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.

Human Capital Index Special Interest Group

Special Interest Group (201 members)

Human Capital Index Forum  

Recent topics

  Human Capital Does not Depreciate
HC is the only capital of an organization that has got no depreciation. Rather human capital becomes more valuable in the course of time and ad...
  H2 Use Human Capital More Effectively?
Please raise any ideas / strategies through which human capital can be used more effectively? Thank you....
  The Value of Human Capital
Is 'human capital' a dream or utopia?
It sounds wonderfully true - albeit only in theories. The practices are different, sometimes a bit, sometim...

Best Practices - Human Capital Index
  Importance of Human Resources
Humans are real resources for any organization. This is an interesting point that both employee and employer claim to understand the importance of HR ...
  Physical Assets / Human Capital
It's true that the human capital is amongst the most valuable assets that an organization acquires, I deem personnel the hidden power that cont...
  Human Resources Capacity Planning Tool
I'm searching for a tool for human resource planning for a period of 6 to 12 months. If possible as a excel-tool. Does anybody have good experiences o...

Expert Tips - Human Capital Index

Approaches by Accenture and Deloitte


The Impact Areas of HR Practices on Market Value


Advance yourself in business administration and management

Resources - Human Capital Index

Risk and Return of Human Capital


The Role of Human Capital in Economic 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


Accelerate your management career

Return to Management Hub: Human Resources  |  Knowledge & Intangibles

More Management Methods, Models and Theory

Special Interest Group Leader


About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2018 12manage - The Executive Fast Track. V15.0 - Last updated: 13-12-2018. All names ™ of their owners.