Sunday, September 13, 2015

What is the ROI from investing in employees?

A study released last April by Harvard Law School looks at whether there is a connection between investing in employee development and financial success.   Based on a review of 92 papers, the authors conclude that there is a strong connection between human capital investment and financial rate of return.  The connection is so strong that the authors claim that financial analysts should start paying more attention to human resource policies when they are evaluating firms.

Such an analysis is not easily performed.  We lack ways of measuring training in ways that are consistent across different organizations.  But with rising social interest in triple-bottom-line analysis, this could end up being an active research topic in the years ahead.

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