Human capital measures agreed

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Board directors and the investment community have reached an agreement on the human capital measures that matter most for assessing an organisation's future performance.

According to the Measures of Workforce Capability for Future Performance report published by the Chartered Management Institute, there are a number of key areas of Human Capital Management (HCM) reporting that investors, directors and stakeholders believe are most likely to affect an organisation's long-term sustainability.

The report found that 86% of company directors agree that employees are their key asset, with the same amount saying the effectiveness of their top team is important to the company's future performance.

But only 68% said they measure the contribution made by the whole workforce, with fewer still (53%) focusing on the impact of senior management.

It also found that there was a low level of measurement among respondents, with only two in 10 firms measuring dynamic indicators, such as evidence of absence management or talent management.

The Chartered Management Institute added that only 5% of investors currently take HCM metrics into account when valuing a company.

On the basis of its findings, the report recommends a three-tier model that could provide a useful framework for firms to measure basic human resources issues.

It suggested that businesses should compile evidence of leadership development, outline training programmes and document performance improvement.

Chief executive of the Chartered Management Institute Mary Chapman, said: "The report provides an initial framework which will evolve with use. A framework like this would mean that companies can clearly differentiate themselves and offer potential investors and stakeholders a more accurate insight into future performance."