Summary of The Human Value of Enterprise

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  • Applicable


In The Human Value of Enterprise, Andrew Mayo proposes a quantitative methodology that attempts to bring the rigors of financial accounting to human resources management. Mayo sets forth a series of formulas designed to reveal how much each individual is contributing to the overall value that any company creates for its stakeholders. Of course, these formulas are limited by the subjective process through which managers assign values to the activities and results of their employees. That said, the procedures that Mayo outlines can be used as the foundation for a fairly rigorous system of human resource cost accounting that recommends to all professionals in the field.

About the Author

Andrew Mayo is a well-known international consultant, speaker, and author. He is a Program Director at London Business School and a Professor of Human Capital Management at Middlesex University Business School. He is the co-author of The Power of Learning, Managing Careers, and Creating a Training and Development Strategy.



Measuring and Managing Human Capital

Since the 1990s, companies have increased the value they place on intangible or intellectual assets like knowledge, competence, brands and systems. Lost in the rush to recognize the value of these newly important assets has been the value of human capital. Organizations must not forget that only people build value, because only they can mange manage and grow tangible and intangible assets. Businesses today need to develop methods to measure and manage people as assets, not just as costs.

If this sounds revolutionary, it shouldn’t. A basic premise of modern management theory is that everything can be quantified in order to facilitate positive change and effective management. Within the broad spectrum of management, there are many factors related to corporate assets and employees that should be closely measured:

  • Cost and value numbers should be balanced so that both play an equal role in making decisions.
  • Intrinsic diversity and individual worth must be acknowledged in order to evaluate personal human capital.
  • Financial and non-financial value created by each individual must be identified.
  • Future...

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