It is not that difficult. Knowing how, when, what, and why an organization should engage in the financial valuation of resources is something that all companies should understand. It seems, however, to be something that many organizations forget about when considering their most expensive asset, human capital.
A humorous explanation about the valuation process linked to measuring human capital is shown in the following video clip.
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From this perspective, we can see how much is invested when following the progress, appreciation, and depreciation of company equipment and materials. There are numerous actuarial tables and formulas that can be used to evaluate the contributions of hard ‘things’ to the overall financial health of an organization. Keeping track of Barry the boardroom chair is easy! Keeping track of what Sammy brings to the boardroom table seems much more complicated!
Why is it so difficult to provide similar value based financial assessments for employees? When organizations tell their people that they are valued, what is the actual measure of that statement?
As Sammy finds outs in this video clip, the results can be quite shocking when we look at the return on investment that companies make on an individual employee basis. Perhaps it is time to be as open and transparent with all employees to let them know how valuable they really are as they continue to contribute to the bottom-line financial success of any organization.
This clip ends with a pretty simple message that is, in itself, quite valuable. Find your people. Know your people. Manage your people. The return on investment will definitely pay off.
Discussion Questions:
- Think about your own work experience over the past five years. How much did the company you worked for, pay you? How much value did you contribute back to the company? What is the differential?
- Upon leaving your current place of employment, do you see yourself as an appreciating or depreciating asset from a pure, return-on-investment perspective?
- What types of measures and tools can the Human Resources practitioner put into place in order to value the true cost of employees as part of the Human Capital investment strategy?