Back in May, Personnel Today urged its readers to get involved with the
consultation on human capital management (HCM) launched by the DTI’s Accounting
for People Task Force.
This magazine is convinced that proving the link between people policies and
the bottom line is key to the future of the HR profession and we were anxious
that our readers should get stuck in and influence the outcome.
The response was phenomenal, far better than many other consultations, with
more than 100 organisations contributing in various ways to the taskforce’s
thinking. The result this week is a weighty document calling for action from
companies, the Government and from professional bodies to kick-start a more
robust approach to reporting of HCM.
There is nothing mandatory or prescriptive about the recommendations – all
organisations are different and, therefore, there will be no uniform approach.
Employers will need to define what aspects of HCM are key to their own
performance and figure out what to do themselves.
Guidelines on key indicators will come, but don’t expect them in this week’s
report. There are case studies and advice on methodologies and metrics, but
that’s about it.
A set of general principles for HCM reporting has been provided to encourage
the publication of high-quality information, but HR should not feel alone.
HCM has been under-exploited as a way of gaining a competitive edge and must
be seen as a top-level strategic issue rather than as operational HR. Nevertheless,
the onus is on the HR director to win over the board and help the business
understand how people practices can create value and lead to sustainable
It is in the interests of everyone – chief executives, managers, workers,
investors, customers and most certainly HR – to make these measures more
visible. In future, no HR professional should attempt to persuade the board of
a particular course of action without hard evidence to back it up.
HR has just two years to get its act together. So let’s be clear about what
you are being asked to do. HR must use sound data to report on measuring the
impact of people policies and relate it to corporate strategy and performance.
Your report may be reviewed by auditors, should be capable of comparison over
time and use commonly accepted terms and definitions. In future, annual report
and accounts should include this data.
HR may have struggled in the past with HCM but there can be no excuses not
to tackle it now. Use it as leverage to prove that HR can make a difference.
By Jane King, editor