Scribd
Upload
13 views2 pages

Roi Human Review

Jac Fitz-Enz's book, 'The ROI of Human Capital,' argues that organizations must recognize employees as valuable assets rather than mere expenses, emphasizing the importance of human capital in achieving competitive advantage. He presents both quantitative metrics for measuring human capital ROI and a qualitative case for treating employees with value, highlighting the significance of retention and effective management. Fitz-Enz concludes with principles for leveraging human capital, stressing the critical role of supervisors in fostering a productive work environment.

Uploaded by

Thu Thảo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
13 views2 pages

Roi Human Review

Jac Fitz-Enz's book, 'The ROI of Human Capital,' argues that organizations must recognize employees as valuable assets rather than mere expenses, emphasizing the importance of human capital in achieving competitive advantage. He presents both quantitative metrics for measuring human capital ROI and a qualitative case for treating employees with value, highlighting the significance of retention and effective management. Fitz-Enz concludes with principles for leveraging human capital, stressing the critical role of supervisors in fostering a productive work environment.

Uploaded by

Thu Thảo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 2

A review of

The ROI of Human Capital


by Jac Fitz-Enz,
published by
AMACOM, New York, 2000
ISBN 0-8144-0574-6

Rating: 9
(The Official Ayers Rating Scale goes from 1-10. Anything lower than 6 is thrown out.
This produces a net five point scale from 6-10.)

If you’ve been awake at some point in the last several years, then you must have heard
one or both of these comments: “People are an organization’s most important asset.”
“Things have changed, and now it’s information rather than equipment that offers a
competitive advantage.” Perhaps you heard them about your own organization. Perhaps
you even said them yourself.

Jac Fitz-Enz sets out to make the case for both of these comments. He does so in two
interesting and complementary fashions. On one hand he offers an array of formulae
which should appeal even to the truly quantoid among us. He points out that “sales per
employee” is misleading when you have a high percentage of people other than ordinary
full-time employees (FTEs). He offers accessible schemes for calculating instead such
metrics as Human Capital Revenue Factor: take the total revenue and divide it by the
number of full-time and part-time and contingent labor hours. He suggests that this is
better than “sales per employee” but still too simple.

On the other hand, Fitz-Enz offers a much more humanistic and value-based case. Yes,
you can quantify the ROI, but even if you couldn’t, you should still treat people as
valuable assets. Why? “I believe that the companies that learn how to turn on the
information- and intelligence-gathering capability that lies dormant in most employees
will dominate the future. And the ROI of human capital in those firms will be
astronomical. They will be able to produce much more per person. They will be opening
new product lines faster, creating new markets while competitors are reworking old ones,
and continually improving life for customers and employees. When that is achieved,
management will truly be leveraging the potential of its human capital.”

He suggests that we can learn from the most effective companies. They engage in the
practices of planning, staffing, compensation, benefits, and development. They also add
a sixth which differentiates the best from the rest: retention. It isn’t that most companies
do a bad job of managing retention, he writes. They don’t do any job at all. Is retention
really all that important? you might ask. Shouldn’t we look to increased use of
“contract” workers or “temporary” workers for flexibility? He quotes Jeffrey Pfeffer, an
outspoken Stanford professor, describing the contradiction between a staff which offers
“competitive advantage” and a staff with a larger contingent component:
“If competitive success is achieved through people – if the workforce is, indeed, an
increasingly important source of competitive advantage – then it is important to build a
workforce that has the ability to achieve competitive success and that cannot be readily
duplicated by others. Somewhat ironically, the recent trend toward using temporary help,
part-timers, and contract workers, particularly when such workers are used in the core
activities, flies in the face of the changing basis of competitive success.”
Then Fitz-Enz then offers his comments on this contradiction:
“Logically, he has a point. However, no matter its logic and validity, economics will
rule, as it always does. So long as executives don’t know how to measure the economic
value of people, they will continue to treat them as an expense, not as a value-generating
force, and to believe that they are saving money by using a large percentage of contingent
workers.”

Fitz-Enz also points out that this kind of light-weight thinking about serious issues leads
to increasing susceptibility to management panaceas. “Another fallacy about trends is
perpetrated when people correctly discover a directionality in events but then assume that
something else moving in parallel must be the cause or the effect. Mixing correlation
with causality is the stuff of the naïve, of charlatans, and of demagogues. Politicians,
religious fanatics, and consultants are masters at this.” Just because you read it in an
airline magazine does not make it true!

Suppose that you accept his ideas. How can you move your organization forward? How
can you leverage your human capital more effectively? Fitz-Enz proposes eleven
principles near the end, recapping the arguments occurring throughout the book. For
example,
Principle 1: People Plus Information Drives The Knowledge Economy
Principle 6: Coincidence May Look Like Correlation But Is Often Just Coincidence
Principle 10: The Key Is To Supervise, And The Supervisor Is The Key
The support for principle 10 comes from his organization having done hundreds of “exit
interviews” for large organizations. His conclusions match those we read in First, Break
All the Rules: if you have a retention problem, then you have a management problem.
“The findings revealed that employees who responded most positively worked in the
higher-performing organizations. … opinions differed by work unit rather than by
company. This implies that the local environment is more important than the corporate
culture, structure, or policies. The point hidden in here is that the supervisor is the key.”

Bottom-line? If you want to have get the most out of the people, then pay attention to the
people who serve as supervisors and managers.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy