create and manage high-performing work teams (PhD focus); and identify organizational effectiveness and ROI of human capital investment.
Creative and innovative HR leadership, program design and culture/climate change agent. Experience in leading large and diverse programs and staffs. Extensive international experience including competency in five languages. Certified Team Coach.
Areas of Expertise:
HR-driven Margin Optimization: Experienced in the analysis and re-engineering of HR process flows, benchmarking and organizational structure to improve operating margins affected by “people” costs as measured by Key Economic Performance Indicators (KEPI). Expert in facilitating collaboration and cooperation amongst various business stakeholders.
Project Management: Experienced in planning, organizing, securing, and managing resources to achieve specific goals related to time-bound strategic projects. Competencies in technical skills and management strategies to deliver project goals and objective, honoring scope, time, and budget constraints.
Mergers & Acquisitions, Divestitures and Post-transaction Integration: Subject matter expert in the HR M&A/Divestiture function with more than 50 transactions completed. Experienced in transaction post-close activities including identification of key business drivers, talent retention, organization redesign/combination and financial impact on margin optimization going forward.
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