While Human Capital can be a differentiated value driver, most organizations face challenges in measuring and reporting its impact on the business. HCMI's Human Capital Reporting & Disclosure services set the global standards in leading and educating organizations on what to measure, what it means to the business, and how to report and disclose to meet voluntary and regulatory compliance standards.
Measure and Optimize Productivity via HR Benchmarking
If an organization’s workforce provides a competitive advantage, shouldn’t workforce productivity or the impact of workforce related investments be measured with rigor and discipline? Even with mounting success stories and research, few HR teams have the capability to calculate, track and benchmark their workforce productivity.
But it does not have to be this way!
HCMI’s data-based approach to workforce productivity and planning bridges this gap by providing a financial framework to optimize workforce cost and productivity.
Measure Workforce Productivity
Not to be confused with the concept of labor productivity, workforce productivity is a financial measure of return on investment (ROI) of the total dollar amount invested in human capital. It shows how well an organization allocates its workforce investments.
While Revenue per FTE and Profit per FTE are commonly used Finance metrics to measure workforce productivity, our research shows that they are by not the best predictors of financial success because they only show changes in revenue and profit based on headcount rather than total costs of the workforce.
In a joint study with Pepperdine University, we determined that the advanced productivity metrics noted below are superior measurements to explain true performance and act as leading indicators of stock price change. This position is supported by modeled statistical analysis showing that these metrics are indeed strong predictive measures, linking closely to costs and profits and are more predictive of organizational success.
The advanced workforce productivity metrics we recommend companies use are:
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Human Capital ROI Ratio
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Total Cost of Workforce (TCOW)
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TCOW % of Revenue
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TCOW % of Operating Expense
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Workforce Productivity Questions to Answer
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What is the value of our human capital in the form of return on investment?
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What is our workforce productivity? Is it higher or lower than ours peers?
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Is our workforce productivity increasing, decreasing or static?
Benchmark Workforce Productivity
Our Global Workforce Productivity Benchmark Services can help companies benchmark their Total Cost of Workforce and other productivity metrics against industry and targeted competitors. HCMI’s proprietary database includes data for over 10,000 companies worldwide from various industries, sizes, and regions. You can download a workforce productivity benchmark case study for a major bio-tech company here.
Sample workforce productivity benchmarking deliverables:
To Learn More
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