HOW TO MEASURE HUMAN CAPITAL’S CONTRIBUTION TO ENTERPRISE GOALS 59
Nevertheless, let’s not let ignorance stand in our way.
We’ll use it as a stimulant. There is a workable solution,
even though its factual basis is suspect. Set your own stan-
dards for what constitutes a developmental expenditure.
You can do it any way you like, because there is no generally
accepted standard. Then, collect data according to your
model and monitor those data every quarter. Pretty soon
you will see movement, and you can begin to judge the value
of that investment. Ask yourself, did we see quality, innova-
tion, productivity, customer satisfaction, or sales increase as
the training investment increased?
These are just a few of the things that can be tracked and
managed at the enterprise level. Knowing how much is
being produced and sold, what it costs, and whether you are
getting a decent ROI is essential for corporate management.
Ignoring human capital costs, or using only gross pay and
benefit costs as your benchmark, is somewhere between
simplistic and inexcusable. Of course, we all want and need
to manage cost to stay competitive. But the real opportunity
is in managing contribution to revenue and profits. We can
cut costs only so far. But there is always room for more reve-
nue generation. Human capital management takes us down
that side of the path as well.
Human Ca pi tal En ter pr ise Scorecard
In 1996, the work of Robert Kaplan and David Norton cul-
minated in their book The Balanced Scorecard.
6
It followed
a series of articles by the pair that described their experi-
ments with this method of management monitoring and re-
porting. Since then, the balanced scorecard has become a
popular management tool. Lately, it has evolved into a stra-
tegic mapping device. Its premise is that standard account-
ing is too insular and focused exclusively on financial

Get The ROI of Human Capital: Measuring the Economic Value of Employee Performance, Second Edition now with O’Reilly online learning.

O’Reilly members experience live online training, plus books, videos, and digital content from 200+ publishers.