Final answer:
Option (b), The formula to estimate an organization's human capital return on investment is (Total revenue - [Operating expenses - Total compensation costs]) ÷ Total compensation costs.
Step-by-step explanation:
The formula that estimates an organization's human capital return on investment is b) (Total revenue - [Operating expenses - Total compensation costs]) ÷ Total compensation costs. This formula considers the total revenue generated by the organization, subtracts the operating costs excluding the total compensation costs, and divides that result by the total compensation costs. It effectively measures the efficiency and profitability of the organization's investments in its workforce, thereby revealing the financial return on human capital investments.
Investing in human capital is critical because it represents an upfront cost with the potential for future benefits, such as increased productivity and earning capability. Organizations aim to enhance human capital to improve operations and generate higher profits, which can be assessed using the human capital return on investment formula. This calculation helps in understanding how effectively the monetary investments in employee compensation are contributing to the company's earnings.