Human Capital Index
(Watson Wyatt)

Knowledge Center


Calculation of the correlation of human capital and shareholder value. Explanation of Human Capital Index of Watson Wyatt.

Human Capital IndexThe Human Capital Index (HCI) is a methodology of Watson Wyatt used to calculate the correlation of human capital and shareholder value.

Watson Wyatt developed a set of measures quantifying exactly which Human Resources practices and policies have the greatest correlation to shareholder value.

Using those to assign a single Human Capital Index (HCI) "score" to each surveyed company allows them to deliver conclusive results. Where there are superior Human Resources practices, there is higher shareholder value.

In other words: the Human Capital Index shows that if an organization is doing better in managing its human capital, it will also be better in its returns for shareholders.


Human Capital Index Formula

Responses are matched to objective financial measures, including market value, three-year and five-year total returns to shareholders (TRS), and Tobin's Q, an economist's ratio that measures an organization's ability to create value beyond its physical assets. Public data from Standard and Poor's databases are used to access the financial information needed.

To investigate the relationship between Human Capital practices and value creation, a series of multiple regression analyses were conducted, which apparently identify a clear relationship between the effectiveness of a company's human capital practices and shareholder value creation. Thirty key Human Resources practices were associated with a 30 percent increase in market value. Total HCI scores were created for individual organizations so that results could be expressed on a scale of 0 to 100. An HCI score of 0 represents the poorest human capital management, while a score of 100 is ideal.

Special Interest Group - Human Capital Index

Special Interest Group (205 members)

Forum - Human Capital Index  

In the forum section you will find recent discussions within this knowledge area.

  Importance of Human Resources (1 reactions)
Humans are real resources for any organization. This is an i...
  H2 Use Human Capital More Effectively?
Please raise any ideas / strategies through which human capi...
  Physical Assets / Human Capital (1 reactions)
It's true that the human capital is amongst the most valu...
  Human Resources Capacity Planning Tool (3 reactions)
I'm searching for a tool for human resource planning for a p...
  The Value of Human Capital (1 reactions)
Is 'human capital' a dream or utopia?
It sounds wonderf...

Best Practices - Human Capital Index

In the best practices section you will find the best forum discussions within this knowledge area.

  Human Capital Does not Depreciate (5 reactions)
HC is the only capital of an organization that has got no de...

Expert Tips - Human Capital Index

In the expert tips section you will find advices from experts within this knowledge area.


Approaches by Accenture and Deloitte

Measuring Human Capital...

The Impact Areas of HR Practices on Market Value

Shareholder Value, Market Value...

Resources - Human Capital Index

In the Resources section you will find powerpoint presentations, micro-learning videos, articles, news items, etc. within this knowledge area.

Risk and Return of Human Capital

Human Capital...

The Role of Human Capital in Economic Growth

Human Capital, Organizational Growth...

News about Hci Watson


News about Human Capital


Videos about Hci Watson


Videos about Human Capital


Presentations about Hci Watson


Presentations about Human Capital


Books about Hci Watson


Books about Human Capital


More about Hci Watson


More about Human Capital


Return to Management Hub: Human Resources  |  Knowledge & Intangibles

More Management Methods, Models and Theory

Special Interest Group Leader

You here? Sign up for free


About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2019 12manage - The Executive Fast Track. V15.0 - Last updated: 19-6-2019. All names ™ of their owners.