Human Capital Challenge

Human capital may well be the most critical source of competitive advantage for businesses today, but it is also the most difficult to measure. This is because human capital comprises people; individuals who contribute differently and who also act and react to motivation differently.

So, if your people are your company’s greatest asset, you need to know how to quantify the actual value of that asset and how to influence it to the best mutual advantage.

Quantifying your Human Capital asset

If your organisation cannot prove, through adequate measures and reports, that its people are its greatest asset, how can you be sure that that asset is being effectively managed?

Quantifying and placing a valuation on each employee’s contribution is a real challenge, and there is currently no one accepted way of carrying out the measurement. No single calculation can currently describe the impact of an employee’s competence and commitment on business performance.

Human capital is a new and evolving science: there are no reliable methods for measuring return on investment for human capital, unlike physical capital.

How does Ceridian gauge Human Capital value?

Ceridian’s emphasis on human capital, and gauging the value of it for each of our clients, lies in more than just a simple calculation or two. We look at a number of factors, including:

Causality:

The direct connection between action and outcome, e.g. has customer satisfaction really improved thanks to employee retention, or is it because the business has invested in better technology or an improved product set?

Employee engagement:

Interventions that are going to have the most positive impact on employee engagement e.g. is your organisation getting more effort from your people because they have been allowed flexible working, or because they have been offered more money?

Correlations between taking action as a business and witnessing an outcome are not the same as 'causality'.

Which brings us neatly to the Human Capital Challenge.

If the value of human capital can’t be quantified, where and how does your company make the best investment in this, your most important asset, and how do you know what return on that investment you will see?

Contact us for more details.

How important is Human Capital Management?

Find out more.