What does human capital return on investment (HCROI) measure?

Human capital return on investment (HCROI) specifically measures the operating profit derived from investments made in human capital. This metric is essential for organizations as it quantifies the financial returns of expenditures on workforce development, such as training and development programs. By calculating HCROI, organizations can assess how much profit is generated relative to the investments made in their employees, allowing for a clearer understanding of the effectiveness and value of these investments.

In contrast, while the other options present various aspects of financial management, they do not connect directly to the concept of HCROI. Employee training costs relate to the investments being measured, but they do not represent the return on those investments. Total expenses of an enterprise encompass all costs incurred by the organization, not specifically shedding light on the profitability stemming from human capital. The average salary of employees, although a component of human capital costs, does not reflect the overall return generated from those expenditures. Therefore, the focus on the operating profit gained from human capital investments highlights the intended purpose of HCROI, making it the correct interpretation.