Reviewing key performance indicators relating to people is important to ensure that risks and opportunities in an organisation are being managed effectively.
However, the furore surrounding the fact that the new accounting standards will not require the inclusion of HR measures is, to a degree, misguided (Personnel Today, 8 March). Adherence to corporate governance best practice in annual reports is a quite separate issue from whether boards of companies believe employees are their ‘most valuable asset’.
If HR is not represented at board level, and the chairman and chief executive officer do not take a direct interest in the contribution of their people, then no amount of mandatory reporting in company accounts will change this situation. Indeed, such a requirement for reporting, had it come into force, may well have been viewed negatively by unenlightened leaders as one more unnecessary distraction from the practicalities of running a business.
So, however disappointed the community of HR professionals may be in missing this opportunity to raise the profile of the function, we should not be diverted by the conclusions of the Accounting Standards Board from our main responsibilities. Instead, we should continue to prove to our colleagues that giving priority to effective leadership of people is critical to delivering competitive advantage.
Where we achieve this goal, human capital reporting will be adopted as an essential component of the management process and not grudgingly, in compliance with the increasingly onerous and bureaucratic burden of corporate governance.
David Longbottom, group director of HR, Dixons
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