Last week I opened the invoice: a trillion dollars in silent mental-health losses, ten trillion in disengagement, half a billion leaking annually from a single median firm. The cost of not investing, priced. And the hinge I left you with — every US$1 invested in treating depression and anxiety returns about US$4.

Marshall wrote that sentence above in 1890. A hundred and thirty-six years on, most P&Ls still book people as a cost.

But here is the problem with last week: it was a fear case. And fear makes a poor investor. A board that funds people to avoid pain will cut again at the first hard quarter — cost-avoidance has no compounding. What survives budget season is not the argument that spares you a loss. It's the one that books a return.

So let me put my position before the evidence: measured properly, your people are not your highest cost. They are the highest-yielding asset you own — and the return is paid in the one currency downturns demand: resilience.

I should declare an interest. Fresh from my PhD in 2006, I applied to one firm — PricewaterhouseCoopers — for one reason: Saratoga, the practice Jac Fitz-enz built, where measuring the value people create was the whole job. Twenty years later, I'm still asking Saratoga's question: not what we spend on people, but what is realised in return. This week I hand you its instrument.

Markets first — because the strongest rebuttal to “people spend is soft” comes from the hardest-nosed audience on earth.

— Tanguy

Last week priced the fear; this week prices the greed. Four numbers, from the world's capital markets down to your own workplace — and below them, the one worth sitting with, plus the formula that puts your own return on a single line.

💹 INVESTOR RETURNS 💹 | Human Capital Management — Research Summary: People Are Our Greatest Asset | Schroders (2023) | What does the least sentimental audience in the world make of investing in people? Schroders — working with CalPERS and Saïd Business School, University of Oxford — found that Human Capital ROI is positively correlated with forward excess returns, over multiple time horizons and across the majority of sectors, even after controlling for quality (ROCE), valuation, size, momentum and R&D intensity. Built on empirical testing of a global equity universe from 2014 to 2022, averaging 228 stocks per long–short portfolio each month, the research carries an even sharper edge: markets punish poor HCROI harder than they reward strong HCROI. Investors already price your people decisions. The only question is whether you measure them before the market does.

🏆 BUSINESS PERFORMANCE 🏆 | Performance Through People | McKinsey Global Institute (2023) | What separates the firms that make people development pay off from those that merely spend? Across 1,793 large companies in 15 countries, benchmarked within their sectors on a decade of economic profit plus training hours, internal mobility and organisational health, only about 9% deliver top-tier financials and top-tier people development. These People + Performance Winners generate roughly 30% higher revenue growth for every dollar invested in people and organisational capital — spending that averages a third of revenue. And here is the reframe: their profitability merely matches the purely performance-driven. The difference is about half the earnings volatility, and revenue growth twice as fast through the pandemic. The return doesn't only show up in the good years. It shows up precisely when everything else is failing.

🌊 TALENT ADVANTAGE 🌊 | Work Reimagined Survey | EY (2024) | If 38% of your workforce is ready to walk, is that a threat — or a flow you can channel? EY's survey of 17,350 employees and 1,595 employers across 27 sectors and 23 countries found that only 32% of organisations run a genuinely strategic people function. Those that do are 7.8 times more likely to have successfully navigated recent external pressures, 6.5 times more likely to report significantly improved productivity over two years, and 5.8 times more likely to be outperforming in current conditions. Two-thirds of organisations are leaving that multiple on the table. That isn't a risk statistic; it's an arbitrage.

❤️ EMPLOYEE EXPERIENCE ❤️ | The Definitive Guide: Employee Experience | The Josh Bersin Company (2021) | Now bring it inside your own walls. When Josh Bersin's team surveyed more than 950 organisations and correlated over 80 workplace practices against business, people and innovation outcomes, the organisations that get employee experience right proved 2.2 times more likely to exceed financial targets, 5.2 times more likely to engage and retain their people, and 3.7 times more likely to adapt well to change. The most striking figure of all: the most financially and operationally successful companies are 34 times more likely to support employees in developing their careers. The practices are not exotic. They are simply funded.

Sit with McKinsey's — not for the size of the return, but for its address. People + Performance Winners don't out-earn the purely performance-driven; they match them. What they don't match is the ride: half the earnings volatility, and revenue growing twice as fast when the pandemic hit. Now hold last week's page against this one. The costs of divesting — disengagement, decayed skills, the colleague who quietly leaves — land hardest in downturns. The returns of investing arrive at exactly the same address. Risk and return on human capital are one line item, read from opposite sides — and resilience is where they meet. Benjamin Graham called it a margin of safety. I call it the Regeneration Premium: the excess return that accrues to organisations that fund their people as a renewable asset instead of draining them as a fixed cost. It is the whole two-part argument in one sentence — and it is exactly what a P&L cannot show you. An instrument can.

Last week's Workforce Risk Map priced the exposure. This instrument prices the return — and together they make the complete case: what it costs to neglect your people, and what it pays to fund them. Boards fund what they can compare, so put your workforce on the same footing as every other asset class: count it, compute it, compare it.

Count it. Build your Human Capital Cost Factor (HCCF) — the fully loaded cost of your people: salaries + benefits + contingent workers + training + absence + turnover. Not the payroll line. The whole invoice. (Sound familiar?)

Compute it. HCROI = (NOPAT + HCCF) ÷ HCCF. In words: add everything you spent on people back to your net operating profit after tax, then divide by that spend. It reads like any other return: 1.0 means your people investment broke even; 2.0 means every franc invested came back twice.

Compare it. One HCROI is a photograph; the trend is the film. Track it over three years, benchmark within your sector — and, this is where the two instruments lock together, read it against your Workforce Risk Map. A top-right risk cluster plus a falling HCROI is the strongest investment case a CHRO can present to a board.

Your turn. One envelope, one calculation: your HCROI for last year. Above 2, or below? Hit reply and tell me; I read every one. And if you know a CEO drafting next year's budget with the people lines circled in red — forward this before the ink dries.

📈 The Half-Time Whistle — Sunday 26 July

Two weeks of ledgers close the Invest-or-Divest question: the cost is real, the return is real, and now you can compute both. From next week until the end of August, I return to the standard format — each Sunday, three or four of the best pieces of evidence 2026 has produced, across the themes this newsletter covers, with my reading of each.

— Tanguy

Mini-lexicon

Human Capital ROI (HCROI) — the profit generated for every unit of money invested in people: (NOPAT + HCCF) ÷ HCCF. This edition's instrument.

Human Capital Cost Factor (HCCF) — the fully loaded cost of a workforce: salaries, benefits, contingent labour, training, absence and turnover. The denominator that keeps HCROI honest.

The Regeneration Premium — the excess return, paid as resilience, consistency and retention, that accrues to organisations funding their people as a renewable asset rather than draining them as a fixed cost.

Method

The HCROI formula sits inside the People Centricity Methodology™ — Empathise, Strategise, Realise, Analyse. The Analyse phase is my Saratoga inheritance: keep score, with metrics that matter.

References

Bersin, J. (2021). The definitive guide: Employee experience. The Josh Bersin Company.

Chisholm, D., Sweeny, K., Sheehan, P., Rasmussen, B., Smit, F., Cuijpers, P., and Saxena, S. (2016). “Scaling-up treatment of depression and anxiety: A global return on investment analysis.” The Lancet Psychiatry, 3(5), 415–424.

Ernst & Young (Feinsod, R., Billeter, K., and Beck, R.). (2024). Work Reimagined Survey: Will the future of talent be shaped by the flow of an untethered workforce? EYGM Limited.

Fitz-enz, J. (2009). The ROI of human capital: Measuring the economic value of employee performance (2nd ed.). AMACOM.

International Organization for Standardization. (2018). ISO 30414:2018 — Human resource management: Guidelines for internal and external human capital reporting. ISO.

Madgavkar, A., Schaninger, B., Maor, D., White, O., Smit, S., Samandari, H., Woetzel, J., Carlin, D., and Chockalingam, K. (2023). Performance through people: Transforming human capital into competitive advantage. McKinsey Global Institute.

Marshall, A. (1890). Principles of economics. Macmillan.

Schroders (in collaboration with CalPERS & Saïd Business School, University of Oxford). (2023). Human capital management — Research summary: People are our greatest asset. Schroder Investment Management.