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Whether you’re at a dinner table or at a board meeting, the big “V’ word is inevitably brought up when it comes to the topic of Human Capital. In other words, what value does human capital create? After decades of research and debate, there is finally a way to substantially show the value that human capital adds through measuring human capital return on investment (human capital ROI). Advances in good data practices, measurements, and metrics have been able to demonstrate the value of human capital efforts. Human capital as a function exists to recruit, develop and retain the very best talent. By this logic, human capital ROI is a fundamental measurement of employee contribution. But what exactly is the definition of Human capital ROI? How do you calculate it, and why should you use this metric? Let’s dive in. ContentsWhat is human capital?What is human capital ROI?The human capital ROI formulaHuman capital ROI calculation examplesBenefits of using the human capital ROI as a metric and KPI What is human capital? Human capital (HC) is an intangible asset that is a sum of the economic value of employees’ experience and skills. The ‘capital,’ in this instance, refers to assets such as
