North America's First Human Capital Evaluation Service
At DeWolf Research we understand intangible sources of value. We know how to identify the portion of value that is Human Capital as well as the portion of value which is hard Net Asset Value. One significant advantage of our service is that it gives companies and analysts a credible measure of a company’s human capital in comparison to its peers.
Evaluating Human Capital Assets (HCA)
Chevron’s “Human Energy” advertising campaign, the first of its kind in the petroleum industry, is just one small sign of the growing importance of Human Capital Assets to business. Consequently, Human Capital Evaluation (HCE) is becoming a key value driver for North America businesses. HCE is emerging as the most challenging to secure, the most elusive to quantify and the most critical to corporate success. In time, we believe that North American Regulators will require its quantification. DeWolf Research is pioneering the introduction of Human Capital Evaluation and Measurement, in North America, after successfully employing HCE in advising a leading United States institutional energy investor in the screening of emerging-growth oil and gas companies. There is a growing disparity between the contribution that human capital makes to business performance and the existing means of identifying and valuing that contribution. By adding HCE to hard Net Asset Value (NAV), we can determine a company’s Correct Investment Value (CIV), which may be higher or lower than perceived market value. Most takeover bids occur at HCE premiums that intuitively value management talent, but with little quantification. Human Capital Evaluation quantifies that intuition.
The European Experience
In Europe, North America and Asia-Pacific, organizations with best practices in Human Capital Management (HCM) have a higher performance in market value and shareholder returns. Exhibits 1 and 2 show the aggregate results across a wide range of companies surveyed.
Exhibit 1: European Companies with a higher HC Index create more value
Figure from Watson Wyatt’s “The HC Index™ European Survey Report 2000” page 3.
In economic downturns, when business opportunities are scarce and competition is keen, it is important to maintain excellence in Human Resource Management (HRM). The following exhibit shows the 2002 statistics for Europe.
Exhibit 2: Companies with Higher HC Index Deliver More Shareholder Value
Figure from Watson Wyatt’s “The HC Index™ European Survey Report 2002”.