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The ROI of Human Capital: Measuring the Economic Value Of Employee Performance [Hardcover]

Jac Fitz-Enz
5.0 out of 5 stars  See all reviews (6 customer reviews)
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Book Description

June 1 2000
We all know that people--not cash, buildings, or equipment--are the lifeblood of any business enterprise. Yet, astonishingly, there has never been a reliable way to quantify the contribution of human capital to corporate profit...until now.

In THE ROI OF HUMAN CAPITAL, Jac Fitz-enz draws on years of quantitative and qualitative research by his prestigious Saratoga Institute to provide a breakthrough methodology for measuring the bottom-line effect of employee performance. A prolific author, whose previous work includes Human Value Management, named Book of the Year by the Society for Human Resource Management, Fitz-enz has also been called "the father of human performance benchmarking."

This new book offers a rare blend of management expertise and quantitative metrics, showing executives and HR professionals how to gauge human costs and productivity at three critical levels: * Organizational (contributions to corporate goals) * Functional (impact on process improvement) * Human resources management (value added by five basic HR department activities).

With today's employee costs often exceeding 40 percent of corporate expense, measuring the value of this human capital is essential. Here, at last, is a resource that reveals how to do it and that helps managers determine how to invest most effectively in human productive potential.

Frequently Bought Together

The ROI of Human Capital: Measuring the Economic Value Of Employee Performance + The New HR Analytics: Predicting the Economic Value of Your Company's Human Capital Investments + The HR Scorecard: Linking People, Strategy, and Performance
Price For All Three: CDN$ 68.85

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Product Description


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

About the Author

Jac Fitz-enz, Ph.D. (Saratoga, CA) is the founder of the Saratoga Institute in Santa Clara, California, known worldwide for its pioneering research and reports on performance measurement and improvement. His numerous books include The 8 Practices of Exceptional Companies, Human Value Management, and How to Measure Human Resource Management.

Inside This Book (Learn More)
First Sentence
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. Read the first page
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Front Cover | Copyright | Table of Contents | Excerpt | Index | Back Cover
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2 of 2 people found the following review helpful
5.0 out of 5 stars The Human Dimension of ROI Nov. 13 2000
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.
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5.0 out of 5 stars If we don't know how to measure, we can't manage. July 21 2000
"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.
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5.0 out of 5 stars Professional reviews ROI of Human Capital June 17 2000
By A Customer
This review was written and published by Barbara Jacobs forBOOKLIST, a national book review service.... Wall Street has long shunned the notionthat employee satisfaction or dissatisfaction impacts the corporation's bottom line. Esteemed consultant and prolific author (The 8 Practices of Exceptional Companies, 1997) Fitz-enz balances the scorecard with his metrical and sometimes lyrical evaluation of employees---aka "human capital"---which he calls ROI. In fact, this is a scholarly tome well worth reading by more than the HR crowd; in it, he sets forth guidelines to measure the effect of human performance as well as improvement initiatives such as restructuring and outsourcing. Some are mathematical formulas, which, after a careful drilling down through, are less intimidating. Others reflect a wise and commonsensical review of other management gurus' findings, a recap and then a reapproach. One example of why benchmarking fails is that the initiative is defined in too broad a scope---or, in the author's words, "don't take on world hunger." Solid business wisdom that allows for humanity and humor. ---Barbara Jacobs
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