Businesses are unprepared for human capital measurement yet they need better measures to unleash performance gains and keep shareholders happy.
The Taking Measures report by Penna Board Partnership, says that 82% business leaders, surveyed from 200 UK companies, now acknowledge that HCM is fundamental to the success of the business.
Further, 80% of business leaders agree that reporting and measurement are central to the effective delivery of Human Capital Management.
According to the research, businesses are currently looking at basic operational and historical people measures, such as headcount changes (86%), hires and terminations (81%) and total compensation (61%).
Leaders understand the value of more strategic HCM measures, such as employee motivation (77%), leadership team capability (76%) and employee competency (70%). Almost nine out of ten (87%) business leaders want to report on these figures in the future.
However, for now, leaders highlight that they do not have the necessary systems and procedures in place to capture, and report on, these key measures. Only 20% of business leaders feel well, or reasonably, prepared. 39% of Managing Directors believe their organisations in a poor state of preparation for reporting externally on HCM.
Richard Finn, Managing Director, Penna Board Partnership, said: "HCM reporting will become more pressing when the Company Law Review – which obliges most large companies to produce Operating and Financial Reviews (OFRs) reporting on factors that are material to the organisation's performance – comes into effect. It will be hard for organisations to argue that HCM is not material and should not be included within this vital insight into a business' performance. The Accounting for People report, which encourages companies to report across a broad range of HCM measures, underlines this imperative."
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