Many managers know understand that people are their most important assets. The hard part is figuring out how to measure it. PricewaterhouseCoopers/Saratoga, a leader in HR metrics and benchmarking, offers 5 useful Human Capital Measures for human resource effectiveness and overall corporate profitability.
- Human Capital ROI is the pre-tax profit an organizations generates for each dollar invested in regular employee pay and benefits after non-human expenses are removed.
Revenue – (Operating Expenses – (Compensation + Benefits) / Compensation + Benefits
The 2003 all-industry median was 1.48.
- Revenue per employee looks at how much revenue each regular employee generates and is a basic measure of productivity.
Revenue / Full-time Equivalent (FTE)
The 2003 all-industry median was $312,738.
- Profit per employee takes the pretax profit and organization generates and attributes this to each FTE. This measure provides an integrated picture of productivity and expense control efforts.
Revenue – Operating Expenses / FTE
The 2003 all-industry median was $39,164.
- Labor Cost as a Percent of Income looks at the percentage of revenue dedicated to compensation and benefits costs for regular employees.
Compensation + Benefits Costs / FTE
The 2003 all-industry median was 26.10%.
- Voluntary Separation Rate looks at the percentage of regular head count that voluntarily left the organization. High turnover might impact the organization’s stability, profitability and productivity.
Total Voluntary Separations / Total Head Count
The 2003 all-industry median was 9.10%.
Source: HR Magazine, January 2005