The ROI of Human Capital: Measuring the Economic Value of Employee Performance (Hardcover)

~ Dr. Jac Fitz-enz (Author) "In the closing years of the twentieth century, management has come to accept that people, not cash, buildings, or equipment, are the critical differentiators of..." (more)
Key Phrases: human capital scorecard, process value analysis, human capital management, New York, Saratoga Institute, First Union (more...)

Editorial Reviews

Review

...is absorbing and a pleasure to read. -- GetAbstract.com

…an important new business book....This work will be invaluable as a framework for executive dialog on HR issues. -- HR Magazine

Review

Winner of the 2001 Society for Human Resource Management Book Award

""Well worth reading by more than the HR crowd. Solid business wisdom that allows for humanity and humor."" Booklist

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Product Details

• Hardcover: 316 pages
• Publisher: AMACOM; 1 edition (May 29, 2000)
• Language: English
• ISBN-10: 0814405746
• ISBN-13: 978-0814405741
• Product Dimensions: 9.1 x 6 x 1.3 inches
• Shipping Weight: 1.3 pounds (View shipping rates and policies)
• Average Customer Review: 4.6 out of 5 stars  See all reviews (8 customer reviews)
• Amazon.com Sales Rank: #531,875 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

61 of 63 people found the following review helpful:

5.0 out of 5 stars The Human Dimension of ROI, November 13, 2000

By	Robert Morris (Dallas, Texas) - See all my reviews (TOP 50 REVIEWER)    (REAL NAME)

Perhaps you have already read The 8 Practices of Exceptional Companies. Fitz-enz adds substantially to his international renown with this more recent book in which he suggests all manner of ways to measure the economic value of human capital. In the Preface, he suggests that (in business terms) human capital be described as a combination of factors such as these:

* The traits one brings to the job: intelligence, energy, a generally positive attitude, reliability, commitment

* One's ability to learn: aptitude, imagination, creativity, and what is often called street smarts", savvy (for how to get things done)

* One's motivation to share information and knowledge: team spirit and goal orientation

As Fitz-enz then explains, Chapter 1 takes the first steps toward a methodology for measuring the return on investment (ROI) of human capital. Chapter 2 launches the process of finding the ROI of human capital from an unusual "starting point": rather than begin with process improvement at the lower organizational levels, focus at the highest possible levels on "the goals of the enterprise." Chapter 3 is the "bridge" between the enterprise and the human capital management levels. Chapter 4 brings us to "the drivers of all enterprise success": people." Chapter 5 integrates the three levels (enterprise, process or function, and people), combining them "in one end-to-end system of human capital valuation reporting." Chapter 6 moves to the next level: trending and predicting. Chapter 7 dissects five of the most common human resources and human capital initiatives, demonstrating HOW to find economic value in the workings of each. Chapter 8 reports on two of the longest-term, largest-scale studies of human capital management. Chapter 9 explains what is required for an organization to take a quantum leap" over its competition. Chapter 10 provides a "compilation" of eleven "guiding principles" which serve as "The Foundation Stones of the Human Capital Measurement Pathway." And then in the final chapter, Fitz-enz brilliantly sums up the basic measurement system. Note in particular Figure 11-1 ("Composite human capital scoreboard") which provides an excellent model to guide and inform the efforts of any organization, regardless of its size or nature.

With very few exceptions, an organization's greatest assets do indeed "walk out the door" at the end of each business day. For those who are eager to measure human capital more accurately, who then wish to create for their organization a much greater return on investments in its human resources, this is an absolutely indispensable resource to help achieve those objectives.

11 of 11 people found the following review helpful:

5.0 out of 5 stars Worth every penny, June 15, 2000

By	Venkatesh Pillai (India) - See all my reviews

This book is a must reading for all human resource professionals and a must in all libraries. I found this book very interesting and being a human resource professional myself, this told me methods and introduced me to many tools in which the human resource can be quantified and accountability can be broughtinto this department, especially HR department. Wonderful book and it makes Human capital accounting sounds practical, feasible and logical. Worth every penny

44 of 54 people found the following review helpful:

5.0 out of 5 stars If we don't know how to measure, we can't manage., July 21, 2000

By	Turgay BUGDACIGIL (Istanbul, Turkey) - See all my reviews (TOP 1000 REVIEWER)

"In the closing years of the twentieth century, management has come to accept that people, not cash, buildings, or equipment, are the critical differentiators of a business enterprise. As we move into the new millennium and find ourselves in a knowledge economy, it is undeniable that people are the profit lever. All assets of an organization, other than people, are inert. They are passive resources that require human application to generate value. The key to sustaining a profitable company or a healty economy is the productivity of the workforce, our human capital...Drucker claims that the greatest challenge for organizations today and for the next decade at least is to respond to the shift from an industrial to a knowledge economy...This shift toward knowledge as the differentiator affects all aspects of organizational management, including operating efficiency, marketing, organizational structure, and human capital investment...Since employee costs today can exceed 40 percent of corporate expense, measuring of the ROI in human capital is essential. Management needs a system of metrics that describe and predict the cost and productivity curves of its workforce" (pp.1-3).

Within this general framework, Jac Fitz-Enz argues that without measurement we cannot:

* communicate specific performance expectations.

* know what is going on inside the organization.

* identify performance gaps that should be analyzed and eliminated.

* provide feedback comparing performance to a standard or a benchmark.

* recognize performance that should be rewarded.

* support decisions regarding resource allocation, projections, and schedules.

In short, he argues that "if we don't know how to measure our primary value-producing assets, we can't manage it".

On the other hand, in Chapter 1, he displays many of the management panaceas that have hit the market in the past fifty years as follows:

** 2000 ? ? ? ? ?

-Intellectual Capital-Learning Organization

-Rightsizing-Balanced Scorecard-EVA

** 1990 -TQM-Reenginering-7 Habits-Delayering

-Downsizing-Customer Service-Benchmarking

-Kaizen-Empowerment-Continuous Improvement

** 1980 -Corporate Culture-Change Management-MBWA

-Intrapreneuring-Relationship Marketing-Excellence

** 1970 -Quality Circles-Diversification-One Minute Managing

- Work Simplification-Needs Hieracchy-Statistical Process Control

- Organizational Renewal-Value Chain-Portfolio Management

** 1960 -Managerial Grid-Matrix-Hygienes and Motivators-Theory Z

-Theory X&Y-Plan-Organize-Direct-Control-Human Relations

** 1950 -Management by Objectives-Management Science-Decision Tree

I highly recommend this 'must' reading study to all executives and HR practitioners.