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Companies fail to measure human capital, finds survey

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A new report by the Chartered Institute of Personnel and Development (CIPD) suggests that company accounts currently record the costs associated with people, but not the benefits they bring, in spite of the “people are out greatest asset” mantra.

The report shows that human capital, while fundamental to organisational success, cannot be the subject of a one size fits all measurement tool, because human capital is, “non-standardised, tacit, dynamic, context-dependent and embodied in people.”

The CIPD says that organisations need to better understand and put in place key measures of the value which people add to the organisation, such as skills and qualifications, labour turnover rates, rates of innovation, the extent of team working and key employee statistics in areas such as employee attitudes and demographic composition.

Evaluating Human Capital features a number of case study companies that are making progress in relation to managing and measuring their human capital. None have as yet taken the decision to report such measures to external stakeholders.

Duncan Brown, the CIPD’s Assistant Director General said: “Trade and Industry Minister Patricia Hewitt recently announced an initiative on human capital reporting which calls for more information to be included in company reports. That will help; but if we are to avoid near-identical statements of general platitudes that characterise so many ‘boiler-plate’ obligations, it is vital that they report in terms that are meaningful to them, consistent over time and traceable by all stakeholders into the value they ultimately create.”

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