The ROI of Human Capital: Measuring the Economic Value of Employee Performance

By Jac Fitz-Enz | Go to book overview

2
How to Measure Human
Capital’s Contribution to
Enterprise Goals

“Attaining one’s objectives is not a cause for celebration; it is a
cause for new thinking.”

—Peter Drucker

It is axiomatic that all resources should be directed to serving the enterprise’s purpose. This purpose can be, should be, and most often is expressed through a combination of economic and human goals. It often starts with a statement of corporate management’s vision, values, and mission. Then it moves to the financial goals of seeking an exceptional rate of return on shareholder investments. Finally, there is obeisance to serving the interests of employees and the communities in which the corporation operates. However, this last goal is sometimes more a platitude than a sincere expression of values.

In the mid-1990s, the Saratoga Institute undertook a retroactive study of the five-year financial and human performance of 1,000 companies. The objective was to uncover the human resources programs and employee-related financial practices that separated top performers from all others. Exceptional performance was defined as top quartile financial standing within a company’s industry plus top quartile performance on human metrics of staffing, compensation, benefits, turnover, and training in Saratoga’s annual Human

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