HCROI = Revenue - (Expenses - Pay and Benefits)

                             Pay and Benefits

Human Capital ROI (HCROI)

HCROI = $100,000,000 - ($80,000,000 - $24,000,000)

                             $24,000,000

HCROI = $44,000,000

               $24,000,000

HCROI = $1.83

This means that for every dollar the organization invested in human capital, the productivity produced by the human capital produces $1.83.

(Gross Revenue / Average Number Employees vs. Prior Five Years)

$GR/E = YR1 + YR2 + YR3

                            E  

            Where:

·      $GR/E = dollar gross revenue per employee

·        YR1 = year one revenues (e.g., $10,658,000).  Also true for YR2 (e.g., $17,120,000), YR3 (e.g., $25, 896,000).

·        E = average number of employees (e.g., 3,097)

$GR/E = $10,658,000 + $17,120,000+$25,896,000

                        2840              2976             3097

              =   $3752.82         $5752.69      $8361.64

                     Year 1             Year 2          Year 3

These numbers are read as ratios such as $3,753:1 (employee). If this number improves significantly from year to year, it might be a sign that gross productivity is increasing. The improvement is not necessarily all in factory or operational productivity. It might be that salespeople are becoming more efficient or that a diverse engineering team has simplified a design or that manufacturing has an automated procedure. The reason is not necessarily obvious, but the result is clearly positive.

Of course, a decrease in the number indicates a deterioration in performance somewhere. In a service business, higher productivity usually means that the organization is able to serve an increasing number of customers without adding staff. Overall, this figure is helpful in monitoring trends.

The formula should be based upon the rating system scale used in your employee survey (e.g., 5-point Likert Scale from Strongly Disagree to Strongly Agree, or 1-Poor to 5-Excellent, and so on). 

Many employee surveys contain questions relating to the diversity climate. These questions generally assess the employee’s perception regarding diversity issues, including how well diversity values and related behaviors have been instilled in the organization’s culture.

Typically, the impact of diversity values can be assessed based on the following four categories:

þ    Knowledge of the Values: This includes examining ratings on survey questions pertaining to knowledge that a diversity values statement exists.  For example, this includes setting rating targets for questions such as “Our organization’s stance on the value of diversity is communicated regularly,” or “Management’s behavior reflects the standards set in our diversity values statement.”

þ    Understanding: This includes examining ratings on survey questions regarding knowledge of stereotypes, bias, and  awareness of and empathy for diverse work group issues. For example, this includes setting rating targets for such questions as, “Employees take care not to make statements that reinforce prejudice or bias in the workplace,” or, “It is difficult for new employees to feel a part of the work group,” or, “Management should show greater sensitivity to those who are different.”

þ    Acceptance: This includes examining ratings on questions regarding open-mindedness and respect for diverse work group issues. For example, this includes setting rating targets for such questions as, “It is easier to accept another person’s behavior when you know about his/her culture,” or “I am comfortable working with gays, lesbians and bisexuals,” or, “In the workplace, people of color earn their position.”

þ    Behavior: This includes asking questions to assess whether employees are self-aware and possess interpersonal skills to interact and work with their diverse work group colleagues. For example, this includes setting rating targets for questions such as “Employees tactfully let others know how they feel when they are offended by something that person says or does,” or, “Employees adapt their style in order to work effectively with those who are different from themselves,” or, “Employees in this organization are aware of how their values and beliefs impact their relationship with others.”

DPT =   R         DPT = R     

              L                    TR

Where:

·        DPT = percent diversity employees terminating at each performance level

·        R =  number rated at each level

·        L = total number terminated

·        TR = total rated at a given level

DPT = 27  = 12.0% or  DPT = 27 = 34.2%   LVL  6     

         225                            79

DPT = 79  = 35.1% or  DPT = 79 = 21.6%   LVL  5     

         225                            365

DPT = 63  = 20.0% or  DPT = 63 = 10.6%   LVL  4     

         225                            593

DPT = 42  = 18.7% or  DPT = 42 = 79.2%   LVL  3     

          225                           53

DPT = 8  = 3.6% or      DPT = 8 = 80.0%   LVL  2     

         225*                          10*

* Column adds to 219 + 6 who did not get rated.

These statistics (based upon a 6-level performance appraisal structure) suggest the following:

In the employee sample, 225 diverse work group employees were terminated. Twenty-seven were rated 6, or the highest level in their performance. In the total organization, 79 were rated 6. This means that while 12 percent of the terminations came from Level 6, these diverse work group employees represented 34.2 percent of the organization’s highest performers leaving to work somewhere else!

Where:

Where: