Dear All,
I am a HR professional looking after all the generalist functions of HR. Our management has instructed us to get the details on Employee Value Addition. And wanted to increase the value addition of the employee. Can any body share what is "Employee Value Addition"? How to improve the value addition of staff / workers. What is the ROLE of HRD in improving the value addition. Your recommendatations will be more appreciated.
Also mention the formulae for calculating "EMPLOYEE VALUE ADDITION(EVA)". I have heard more about Economic Value Addition but I need the details about EVA.
Thanks with Regards,
Thiru
From Germany, Herzogenaurach
I am a HR professional looking after all the generalist functions of HR. Our management has instructed us to get the details on Employee Value Addition. And wanted to increase the value addition of the employee. Can any body share what is "Employee Value Addition"? How to improve the value addition of staff / workers. What is the ROLE of HRD in improving the value addition. Your recommendatations will be more appreciated.
Also mention the formulae for calculating "EMPLOYEE VALUE ADDITION(EVA)". I have heard more about Economic Value Addition but I need the details about EVA.
Thanks with Regards,
Thiru
From Germany, Herzogenaurach
Hi Thiru,
Please correct me if I am wrong, but to my understanding your company's management wants you to calculate the "Human Capital Retun on Investment". This refers to how much is the ROI on human capital of the company. The formulas for the same are here listed below:
1. Human Capital ROI
This measures the return on capital invested in pay and benefits. The formula is:
Pay includes all money spent on regular and contingent labour.
2. Human Capital Value Added
This uses a similar formula to Human Capital ROI but divides by the number of full-time equivalent employees (FTEs). The formula is:
This yields a profit per FTE. These two measures are views of the profitability attributable to human effort.
3. Human Capital Cost
This is simply the average pay per regular employee. The formula is:
It can be augmented by added in contingent labour. In that case, we would take total labour expenses, including benefits costs, and divide by FTEs, including contingents.
4. Human Economic Value Added
This is net operating profit after tax, minus the cost of capital divided by FTEs, including contingent labour. The formula is:
May you need any further information on the same. I would recommend you to read the book "HR Scorecard"by Dave Ulrich. Its a very good book on Hr measurement.
Please let me know if this is what you wanted and also in case you would require any further information on this topic.
Regards
Anurag Kumar
From United States
10Please correct me if I am wrong, but to my understanding your company's management wants you to calculate the "Human Capital Retun on Investment". This refers to how much is the ROI on human capital of the company. The formulas for the same are here listed below:
1. Human Capital ROI
This measures the return on capital invested in pay and benefits. The formula is:
Revenue - Nonhuman Expenses
Pay and Benefits
Pay and Benefits
Pay includes all money spent on regular and contingent labour.
2. Human Capital Value Added
This uses a similar formula to Human Capital ROI but divides by the number of full-time equivalent employees (FTEs). The formula is:
Revenue - Nonhuman Expenses
Full-Time Equivalents
Full-Time Equivalents
This yields a profit per FTE. These two measures are views of the profitability attributable to human effort.
3. Human Capital Cost
This is simply the average pay per regular employee. The formula is:
Pay + Benefits + Contingent Labour Cost
Full-Time Equivalents
Full-Time Equivalents
It can be augmented by added in contingent labour. In that case, we would take total labour expenses, including benefits costs, and divide by FTEs, including contingents.
4. Human Economic Value Added
This is net operating profit after tax, minus the cost of capital divided by FTEs, including contingent labour. The formula is:
Net operating profit after tax - Cost of capital
FTEs
FTEs
May you need any further information on the same. I would recommend you to read the book "HR Scorecard"by Dave Ulrich. Its a very good book on Hr measurement.
Please let me know if this is what you wanted and also in case you would require any further information on this topic.
Regards
Anurag Kumar
From United States
Hi all,
correct me if i'm wrong .
employee value addition can broadly be divided into two broad categories- first, whatever is the KRA you are doing it in a more refined or differently which is adding value to the org.for example if i'm into HR -it include handling PF formalities but company has out sourced it- now if i start taking care of it and do it of my own . secondly, apart from KRA doing extra and different from your profile -which is adding value to the organisation.
Now the question how to calculate it-
as such we cannot frame any specific/ same formula to calculate for all the positions but yes if someone has exceptionally performed by changing his way of working-which is traditional and used by the company, than definitely it might be considered as value addition and can be calculated.
further if you have given any suggestion to some other dept. and has increased /improved the area of working is also a value addition.for example if i'm into a profile of sales and give suggestion into operations which make the system more transperant and systamatic
at times you can calculate but at times not.for example if you hae motivated someone- his productivity has increased -you have actually added value .----
thanks.
From India, Gurgaon
correct me if i'm wrong .
employee value addition can broadly be divided into two broad categories- first, whatever is the KRA you are doing it in a more refined or differently which is adding value to the org.for example if i'm into HR -it include handling PF formalities but company has out sourced it- now if i start taking care of it and do it of my own . secondly, apart from KRA doing extra and different from your profile -which is adding value to the organisation.
Now the question how to calculate it-
as such we cannot frame any specific/ same formula to calculate for all the positions but yes if someone has exceptionally performed by changing his way of working-which is traditional and used by the company, than definitely it might be considered as value addition and can be calculated.
further if you have given any suggestion to some other dept. and has increased /improved the area of working is also a value addition.for example if i'm into a profile of sales and give suggestion into operations which make the system more transperant and systamatic
at times you can calculate but at times not.for example if you hae motivated someone- his productivity has increased -you have actually added value .----
thanks.
From India, Gurgaon
Hi all,
Role of HR -employee value addition
according to my understanding first we need to understand the concern profile/KRA and check his performance, the improvement area, what extra he/she can do which is related to his/her profile, what are his area of interest which can add value
Further, motivation, training & development ---- are the tools through which EVA can be increased
Thanks
From India, Gurgaon
Role of HR -employee value addition
according to my understanding first we need to understand the concern profile/KRA and check his performance, the improvement area, what extra he/she can do which is related to his/her profile, what are his area of interest which can add value
Further, motivation, training & development ---- are the tools through which EVA can be increased
Thanks
From India, Gurgaon
Dear Mr. Anurag and Others,
Thanks a lot for your timely response. Please revert back to my post I have requested also to provide the details that how HR can increase the value addition in the organizations( For all the employees). The formulae you have provided is very usefull.
Further information on this will help me a lot.
Thanks with Regards,
Thiru
From Germany, Herzogenaurach
Thanks a lot for your timely response. Please revert back to my post I have requested also to provide the details that how HR can increase the value addition in the organizations( For all the employees). The formulae you have provided is very usefull.
Further information on this will help me a lot.
Thanks with Regards,
Thiru
From Germany, Herzogenaurach
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HR Manual (Employee Hand Book).doc