How do businesses measure human capital?

Human capital may be difficult to measure because it includes a number of intangible elements, including education and skills development. There are a number of variables that could influence whether individuals actually use the knowledge, skills and experiences that have accumulated. Companies that try to measure human capital usually focus on several factors that can be quantified, including turnover, recruitment, salary and wages as a percentage of total revenue, training costs and human resources. One way to isolate the effectiveness of the company's employees is to find that the amount of income contributing to the company contributes to the company. This is done by simply distributing the amount of the company's total income by the number of full -time employees. The danger in this is that the calculation returns only the average, because some unsoubtedly employees contribute more to the lower line than others.

Another disadvantage to take over the average amount of income issued to full -time employees is that income could be influenced by conditions that are out of employee control. Things such as a bad macroeconomic environment will present a challenge for any business team regardless of their skill level. In addition, the way the work is designed can also concentrate on employees only to increase sales and income for organization. This can make it difficult to obtain the real picture of the potential of the return of the human capital of the organization.

Another area that societies consider to measure their human capital is a staffing. They could look at the measure of absence and lost productivity, which is then reflected in the lost income. The cost of turnover and charge is two of the largest areas that the organization will be controlled. Experienced and experienced employees who leave, especially in the first few months of employment, can represent OBequal amount of loss of human capital. This is because the organization requires much more money, time and internal resources for recruiting and training a new employee than to maintain an experienced.

Society also measure the efficiency of its departments of human resources to measure human capital. They can calculate the average amount of human resources costs per full -time employees. The organization could very well explore how many full -time employees are assigned to a specific department of human resources. This is especially true in larger corporations that consist of several divisions, business units and regional sites.