In an article published on Strategic HR Review by Paul Kearns, I found especially interesting the idea of Added Value per Employee – it is a key business metric that helps to understand the how efficacious the Human Resource Management practices are in producing wealth for a company. According to the author, this ratio is now kind of a guiding principle for Human Resources Management analysis - why it is as it is and what a company can do to improve it.
Full-Time Employees (globally)
Net income(last published)
Added Value/Employee (net income / employees)
While Wal-Mart’s employees add an average value of about $6,000 to the net profit, Costco’s add over $15,000 – this should tell a lot about both HRM practices and where they can improve…
Kearns, Paul (2005). Causation not Correlation. Strategic HR Review; May/Jun2005, Vol. 4 Issue 4, p7-7, 1p.