A number of quantitative studies have attempted to rise to the challenge of valuing intangible human capital by using employee engagement or a compilation of social indicators, and analysing their links to companies’ success or their share price’s performance. The work of the research-based consulting group Gallup is of particular interest due to the amount of information it has gathered as a basis of its research. It shows a link between employee engagement and nine performance outcomes, concluding on a very strong and generalizable relationship between engagement and business performance. The Macquarie Equities Research team in Australia has created employee engagement leaders and laggards’ indices and has measured their performance against the benchmark. It does conclude that there is some benefit of employee engagement which would need to be verified over the long term. Other works such as the analysis of Best Companies to Work For index have more positive conclusions, worth watching in the long term.
Some companies have clearly grasped the rationale behind employee engagement, and its potential impact on employee retention and the optimisation of human resources. Best-in-class models are probably those in sectors where intellectual capital is core to the business, such as engineering consultancies. Another area of great focus is employee well-being, from occupational health and safety through lifestyle to management of stress, as it is increasingly perceived as a key determinant of employee engagement, and it presents heavy downside risks.
Last but not least, at a time when executive remuneration is scrutinised, there has been a growing integration of human capital management factors into managers’ compensation schemes, often taking the form of employee engagement indicators. This could be a signal that human capital is increasingly viewed as an intangible which should be re-prioritised for the value it has the potential to create.