What is Human Capital ROI?
Human Capital ROI measures the financial return organizations generate from investments in their workforce, calculated by comparing revenue or profit against total compensation and HR-related costs.
This metric helps organizations evaluate workforce efficiency, justify HR program investments, and benchmark against industry standards. HCROI calculations consider salaries, benefits, training costs, recruiting expenses, and other people-related expenditures relative to organizational output.
While calculating human capital returns presents complexities due to intangible factors, HCROI provides valuable insights into workforce productivity and investment effectiveness. Organizations use this metric alongside other indicators to optimize talent strategies, demonstrate HR value, and make informed workforce investment decisions.
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