Measuring the ROI of Your Human Capital Strategy

The human capital strategies that executives implement are designed to boost revenues. The challenge of connecting the investment in human capital with the strategic objectives is finding the right balance of training, retaining and rewarding employees with the knowledge, skills and abilities. How human capital intangibles (such as engagement, job satisfaction, and compensation) impact each other has a strong relationship to the quality and performance levels of employees’ work. Employees are a part of a corporation’s value and their performance is integral to its earnings and strategic goals. “At many firms, management’s behavior mirrors Wall Street’s difficulty in valuing human capital. Executives say people are the company’s most important asset, but in a down cycle, they treat positions and training budgets as variable expenses—the first things cut.”—Loren Gary

Source: Gary, L. (August 2003). Tying your people strategy to the bottom line. Harvard Management Update, 8(8), 3-5. Retrieved from:

http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=U0308A