The Accounting for People Task Force has now published their conclusions and recommendations in a report to the Secretary of State for Trade and Industry, Patricia Hewitt.
The report is the result of a five-month consultation on how organisations should go about reporting on their “human capital”, including activities such as training, recruitment, staff turnover and diversity.
Speaking at its launch yesterday, Duncan Brown, Assistant Director-General of the CIPD, said the Government should endorse the recommendations set out in the report.
The CIPD is urging the Government not to adopt a prescriptive approach to human capital measurement and reporting, but stick to a set of “general principles to guide decisions”. Brown commented: “Take a typical workforce measure such as labour turnover. How would you assess a company rate of say 20%? For a retailer this would be incredibly low, while for a research-based manufacturing company it might threaten its competitive survival.”
Brown said: “The importance of the report should not be underestimated both within and outside the profession. Within the profession, the success of organisation rests increasingly on the shoulders of HR practitioners as they look to find a human capital management and reporting formula that suits their organisation. A uniform style of reporting is therefore simply unworkable.”
He continued: “And what is more, the dynamic and intangible nature of human capital means that it should not be included in the financial statements of the firm, nor imposed as a common and inflexible set of measures. It would be most effectively reported in the Operating and Financial Review (OFR).”
The CIPD would like to see another recommendation to the list set out: for organisations to set out the barriers to meeting any of their targets. For example, the CIPD says that, while many have laudable aims regarding recruiting a diverse workforce, the geographical demographic constraints might prove such aims unworkable in reality.
Patricia Hewitt said: “The Accounting for People Task Force, under the watch of Denise Kingsmill, is to be congratulated. They have provided valuable insight into the impact of HCM, and some sensible guidelines on what a HCM report might cover.”
She continued: “Their work should help those already reporting and those who want to report. I hope it will encourage others to follow their example, and convince sceptics of the importance of human capital management reporting.”
You can also download the CIPD’s guidance: Human Capital Change Agenda
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