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Tuesday, May 24, 2022

Q&A: Weighing the Value of Human Capital

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Stephen Dixon

Fluidmaster Inc.

San Juan Capistrano

Fluidmaster places significant value on human capital, and this topic has consumed a great deal of executive thought at our company as we have laid out our global business strategies. Our continuing challenge has been to achieve greater returns with our human capital while readying the organization for growth and building a bench of talent prepared for future initiatives.

As a fast-growing company with more than 15% average annual revenue growth over the past three years, as well as with operations in dozens of economies globally, we view the development of our human resources as primary to achievement of our long-term growth objectives.

We measure human-capital contribution and outcomes with a variety of metrics that are part of our monthly key performance indicator, or KPI, reporting. Several of these are internally focused and include employee turnover, recordable incidents, and revenue and EBITDA per employee.

As a performance-based organization, we believe that the visibility of metrics influence behavior and drive continuous improvement. In this manner, the measurement of other performance metrics, such as days sales outstanding, inventory turnover, product vitality indices, purchase price variances, and many others also become the tools to evaluate human-capital contribution to corporate performance.

Further, we turn these measurements outwardly to our customers to understand how we are impacting areas such as customer satisfaction, customer service and on-time deliveries. Key metric reviews occur monthly, are visible, and provide a direct link into organizational and employee performance.

As noted, we assess human capital return with “hard” figures, such as revenue per employee and EBITDA per employee. These measures have increased 17% and 24%, respectively, over the past four years. We believe it is the continuous measurement process noted above and broad alignment to tactical and strategic initiatives that drive this success.

We also look to other “softer” outcomes that tell us that we’re getting a high return on human capital. Examples of these have been the achievement of difficult activities, such as innovative product introductions, enterprise resource planning systems implementations and successful acquisition integrations.

We have a variety of human-capital investments in place and planned. Foundationally, the attraction and retention of motivated, skilled employees are a core priority for us. We have worked hard to become an employer of choice in the markets we serve and have been recognized as one of Orange County Business Journal’s Best Place to Work, as the Orange County Register’s No. 4 Top Workplace, and as San Juan Capistrano’s Business Leader of the Year.

We believe it is our performance-based compensation programs, open and inclusive communications, training, career advancement opportunities and succession planning activities that our employees recognize particularly. Fluidmaster’s greatest resource, even more than its iconic brand, is the company’s global human capital, one that has thrived in a culture of execution, high performance and accountability. We intend to continue to invest significantly to develop this key resource.

Kevin Manion

Young’s Market Co.

Tustin

Young’s Market Co. is a family-owned, $3 billion distributor of America’s most popular wines and spirits, such as Jack Daniels and Grey Goose. As a distributor, we don’t own brands. Our most valuable asset is our people. We are incredibly focused on attracting, training and retaining the best.

Our sales growth has outpaced the competition for quite some time, and we are very proud of our results and the people that achieve these results.

Because of our growth, we have invested in our staffing on many levels. Young’s has a very high internal promotion level that we continue to develop. In those areas in which we don’t have enough internal resources, we have used our industry contacts to recruit people that we already know will be successful and a good cultural fit.

We have increased our training and development investment significantly the past few years to support our growth. We have been very pleased with the return on these programs as revenue growth continues ahead of the industry averages.

We continue to invest in technology to enable our people and business to grow. We have recently installed a new human resources information system, which allows us to much more efficiently hire people, track their training and identify high-potential performers. We have also developed an enterprise resource planning model for our sales team to more efficiently service our customers by having instantaneous insight into product inventory and promotions.

We have also been very busy ensuring workplace health and safety, particularly for our delivery team. We have coordinated programs with our local healthcare providers that have helped significantly reduce our reportable incidents.

Our health programs have been very productive. We have developed screening programs that help our employees identify issues before they become problems. As a result, we have been able to maintain constant healthcare premiums to our employees for several years due to having a healthier and smarter workforce.

Young’s Market Co. has thrived for 125 years because of our employees, and our objective is to reinvest and continue for another 125 years.

Frank Martell

CoreLogic Inc.

Irvine

As chief financial officer of a publicly traded company, a lot of my time is spent covering operating and financial strategies and results for CoreLogic. We have had a lot of success over the past few years driving growth in most of our financial metrics. Our success has been made possible by the professionalism, energy and passion of our more than 5,000 employees across the globe. Our highly engaged workforce is in many ways the secret sauce at CoreLogic.

We rely on each one of our global associates to strive to produce the best possible outcomes that help our clients succeed in their business pursuits. Every year, we invest significant amounts of time and resources to drive employee engagement because we know engaged employees are the key to our success.

Our entire leadership team is measured on its ability to increase employee engagement and satisfaction levels. We measure engagement through regular employee surveys. We compare ourselves to high-performing peer companies nationally and globally. Employee survey feedback and other regular forums provide a road map for areas of improvement that would further strengthen performance and build emotional commitment.

To build higher-performing teams, we have upped the ante on leadership communications, recognition programs, and training and development programs. While we have more work to do, our employees tell us that we are making progress.

Since we became an independent public company four years ago, our attrition rates have run far below those of our peer companies. Also, internal mobility has increased significantly, and more of our employees are rising up to become company leaders. We could not achieve results like these without the positive purpose, passion, partnership and productivity of engaged team members.

CoreLogic continues to grow and enter new markets. We have only been able to expand the company’s footprint as a result of highly engaged and committed employees. As we continue to add new employees through acquisitions and organic growth, we will continue to seek their input and leverage their talent to reach new heights. We are very proud of who we are and who we’ve become, and our highly engaged employees are the key to our success.

Don Voska

Goodwill Industries of Orange County

Santa Ana

Goodwill Industries of Orange County is a quintessential example of an entrepreneurial social enterprise.

Most people perceive Goodwill as simply a charity, but it is much more than that.

Goodwill is a charitable organization that operates a variety of businesses, which through programs that offer training, education, and workplace support and experience, help people to get and keep jobs.

Human capital is important to the organization’s internal performance and growth, and ad-ding value to human capital is our mission and the only reason we exist. By investing Goodwill’s resources in people, we increase the value of human capital for the benefit of Goodwill, for the employers in Orange County, for our community, and for the economy as a whole.

Improving and increasing the value of human capability, capacity and skill sets within Goodwill are measured by improving the quality of our employees.

Tracking mechanisms are contained in our Balanced Scorecard and include targets to increase position-specific technical and safety training, decrease turnover rates, meet internal audit compliance thresholds, and also include interdepartmental collaboration requirements.

With regard to career development, Goodwill encourages employees to

participate in the educational assistance program for qualifying tuition, fees, books and supplies that may be excluded from gross income in accordance with IRS regulations.

The attainment of targeted Balanced Scorecard results is reviewed on a quarterly basis.

Our Balanced Scorecard perspectives include the People We Serve, Financial Strength, Learning and Growing Together, and Operational Excellence. Each perspective, and the tracking of the respective attributes, contributes to the success of the organization by assisting in the accomplishment of strategic objectives.

It is interesting to note that, although the practical measurement is not defined in terms of human capital, the outcomes are a result of improving the value of our human capital.

The Balanced Scorecard perspectives are as much oriented toward Goodwill’s internal operations as they are toward the accomplishment of our mission.

We are in the business of helping people who are facing barriers to get and keep jobs, which provides purpose, pride and dignity. We believe the power of work changes lives.

Goodwill invests heavily in human capital through job training and employment services to help place trained workers in good jobs.

This is accomplished in a variety of programs associated with numerous types of businesses, including retail, recycling,

e-commerce, electronic waste and

community-based programs and services, such as document destruction, custodial services, sign language and assistive technology.

Helping people help themselves is what we do, and we do it by improving their knowledge, skills and abilities.

During 2013, we provided services to more than 15,000 people, including 948 that were placed into jobs in the community.

This would not have happened but for the addition of value to human capital through a comprehensive system of communications, technology, education, training and employment services.

While the outcomes are measurable and benefit to the community is substantial, the value to the people we serve is priceless.

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