The value of human capital management (HCM) reporting depends on what companies themselves make of the opportunity provided in the operating and financial review (OFR) (Personnel Today, 22 February).
I can see nothing in the OFR draft guidance to suggest that Accounting for People has been ignored or that people are being seen as “an organisation’s greatest liability”.
Of the two examples in the guidance, health and safety may often be a compliance risk, but staff morale should be a key strategy, and the OFR will provide measures against this strategy being achieved.
The flexibility of the guidance does mean that companies can get away with reporting very little. However, those that value their reputation, particularly those wanting to present themselves as employers of choice, will still take the opportunity provided by the OFR.
Taking advantage of this opportunity is not about victory for the accountants or HR. It is about HR, finance and company secretaries working together to identify and provide the information investors need to assess the current and future performance of the business. HR should play a key role in this, both in reporting on HCM and in increasing general capabilities for reporting on intangibles within their organisations.
It is not going to be enough to leave reporting until April 2006, when a company’s OFR is due. The measures companies are going to report on next year need to be developed as part of the people strategies that HR should be working on now.
Head of HCM strategy consulting, Penna