OFR HR reporting will be mostly ” airy clichés”, says CIPD

Government proposals on
financial reporting lack focus on people, according to the Chartered Institute
of Personnel and Development (CIPD).

The Department of Trade and
Industry is proposing that all quoted companies introduce a new Operating and
Financial Review section in their annual report and accounts from 2005, to
place a greater emphasis on the importance of ‘intangible, largely human
assets’.

Companies would have to include
some information about employees in their OFR, or explain why they have not.
The consultation on the draft proposals ends today.

However, the CIPD said chief
executives’ assertions in annual reports and accounts that "our people are
our greatest asset" risk remaining as "airy clichés" unless the
Government does more to strengthen reporting requirements.

The institute said the
proposals from the DTI’s Accounting for People Taskforce had largely been
ignored.

The taskforce recommended that
companies be compelled to include information in their OFR about their
"human capital management strategy", which it defined as "an
approach to people management that treats it as a high level strategic issue
and seeks to systematically measure how people policies and practices create
value". 

It specified areas that should
be reported on such as training investment, employee turnover rates, and staff
attitudes and satisfaction.

The latest proposals leave
reporting to the discretion of the "directors of the company to review and
identify the relevant factors in their particular case", or omit them
altogether if they see fit.

CIPD assistant director general
Duncan Brown said, "The DTI produces national competitiveness indicators
to encourage companies to better manage and invest in their people, to help
move the UK economy in the desired direction up the added value chain.  Yet it appears to be backing away from
making individual companies do the same.

“Leaving this decision to
individual companies and their directors, risks institutionalising airy clichés
about the importance of people, while leaving investors and staff in the dark
about the real picture,” he said.

By
Michael Millar

* PersonnelToday.com and
Deloitte will be publishing research on employers’ plans to report on HR in
OFRs in the Measuring Human Capital Value 2004 report on 12th October
2004

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