People reporting has been pushed further down the corporate agenda following the government’s decision to scrap operating and financial reviews (OFRs), senior HR professionals have warned.
The remarkable U-turn by chancellor Gordon Brown, announced at last week’s CBI conference, means there is now no legal requirement to include any meaningful people data in annual reports.
The OFR was intended to provide a written account of how a company was being run – including information on employees and corporate governance – to complement financial data.
But the U-turn means the impetus in people reporting has been lost, according to Duncan Brown, assistant director-general at the Chartered Institute of Personnel and Development (CIPD).
“I’m very disappointed and don’t understand this decision at all. It has not been thought through properly,” he said. “UK businesses will be worse off and it will slow down how companies demonstrate how important their people are to them.”
Brown said the introduction of OFRs had led to the CIPD getting more queries about the type of people information to put into annual reports.
Paul Turner, general manager (people) at West Bromwich Building Society, said OFRs would have made companies more accountable.
“How firms treat their people will be a key differentiator for investors. This was a big opportunity for companies to show the health of their internal data,” he said.
But Paul Kearns, director at HR consultancy PSL, said the decision would make no difference as human capital management was bypassing HR professionals, who were “being left stranded between outsourcing and not being able to offer a strategic capability – not a rosy future”.
The Operating and Financial Review (OFR): road to nowhere
The Department of Trade and Industry (DTI) launches long-term fundamental review of core company law, led by an independent steering group.
Steering group presents its final report to the DTI.
Government publishes response to the major recommendations.
The DTI sets up the Accounting for People (AfP) taskforce, to provide guidance on how firms can relate people management to profits in their annual reports.
Government announces plans for reforming company law, containing three main elements, one of which is introducing OFRs for large companies.
The AfP taskforce recommends that companies producing OFRs should include within them information on employees or explain why it is not there.
Government publishes draft regulations for OFRs, but largely ignores the AfP recommendations, prompting widespread condemnation by HR and business, and a hard-hitting Personnel Today campaign.
OFRs become law. Despite widespread support for Personnel Today’s campaign – backed by a petition signed by 400 HR professionals – there are no changes to the draft regulations.
In a surprising U-turn, Gordon Brown announces that OFRs are to be scrapped as part of a government clampdown on red tape.