This week’s exclusive research with Deloitte into human capital management (HCM) is a sobering read for HR practitioners.
Almost 40 per cent of senior HR professionals don’t see HCM as a priority for their business and a quarter of organisations do not use any human capital measurement.
Even more alarming is that these findings coincide with the first anniversary of the Accounting for People (AFP) taskforce’s recommendations on HCM. One result of the report is that listed companies will have to report on the people policies in their operating and financial reviews. This will be a statutory requirement early next year.
So, we are one year on from the first publication of the recommendations with regulations looming large, and effective HCM still seems a long way off.
All is not doom and gloom, however.
In 2002, Personnel Today carried out a similar piece of research on HCM with Deloitte. Comparing then with now, it shows more organisations are now measuring human capital than they were in 2002.
Crucially, those organisations that are making progress with HCM insist it is leading to more positive outcomes for HR as a discipline because it provides tangible evidence of how HR makes a difference.
Today, HR practitioners say the main reasons for not reporting on HCM are that it is not regarded as a priority for the business and there is a lack of clarity as to the business benefits of HCM and uncertainty on what to measure.
The original AFP report should have gone further by providing more step-by-step advice and with hindsight it should have been more prescriptive. It is clear that despite practical guidance from Personnel Today and the large consultancies, that more must be done by the AFP, the Department for Trade and Industry and the Chartered Institute of Personnel Development in educating the profession.
HR has to get on top of this issue now otherwise marketing and finance will take over the metrics. Demonstrating return on investment is a fundamental of good business and it ensures the value proposition is understood.
HR can no longer pretend that measurement is not part of its job.