A London-based HR consultancy claims to have devised the first software calculator to measure the value of a company’s human capital.
Known as Catalyst, the software is a “total people cost of ownership and effectiveness calculator”, written by PEO People, to link financial and commercial data to workforce productivity figures and correlate them to the company’s bottom line.
“Companies spend a lot of money on retaining their top talent. But even if they have identified how much their human capital costs, they often don’t know what value this represents to the overall bottom line and whether they are getting a return on their investment,” explained PEO People managing director Sandra Pilson.
The new software tool will help senior executives evaluate the cost, risk and value of their people within the overall context of business performance, “which prevents them from associating their people purely as a business overhead”, she added.
Catalyst combines commercial, financial and HR measures to calculate total people costs and effectiveness. The process allocates monetary values to HR risks and compliance, workforce engagement and peformance and the organisation’s talent strategy – previously seen as subjective, and “fluffy” HR data.
Information is collected during a PEO People audit and analysed by the Catalyst program to set a benchmark for the company’s business profile. The resulting insights can help organisations to base their human capital decisions on more clearly defined business cases, the consultancy claimed.