New report calls for international reporting standards in Human Capital Management

Human Resources has for too long taken a backseat to other business-critical functions through having no industry-standard method of demonstrating its return on investment. Now a defining new report Human Capital Management launches for senior managers which outlines the need for HR to drop the tea and sympathy image and adopt a business focused agenda, aligning employee and performance measurement with that of the strategic direction of the business and delivering tangible results, reliable metrics and a visible return on investment.



Human Capital Management - A Management Report from Croner, a leading UK provider of employment information and advice, is written by internationally renowned work and management expert, Richard Donkin. Using a selection of case studies, Donkin demonstrates how various businesses have sought to harness their individual approaches to Human Capital Management. Moreover it points the pathway to the boardroom that remains a significant status objective of HR. The difference here, however, is that it describes tools and strategies to help HR professionals define a leadership role in business.

Research over the last five years commissioned by Investors in People UK (IIPUK) shows that organisational changes made by recognised employers are twice as profitable as changes made by other companies.1. In the words of the first chairman of IIP: Investment in people appreciates, whereas investment in capital depreciates.

At the heart of Human Capital Management is the need for organisations to align their own aspirations, beliefs and ambitions with those of their stakeholders. Cronerís new report explains why Human Capital is a distinct and measurable business function, enabling organisations to take a strategic approach to employment policies.

The Report also gives details on new and forthcoming legislation requiring large companies to include employee information in their financial reporting, with a practical action plan of how this can be used for corporate growth, illustrated with case study examples from companies including Alexander Mann Solutions, Sears Roebuck and Co, and Royal Bank of Scotland.

Richard Donkin, author of Human Capital Management (HCM), says: Quite simply, Human Capital Management is about investing in people and the intrinsic value of employees. This is not about ífamily friendlyí HR policies. Even some of the UKís biggest companies are failing to make the connection between investing in a workforce and the end product in profits and sales. We are talking about the relationship between investment and profit, hence the term human capital.

He continues, Too often employees have been described disingenuously as assets. This can send the wrong signal to accountants whose balance sheet approach must register employees as costs. Employees are quite clearly costs but if they are viewed as capital that can appreciate with investment, rather than depreciate in value over time like many fixed assets, their value to an enterprise is difficult to dispute.

This report, using a selection of case studies, demonstrates how various businesses have sought to harness their individual approaches to Human Capital Management. Moreover it points the way to the boardroom that remains a significant status objective of HR. The difference here, however, is that it describes the tools and the strategies that can help HR professionals to define a leadership role in business. Leadership has to be merited. It cannot be assumed as some God-given right, says Donkin.

Human Capital Management is the sixth in Cronerís Business Evolution series of Management Reports written by recognised industry experts. Others in the series include Corporate Manslaughter, Diversity and Equality and Corporate Social Responsibility.

Peter Fitzmaurice, business development manager at Croner says: Our Management reports are accessible introductions to the hottest issues in the marketplace and designed to demystify and clarify strategic issues surrounding emerging management trends. Crucially they provide the reader with rationale for business to buy into the issues raised with clear pointers for preparing a proposal for executive agenda setting.

For further information about Human Capital Management or other reports in Cronerís Business Evolution series, please visit www.croner.co.uk/managementreports.

1 Impact research recently commissioned by Investors in People UK (IIPUK) shows that organisational changes made by recognised employers are twice as profitable as changes made by other companies. Additional productivity per employee was 41 per employee per year in large organisations, 602 in medium organisations and 303 in small organisations.