Human capital value added, or HCVA, is a measure that quantifies the profit that the average employee contributes to an organization within a specified period of time. HCVA is quite distinct from the Revenue Per Employee (RPE) metric, which is simply the amount of revenue for the organization divided by the number of full-time equivalent employees (FTEs). In contrast, HCVA measures the average profitability an employee contributes to the organization versus the average revenue. The formula for HCVA is given by the following:
This recipe demonstrates how to calculate HCVA on a quarterly basis, which is the recommended frequency for calculating HCVA.