This paper explores a new judgmental forecasting indicator, the Employee Sensed
Operational Capabilities (ESOC). The purpose of the ESOC is to establish a practical
prediction tool that can provide early signals about changes in financial performance by
gauging frontline employees’ sensing of changes in the firm’s operational capabilities. We
present the first stage of the development of ESOC by applying a formative measurement
approach to test the index in relation to financial performance and against an organizational
commitment scale. We use distributed lag models to test whether the ESOC can predict
financial performance. Monthly data were collected from frontline employees in three
different companies during an 18-month period, and the initial results indicate that the
ESOChas predictive power
