How to value your talent (and give your business a boost)

24 May 2016 -

New research reveals reporting around human capital issues is improving, but more needs to be done to maximise the potential of British workforces

Matt Scott

The way in which the UK’s biggest companies are reporting on human capital issues is improving, according to a new research report from the Valuing Your Talent partnership.

The analysis of FTSE 100 companies found that the majority of companies have increased their disclosure on key issues such as knowledge, skills and abilities (KSA); human resource development (HRD); employee welfare, employee equity and workforce risk between 2013 and 2015.

Across the whole of the FTSE 100, 65% of companies have increased their reporting on KSA issues and 76% on HRD (see right). This equates to a 15% increase in the total volume of information relating to KSA, and a 26% increase in HRD reporting.

Speaking to Insights at the launch of the report, former Business Secretary and keynote speaker Vince Cable said that the reporting of such metrics was vital for improving the economic and business performance of UK Plc.

“We know from all the serious research that has been done that economic performance depends on productivity, and productivity depends on two things: people skills and innovation,” he said. “Without human capital development, the productivity is not going to improve and you never know whether you are doing it unless you measure it – you need the metrics.”

Maximising potential

Despite the improvements being made in reporting, almost a third (30%) of FTSE 100 companies are still withholding relevant information from their annual reports.

To help companies improve the quality of their reporting, Valuing Your Talent has created a framework for consistent disclosure across different businesses.

CMI chief executive Ann Francke said that it was ‘critical’ for businesses to focus on such human capital reporting measures if they were to maximise the performance of their workforce.

“The number one driver of productivity and business growth is the quality of management and leadership, because that’s critical to how far organisations get the best from their people,” she said. “But if managers don’t have sight of good people measures, they have a huge blind spot about performance and can’t make the best decisions about their business.

“The Valuing your Talent framework gives managers a clear model for talking with colleagues in HR and finance about what they need to measure and report when it comes to their people.”

CIMA chief executive Charles Tilley said: “This report shows us just how big a shift in perceptions is needed in this area. We have to recognise people as the key to value creation. Not doing so represents a risk in the short, medium and long-term, as business leaders, investors and other stakeholders find they don’t have the data they need to make the right decisions.

“To address these issues, taking an integrated approach is key – finance and HR departments need to work together to help translate the language of people into language of the boardroom.”

CIPD chief executive Peter Cheese said: “With many more questions being raised about corporate cultures, diversity, engagement and wellbeing, as well as the changing nature of the workforce and how these impact productivity and risk, we need greater transparency and consistency of human capital reporting.

“We need more common definitions of key people and organisational metrics, and for businesses to better articulate how they are using these measures to provide consistent insight for all stakeholders.”

Francke continued that the framework was important because it provided a consistent foundation on which companies could build their reporting measures.

“We need transparency and consistency – that is what drives change,” she said. “Think of the coding world: if you didn’t have common coding languages, do you think we would have Google, Apple and SAP and the rest of them ruling the world? Clearly not.

“It’s by having a common coding language and then opening it up for people to improve on it that we’ve driven the huge technological innovation that we’ve had in our time. We should take the same thing to our human capital – I am all for this common language [for reporting on our people and talent].”

You can read the full report and analysis, Reporting Human Capital: Illustrating your company’s true value, here