Four Groups Blog

The ongoing debate about encouraging companies to report on their human capital management practices seems to have been dealt another blow. This article outlines some of the recent developments.

The draft Reporting Standard for operating and financial reviews (OFRs) currently being consulted upon by the Accounting Standards Board (ASB) are missing the opportunity to improve UK productivity and competitiveness according to the Chartered Institute of Personnel and Development (CIPD).

Angela Baron, CIPD Organisation and Resourcing Adviser commented: “The ASB have failed to reflect the Secretary of State’s intention to embed in law the concept of Enlightened Shareholder Value. We are disappointed that the issue of employees and their relevance to long-term performance has been allowed to slip so far down the list of factors that are deemed relevant to operational and financial reporting.

We have a wide range of research that supports our conclusion that significant business gains are to be made if organisations collect, analyse and act on all information available and relevant to their long term performance. This means considering the contribution and value of human capital in a thorough and systematic way, and in equal measure with other forms of capital.”

There can be no doubt that in principle, such reporting and information is fundamentally good. However, the question that needs to be asked and ultimatley answered is why are the supporters of these moves struggling to deliver?

In my mind, there are many reasons for these problems but perhaps the most important is the inability to create a best practice approach or something that can be modelled and replicated which equally delivers internal value for the HR sponsors and other senior decision makers. I continue to look for something to represent this, but with little success to date.