CIPD welcomes Government taskforce report on human capital

The Government should endorse the recommendations set out in todayís Accounting for People report according to Duncan Brown, Assistant Director-General of the Chartered Institute of Personnel and Development, speaking at its launch. In particular, the CIPD urges the Government not to adopt a prescriptive approach to human capital measurement and reporting, but stick to a set of ìgeneral principles to guide decisions.î

As Brown comments, ìTake a typical workforce measure such as labour turnover. How would you assess a company rate of say 20%? For a retailer this would be incredibly low, while for a research-based manufacturing company it might threaten its competitive survival.î

The report is the result of a five-month consultation how organisations should go about reporting on their ìhuman capitalî including activities such as training, recruitment, staff turnover and diversity.

Brown comments, ìThe importance of the report should not be underestimated both within and outside the profession. Within the profession, the success of organisation rests increasingly on the shoulders of HR practitioners as they look to find a human capital management and reporting formula that suits their organisation. A uniform style of reporting is therefore simply unworkable.

ìAnd what is more, the dynamic and intangible nature of human capital means that it should not be included in the financial statements of the firm, nor imposed as a common and inflexible set of measures. It would be most effectively reported in the Operating and Financial Review (OFR). ì

The CIPD would like to see another recommendation to the list set out: for organisations to set out the barriers to meeting any of their targets. For example, many have laudable aims regarding recruiting a diverse workforce ñ but the geographical demographic constraints might prove such aims unworkable in reality.

The CIPD has already produced guidance in the form of its ìHuman Capital Change Agendaî downloadable free of charge from its website.