PwC Saratoga - analysing the added value of human capital

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Lately, the value of human capital has been under pressure. Chief executive officers, financial directors, and HR managers have to find out and assure themselves whether their human capital is competitive. Company owners want to have clear and unambiguous information on what added value employees bring to the company. The motivation to implement this project is often the need to increase productivity or the effort to optimize the number of staff.

The objective of analysing human capital’s added value is to assess the current human capital profile and to prepare scenarios for optimum management of the return on investment into human capital.

The analysis of human capital’s added value is a suitable tool for verifying and arranging a link between HR procedures and the firm’s overall priorities. Thanks to this analysis, consolidations, and improvements in human capital management activities, a significant positive change can be observed, which will manifest itself in the increased added value of employees and their performance, and in strengthening the company’s competitive advantage. If the project results are implemented effectively, the methodology will become a key benefit when transforming the HR function, and will contribute to reinforcing the company’s market position. When planning investments in remuneration, education, or special investments in activities aimed at reducing absenteeism, employee turnover rate, improving loyalty and the involvement of employees, we define the “business case” for the company – that means not only “what has to be done” but also the required return on these investments.

In making these analyses, we use data from the PwC Saratoga institute. This institute possesses the largest global database of benchmarking indicators from over 20,000 companies operating in 28 countries across North America, Asia, and Europe (including Slovakia). A uniform definition of indicators used to measure human capital is the guarantee that all the data is comparable.

The project’s benefit and added value is the fact that it is not carried out as an isolated project, but is prepared in the context of the firm’s overall strategy, and current and planned financial management.