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How Human Capital Reporting Can Improve Decision Making

linnet | 6th January 2015
Business secretary Vince Cable has welcomed the findings of a recent CIPD report Human capital reporting: investing for sustainable growth"   and has said that focusing on reporting standards around people-led performance could ensure business investment is maximised and productivity is improved year after year.
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So what is Human Capital? What should be included in Human Capital Reporting? Why should we care?  The CIPD report defines Human Capital as “the value of people at work and their collective knowledge, skills and ability to develop and innovate”.  Meanwhile Human Capital Management Reporting is defined as “quantitative and qualitative data on a range of measures, such as labour turnover and engagement to help identify HR or Management practices to drive sustainable business performance”.

The answer to “why should we care?” is that in an global and increasingly competitive market place, the value of a company’s Human Capital can help give a business the edge over its rivals.  The use of Human Capital Reporting can help organisations understand the drivers of value and improve their decision making, using metrics rather than guesswork.  The publication of such Human Capital Reporting is also likely to help investors assess the long-term prospects of a company, by examining, for example levels of investment in training and development, or current skills versus current and future requirements.

While there is a plethora of measurements companies may want to include in their Human Capital reporting; the report concludes that the four key Human Capital Measurements are: 1) Total cost of the workforce; 2) Recruitment costs and turnover; 3) Total investment in training and development and 4) Employee engagement survey scores.  The latter, while somewhat contraversial, can give a vital insight into the state of an organisation’s culture and Human Resources practices.

The advent of cloud-based SaaS HR & Payroll software can make the recording and collating of this information a  relatively straightforward affair.  Furthermore, the cost of these solutions is now within reach of many SMEs.

If you would like to discuss what Human Capital Reporting means for your business, and how nickshot hr can help, please contact karen@nickshot.co.uk

 

 

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