The goal of business strategy is to invest capital in a way that maximizes shareholder value. But defining the actions that will accomplish this goal is complex. Success oftentimes depends on the skills and motivation of an organization's employees who assume responsibility for taking a strategy to fruition.

Traditional financial planning frameworks offer very little to guide human capital investment decisions; yet payroll and benefits typically constitute 30-70% of operating expenses. There is little information available to guide management on how to engage pivotal employees and what the "flight risk" is for this talent.

Hewitt developed Human Capital Foresight™ (HCF) to address these questions with factual analysis and to find the degree to which optimal people investments help companies create more value than their peers. This article, which originally appeared in Valuation Issues and is made available here with permission of the publisher, discusses the methodology behind HCF.