What is a Human Capital (HC) Audit?
A human capital (HC) audit is an analysis of all expenditure related to all individuals directly employed by a company and who work for third parties.
The deliverable is a “human capital balance sheet” of all HC costs. This mirrors a traditional financial balance sheet by using the same financial terminology (e.g. OpEx, CapEx, cost-to-income ratio, liabilities, ROI, amortisation etc.)
The scope of a human capital audit is much wider than a mere analysis of fixed costs (e.g. salaries and benefits) and provisioned liabilities (e.g. end-of-service benefits). It includes (but is not limited to):
The monetised expense of the “regretted” turnover of high performing and high potential employees.
The projected financial expense of slowing down such regretted turnover.
The actual financial expense of retaining low performing employees.
The actual financial expense of retaining jobs and roles no longer required for a company’s success.
Fixed Pay
i.e. salaries, benefits (e.g. medical insurance) and liabilities (e.g end-of-service benefits) indexed to the market for each job.
Variable Pay
e.g. commissions and bonuses indexed to performance.
HC Turnover v. ROI
i.e. acceptable retention (turnover) rate for each category of employee versus actual turnover.
HRD Costs
The cost of the Human Resources Department versus market practice.
Our deliverable to you
The deliverable is a “human capital balance sheet”. This is a balance sheet of all HC costs and which mirrors a traditional financial balance sheet. We agree the structure, scope and metrics of the HC balance sheet with our clients. As a minimum it will contain:
Our Credentials and
Our Approach
We have conducted human capital audits for banks in more than 20 countries, either directly or by training our clients’ teams how to conduct the audits. We combine our 30 years global experience in financial and professional services with the ability to adapt to the cultural needs and constraints of our clients.
Our approach is to be a trusted partner and to provide an impartial and independent voice. We experienced in presenting to boards of directors and executive teams. Once the scope of the human capital audit has been agreed with a client, we define the data and internal stakeholders that we require in order to complete the human capital audit.
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