According to Alison Wellner's article "Tapping a Silver Mind" (HR Magazine, March 2002), 60 percent of older boomers and nearly two-thirds of boomers now 38 to 47 expect to work during retirement. According to this article and data from the U.S. Census Bureau and U.S. Administration on Aging, the projected number of older American workers (age 65 and older) will be 39 million in 2010 and 70 million in 2030. As a result, according to Shari Fryer, the director of research for a strategic HR firm, Drake Beam Morin, HR professionals may need to have new performance incentives tailored to older workers such as opportunities to add vacation time, change work schedules, enhance health benefits, assist in personal development, and others. Organizations, as part of their human capital strategy, should consider the impact of an aging workforce. According to Fryer, MITRE enables older workers to stay in the workforce through "phased retirement, part-time work, sabbaticals, and a 'Reserves at the Ready' program that allows employees with at least of ten years of company service to become part-time on-call employees staffing projects throughout the corporation."
To prepare for the age boom, Wellner and Valerie Pagnelli (of Watson Wyatt Worldwide) discuss some steps that HR should be doing now:
Analyze your current workforce. Companies should mine employee data to determine turnover patterns and retirement history and create projections five, ten, and twenty years from now.
Companies should investigate the demographic mix of the community that supplies their workers.
Conduct qualitative and quantitative research with current older workers to learn how a company could improve its relationship with older workers.
Provide retirement education workshops to help persuade aging workers to stay on the job.
Certainly, the organization's success is embedded in its people, and organizations and researchers will continue to look at ways to measure human capital. According to Eilene Zimmerman's article "What are Employees Worth?" (Workforce Magazine, February 2001), analysts and experts agree that nearly 75 percent of the sources of value in a company are never reported, and we have yet to come up with an accounting system that can record it all. According to Zimmerman, the bottom line is human capital matters when it comes to the bottom line! Saratoga Institute has been measuring the value of human capital for twenty years. They have developed ten measures of human capital management, according to Zimmerman and Jack Fitz-enz (founder of the Institute):
Your most important issues
Human capital value added: how do the people in your organization optimize themselves for the good of the company and for themselves?
Human capital return on investment: ratio of dollars spent on pay and benefits to an adjusted profit figure.
Separation cost (the costs to the organization of people leaving): the average cost of separation for an employee is at least six months' equivalent of revenue per employee.
Voluntary separation rate
Total labor cost revenue percent: total benefit and compensation cost as a percent of organizational revenue.
Total compensation revenue percent: percent of the organization's revenues that are allocated to the direct costs of the employees.
Training investment factor
Time to start: monitoring the time from approval of a requisition until someone is on the job is a strategic indicator of revenue production.
Skandia, the Swedish financial services firm, has also been a leader in trying to measure its intellectual capital. It produces the Skandia Navigator report, which looks at the organization from financial, process, human, customer, and renewal and development perspectives. Nuala Beck, a Canadian economist, developed a set of intellectual capital measures:
Knowledge ratio: expresses the number of knowledge workers as a percentage of total employment in an industry, individual company, or organization (measures the "Corporate IQ").
Return-on-knowledge assets: the number of knowledge workers to profit earned.
Patent-to-stock price ratio: the ratio of the number of patents divided by the price of a company's stock.
Research-to-development ratio: the ratio of research dollars spent to the development dollars spent.
Research and development (R&D) to patent ratio: the ratio of R&D investment to number of new patents issued.
Liebowitz has developed a set of factors that affect human capital growth in an organization, as shown in the following list:
Training and Education (T&E)
Formal training of employees
Formal education of employees
Mentoring and on-the-job training
Entre- and intrapreneurship skills
Outside Pressures and Environmental Impacts (OP&EI)
Half--life of information in industry
Demand and supply of those in the field
Internal and Organizational Culture (I&OC)
R&D expenditures of the organization
Formalized knowledge transfer systems
Informal knowledge transfer systems
Interaction with customers and users
Physical environment and ambiance
Internal environment within the organization
Short-term and long-term goals
Psychological Impacts (PI)
Creativity and ingenuity
Stimulation and motivation
Here, human capital growth is a function of T&E + S + OP&EI + I&OC + PI.
In the future, more organizations will continue to develop metrics for measuring their intangible assets.