ADVANCED HUMAN CAPITAL

Human Capital Analytics

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INTRODUCTIONWe believe that human capital can only achieve its full potential to create corporate value if it is more fully synchronized with both business strategy and financial outcomes. A well-conceived business strategy is, of course, critical, but business success or failure is largely determined by the rigor and effectiveness of execution through people.

Aligning strategy, finance and human capital, and specifically enabling more effective collaboration among the executives primarily responsible for each (CEO, CFO, CHRO) requires a different and more progressive approach to human capital data and analytics.

The focus of most human capital analytics today is on operational measures; for example, factors that influence the ability to hire and retain employees. While important, these measures fail to tie human capital to anything but costs (often implied, such as the direct and indirect costs of unwanted turnover). There is little ability to capture the true economic value of effectively managed human capital and, as such, human capital’s strategic and economic value is both underrepresented and managed without reliable productivity and ROI metrics. Ankura’s human capital analytics is closing this gap by enabling businesses to understand the true economic value of human capital investments and resulting productivity in the context of the organization’s strategy.

Ankura’s progressive human capital finance methodologies, developed in collaboration with investment analysts and private equity deal teams, enable client organizations to deploy and develop workforce assets to drive operating profit and EBITA gains. They enable a far better understanding of the economic value of a company’s most strategic capabilities and of the specific employee roles that enable them. The net effect is better and faster decisions about human capital investments as well as a framework for measuring human capital as though it were a tangible, balance sheet asset, rather than merely a cost.

Ankura’s human capital analytics solutions use existing data, mine new data and apply refined analytical methods to more effectively integrate business strategy, human capital development and deployment, and targeted financial outcomes, including short-term and future operating profit. We do this through 3 related service offerings:

• Human Equity Valuation (HEV)

Human Resources strategy development and implementation is a pivotal factor in maximizing a company’s investment in its workforce. This strategy is far more powerful when supported by measures that the C-suite views as objective and credible. Human Equity Valuation (HEV) provides the tools necessary to develop a focused, financially astute human capital strategy that responds to the new realities facing management teams everywhere. HEV translates employee productivity into traditional financial measures of stakeholder value. The HEV statements – Impact Statement, Asset Statement and Flow Statement, which mirror traditional

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Financial Performance

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GAAP statements – identify the roles that most significantly contribute to the organization’s ability to build its competitive advantage. Further, HEV analytics pinpoint areas where the organization can improve in driving outcomes, namely in the capabilities of the people hired, in team structures and alignment, in operating norms and work processes, or wherever people intersect with making the strategic vision a reality. The iterative nature of HEV is an innovative, continuous improvement process that advances HR’ s business impact with the tools, knowledge and solutions necessary for connecting strategy to the workforce and investing limited financial and human capital resources more effectively.

• Value-Based Talent Management (VBTM)

The roles that create the most value in your organization may not be at the top. Getting the right people in these critical roles has a disproportionate impact on company performance. The key is to focus first on roles – the ones that create this outsized value – then on the people in those roles. Using a variety of analytical techniques, VBTM enables companies to identify the distinct organizational activities and capabilities that collectively create the most significant advantage in the marketplace. It links strategy to differentiated capabilities to specific role competencies, which reveals the roles most directly responsible for creating corporate value and competitive advantage. This enables a more objective, portfolio approach to talent investment and development. This in no way diminishes the importance of people, in these or any other roles.

HOW WE HELP

HUMAN CAPITAL ANALYTICSProgressive human capital finance methodologies that enable client organizations to deploy and develop workforce assets to drive operating profit

ORGANIZATIONAL CULTURE TRANSFORMATIONShape an organizational culture that enables strategy execution

EXECUTIVE COACHING AND LEADERSHIP ADVISORYImprove executive team decision-making, create greater strategic and operational alignment and change agility

ORGANIZATIONAL DESIGN AND STRUCTURERedesign the organization to reduce costs and increase agility and strategic alignment

HUMAN RESOURCES FUNCTIONAL TRANSFORMATIONReimagine the HR function as a strategic force in the talent-first economy

M&A HUMAN CAPITAL INTEGRATIONClear strategies and practical solutions to effectively hedge M&A and PE human capital risks and drive value across the entire investment life cycle

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ManagementDevelopment

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FinancialWellness

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Labor Strategy

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PolicyManagement

TeamDevelopment

WorkforceComposition

EmployeeEngagement

OrganizationDesign

Job Design

Recruiting

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Outsourcing

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RecognitionSystems

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HR DataManagement

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High performing and high potential individuals are critical to success. When we speak of the importance of human capital, we are certainly including these valuable people. However, there are roles, the top 1% to 2% in terms of value, which must be treated as so important that decisions about who occupies these roles must be considered independent of the impact on the feelings of, or career implications for, their current occupants. Beyond this, VBTM enables a company-wide perspective on which roles do and do not create differentiating value which enables better decisions about how to treat both the highest and lowest value roles.

• Workforce Cost Optimization

For most companies today, the more obvious and less painful cost reduction opportunities often have been realized; management is now facing tougher, more complicated decisions. Cut too deeply or in the wrong areas and they risk disrupting the core business or necessary innovation. Cut too shallowly and the business will be in a constant state of fear and uncertainty. Since human capital is typically a company’s first or second largest operating expense and controllable cost, it is inevitably part of the cost containment equation. In today’s talent-driven economy it is also the most potent source of corporate value creation.

Ankura enables companies to engage in workforce cost containment as a continuous process and in a way that preserves strategic workforce investments. Ankura’s workforce optimization process involves a rigorous analytical examination of job roles, team structures and organization design, identifying those areas misaligned with the company’s strategy. Organizational structure should follow function. As organizations evolve, the rationale for adding headcount often drifts. This analysis enables leaders to quickly and continuously identify these misalignments before they become entrenched and harder to change.

THE ANKURA DIFFERENCEOur professionals believe em-ployees are every organization’s most valuable asset. The work-force is typically a company’s first or second largest operating expense and controllable cost. When engaged properly, the workforce is the most potent source of corporate value cre-ation. Human capital leadership and management is a fast-evolv-ing and highly differentiating capability in the contemporary economy.

Ankura is improving human cap-ital performance by engaging its clients with a decidedly more rig-orous, financially-oriented pro-cess with capabilities that signifi-cantly improve the return on the human capital investment.

© 2020 Ankura Consulting Group, LLC

ABOUT US Ankura is a business advisory and expert services firm defined by HOW we solve challenges. Whether a client is facing an immediate business challenge, trying to increase the value of their company or protect against future risks, Ankura designs, develops, and executes tailored solutions by assembling the right combination of expertise. We build on this experience with every case, client, and situation, collaborating to create innovative, customized solutions, and strategies designed for today’s ever-changing business environment. This gives our clients unparalleled insight and experience across a wide range of economic, governance, and regulatory challenges. At Ankura, we know that collaboration drives results.

GERARD F. MCDONOUGHSenior Managing Director

gerard.mcdonough@ankura.com+1.704.968.8918 Direct

Gerard McDonough is Senior Managing Director of Ankura’s Advanced Human Capital area of expertise and has dedicated himself for three decades, to improving business results through people. He developed the firm’s proprietary Human Equity Value™ methodology, and has expertise in the disciplines of enterprise-level culture-shaping, organizational design, merger and acquisition integration, change execution, and executive-level leadership and team development. Frequently, his work involves helping private equity portfolio companies identify misallocated human capital costs and remove barriers to performance, including the full range of structures, policies, and systems that govern, influence, and reinforce workforce behavior. His work measurably increases company intrinsic value through improved human capital management.

Lisa Moceri is a Managing Director based out of Ankura’s New York office. She leads the implementation of Human Equity Valuation™, the firm’s innovative approach to human capital analytics. As an experienced operational leader and a former CFO, Lisa brings strategic and financial rigor to performance measurements, translating data and insights into action plans that drive optimal business outcomes. Her career has spanned corporate finance, business-line management, and audit roles, experience that has honed her acumen when tackling complex business issues and taking calculated risks.

LISA MOCERIManaging Director

lisa.moceri@ankura.com+1.612.743.6611 Direct