HR professionals must demand that the Government includes more people information in forthcoming company reporting regulations, otherwise the profession risks being completely sidelined.
Personnel Today’s call, backed up by industry experts, comes after it emerged that employee information is all but ignored in the draft Operating and Financial Review (OFR) regulations, which are due to become law in April.
In 2003, the Department of Trade and Industry’s Accounting for People taskforce recommended that human capital management (HCM) should form a key part of the OFRs – which apply to companies with more than 1,000 employees. At the time, trade and industry secretary Patricia Hewitt said the recommendations would “form useful guidance to help companies ensure that their OFRs reflect how the management and development of their people impacts on the performance of their business”.
But in the new draft regulations, which are out for consultation until 28 February, employees are only mentioned in passing and there is no reference at all to the term ‘HCM’.
The Accounting Standards Board (ASB) regulations, which give legal effect to the OFRs, state that staff is one of nine areas requiring reporting only “to the extent necessary” in directors’ eyes and that staff information may be included “depending on the nature of the business”.
In the ASB guidance, employees are seen almost exclusively as a risk rather than an asset, with only health & safety and morale being the only areas highlighted as key performance areas.
Duncan Brown, assistant director general at the Chartered Institute of Personnel and Development, warned that merely reporting on the number of staff and some information about employee communication will be enough to meet the guidelines.
“It’s as if ‘Accounting for People’ never happened,” he said. “I don’t know where these guidelines came from. The regulations say that matters relating to strategy should be covered, but I am going to ask them to give me examples of companies where people are not key to the strategy.”
HR professionals must use the time available to respond to the DTI’s consultation period, either directly or via Personnel Today’s petition, Brown said. “The whole reason for OFRs was because of weaknesses in financial reporting,” he said. “Unless something is done, reporting will be no better.”