Personnel Today’s petition to include meaningful HR data in company reports has generated a huge response, with more than 300 signatories already signed up. Here are the edited highlights of the feedback we have received from those who have signed our petition so far, as well as industry experts and members of the Accounting for People Taskforce.
What members of the Accounting for People Taskforce are saying…
“I am entirely happy with the emphasis on companies reporting on those matters material to their business. My taskforce provided some guidelines for those companies that wish to include people information in their reports, but as the Accounting for People report made clear these were certainly not intended to be prescriptive.”
Head of the Accounting for People Taskforce
“I’m fairly happy with the regulations – the taskforce was all about creating an awareness and understanding of HCM [human capital management] and how important it is. We are now leaving it up to management, but they ignore this at their peril. If organisations do not include people information, it almost implies that they [people] are of lesser importance than other things that are necessary for an understanding of risk and strategy.”
“Having been a member of the taskforce that produced the Accounting for People report, I was disappointed by the stance that Personnel Today has taken with regard to the Operating and Financial Review (OFR) regulations and accompanying draft reporting standard from the ASB (RED 1). I agree with the comments made by my fellow taskforce member David Bishop that “the taskforce was all about creating awareness and understanding of HCM and how important it is”. That was very much a reflection of the messages we heard from companies and investors during our work and a sentiment echoed in our report, which formed an important input to the ASB guidance.
“Personnel Today claims that ‘in the ASB guidance, employees are seen almost exclusively as a risk rather than and asset’. That is not my reading of RED1 and the accompanying implementation guidance. Employees are referred to as an example of a resource in paragraph 49 of RED1, and as a ‘particularly key resource’ in IG21. Further, employees are also referred to as an example of a significant stakeholder relationship in paragraph 56 of RED1. That is, I suggest, the intent of the guidance rather than your interpretation.
“The OFR regulations and RED 1 are clear that the OFR has to be the responsibility of the directors who have to judge for themselves what to report, taking into account the particular circumstances of their own company. While the requirement to cover employees is ‘to the extent necessary’, directors still have to consider such issues in the context of their strategy and its execution and will have to state when employee issues are not included in an OFR, which should concentrate the minds. Again, to quote David Bishop, companies which choose not to report on employee issues do so ‘at their peril’.”
What industry experts say…
“Because the perception built up that the government was going to do something here, it could now have a negative effect. Companies should be (measuring the value of HR) anyway, but for whatever reason they are not, and without the legislation there is no real external driver.”
Assistant director general
“I think if the HR profession was waiting for any ‘leadership’ on this issue they had better not be holding their breath. It just proves that the government and business leaders don’t have a clue what HCM means or how they might get significantly more value out of their people than they do now.”
Director of HR
“There is a strong argument for making information relating to human capital mandatory, because it is so important. I cannot see why the government has left it out.”
Saratoga (the HR consulting arm of PricewaterhouseCoopers)
“HR does need to seize the initiative and set its own standard. After all, no-one, except finance directors and company secretaries, is ever going to read anything more than digests of the requirements, so it’s up to the profession to get out there.”
“At face value, the recommendations in the new draft regulations look disappointing for those of us who see people issues high on the CEO agenda, together with the need for better reporting. This appears to be an opportunity missed.”
European head of human capital consulting
And what the HR profession says…
“The regulations offer a great opportunity to build on the work of Kingsmill, but they do not go far enough. There is an opportunity over the next few weeks for HR to get lobbying so we can build on the positive aspects and toughen up the guidelines, because there is a lot a latitude there.”
General manager (people)
West Bromwich Building Society
“The draft regulations are very disappointing. It is sad that the output of the work undertaken by the DTI-sponsored Kingsmill Accounting for People taskforce has not been understood or had any substantial impact on the regulations. An obligation to include employee information in company reports would certainly have assisted in improving the focus on better people management in companies. Unfortunately, we have another missed opportunity for moving the people agenda forward, for the benefit of UK plc.”
“People represent any organisation’s defining asset. Excellence in people management can add massively to shareholder value. Is it not time for shareholders to be aware of how well, or badly, such a resource is being managed?”
“Possibly the greatest opportunity to place HR at the heart of a business and provide real value to employers, employees, shareholders and potential investors.”
“A company is nothing without its people. What are you afraid of?”
“An OFR won’t be complete without people management data.”
“An opportunity to make UK management efficient missed. A typical response where there are no votes to be won.”
“As the era of the service industry gains momentum, it is inevitable that many company assets are indeed founded on intangible capital and not physical, tangible capital.
Employee costs often exceed 40% of many companies’ total expenditure. Thus, to enable a stakeholder to knowledgeably invest in a company, it would be imperative to know that the company is able to maintain the intangible assets – to stop, for example, the knowledge walking out to a competitor.
Annual reports that include information on their human capital and how the organisation will maintain and invest in this most important of assets, will offer information that will help potential investors to back a company. It is essential information that the market requires.”
“By reporting on staff strategies and management, companies will become more aware of people impact and, who knows, it may even assist production.”
“Clearer guidelines need to be produced and bought into.”
“Come on Tony [Blair] – pull your socks up. As an employment lawyer surely you must see the value of people in the success of business.”
“Companies have developed so far with recognition of people as their greatest asset. There should be a driver to measure value.”
“Denying this is paying lip service to the statement that ‘our employees are our most important asset’. Where would the British economy be without the millions of people who work to make it a success? Unfortunately, many organisations in this country have a history of treating people as an expendable resource, when, in reality, their businesses could not survive without the contribution of their workers. Failing to measure workers’ contribution and value to UK business is overlooking our true assets.”
“The government should recognise the value HR brings to any organisation. I do not believe that any organisation, be it government, industry, or even the voluntary sector, could operate properly without the special skills people bring to organisation. If organisations are going to be able to compete for business they must value and recognise people’s skills and keeping supporting and developing them.”
“It is absolutely critical that information about the people working for an organisation is clearly visible to all, as an indicator of the added value and business benefits they bring. People are the true differentiator and there needs to be recognition of this.”
“No wonder British management is as abysmal as it is, there is no measurement that is recognised by anyone. Isn’t it about time we voted for a strategy that would prove what we keep saying that our people are our greatest assets. Mind you perhaps that’s why they don’t want to be measured, as there is no real meaning behind the words.”
“So, 40-60% of operating costs unaccounted for? The government never fails to miss an opportunity to miss an opportunity. We need to put a value on our people. They are our greatest source of competitive advantage and we need to recognise that when looking at the status and health of any organisation.”
“What an insult to our profession, but more importantly what an insult to people.”
“When will the government realise that people are the best asset in any company and should be reported. This could take HR backwards instead of the forefront for its company.”
“Yet another example of the Blair government talking lots and doing little – pensions, age discrimination, human capital management… The list goes on.”
There is still time to be heard…
The government’s Operating and Financial Review regulations are out for consultation until 28 February. As they stand, the regulations have all but ignored the Accounting for People Taskforce requirements for organisations to measure and report on their people policies each year.
If you believe that meaningful data on people policies should be included in annual company reports, then sign our petition, which Personnel Today will present to the Department for Trade and Industry.
Now is the time for the true value of HR to be recognised. Don’t delay, sign up today.