What is the Human Capital Benchmark Report?

The Human Capital Benchmark Report is an exclusive report that is offered through the Society for Human Resource Management (SHRM). This HR benchmarking report focuses on company costs and effectiveness as well as HR efficiency and contributions to success. HR professionals use these reports to streamline operations, redesign programs, deploy improvements and boost business performance.

Why Review Human Capital Performance?

When companies benchmark HR effectiveness, they basically survey customer perceptions and industry feedback. This useful information provides input into growth and development initiatives. Traditional reports focus on metrics like production quality, service speed and ease of communication, but human capital reports demonstrate the business value of measured HR functions. HR leaders who broaden their benchmarking horizons will help executives understand the beneficial impacts of their activities on the enterprise as a whole and not just the traditional categories of HR costs and headcounts.

Economic, industry, consumer and technology trends are fundamentally changing the ways companies conduct business and review their marketplace performances. Human capital reports measure the degree to which HR functions as a strategic driver of business functionality. As a result, corporations enjoy better insight into revenue and market growth indicators. They also better understand the driving effects of globalization, innovation, profitable growth and talent development. Companies will improve their speed, compliance and cost effectiveness.

What are the Key Human Capital Measurements?

HR professionals understand human capital performance through a set of efficiency ratios that demonstrate how well they are managing human capital. The Society of Human Resource Management has established ten key human capital measurements. They include revenue factor, which is revenue divided by the total number of full time employees, and the voluntary separation rate, which is the number of voluntary separations divided by the total headcount. The human capital value added ratio is a complex formula that compares the total number of employees against revenue minus operating and compensation cost.

The total compensation revenue ratio divides compensation and benefit costs by revenue while the labor cost revenue ratio adds compensation, benefit and personnel costs in order to divide them against total revenue. The training investment factor ratio divides the total costs for training by headcount and the turnover cost ratio lets business leaders know how much it costs to terminate, hire and train new employees. Related to this, the cost per hire ratio adds up job ad, agency and recruiter fees in order to divide against operating expenses. Finally, the health care cost per employee ratio divides the total costs of health care by the total numbers of employees.

Questions to Important Answers

Human capital reports answer important questions about strategy, such as does the company have the talent needed to succeed and is the company properly investing in growing HR capabilities. When it comes to employee perspectives, the report helps executives understand employee satisfaction and engagement levels. Operational feedback helps leaders to know if technology is improving HR efficiency and if current HR management processes and transactions are efficient and effective. When it comes to finances, the capital reports clarify if the ROI in people is competitive and if the company is appropriately managing and reducing turnover costs.

When tied to key HR benchmarks, human capital key performance indicators demonstrate the business impact of HR functions. The Human Capital Benchmark Report will optimize the effectiveness of HR functions, help business leaders understand the competition and support the development of future strategies.

See also: Top 10 Best Online Master’s in Human Resources Management Degrees (MSHR) 2014