Senior executives find it hard to manage human
capital, a shortcoming that scuttles competitiveness and growth
opportunities, a recent survey has revealed.
The report, Talent pipeline draining
growth: Connecting human capital to the growth agenda,
emphasises that an inadequate HR policy can result in businesses
failing to achieve financial targets.
The survey was conducted by The Economist
Intelligence Unit on behalf of the Chartered Global Management
Accountant programme (CGMA), a joint venture between the American
Institute of Certified Public Accountants (AICPA) and the Chartered
Institute of Management Accountants (CIMA).
CGMA’s research found that as many as 43% of
the 313 senior executives who took part in the survey believed
failure to achieve financial goals was due to inadequacy in human
This link between performance and HR
management grows in the context of the financial services sector,
the results suggest.
Some 58% of senior executives in this field
said poor human capital management was behind failure to start
major projects or accomplishment of company targets.
Despite the damage that poor talent management
may pose, the survey shows a gap in firms’ intention to invest on
Spending cuts connected to the development of
workforce skills, training and qualifications are on the agenda for
77% of the chief executives surveyed, despite this being against
the recommendations of some 82% of human resources directors.
“Generally speaking, human resources and
finance should partner in determining both the cost and value of
human capital. In this way organisations can maximise the expertise
and skills that the management accountant can bring to this area,”
says Valerie Rainey, a chief financial officer who took part in the
CGMA’s survey also found that chief executives
are worried about the quality of data and analytics they receive on
human capital, with as many as 88% not feeling confident about the
metrics available in that area.
“It is clear from our research that many
companies are falling short of their potential because they lack
thorough, relevant information about their people to support
effective strategy, hiring and training decisions,” AICPA senior
vice president Arleen Thomas commented.
The survey also underscores the difficulty in
understanding the cost and value of losing and replacing talent
within a corporate environment.
According to CGMA, 87% and 83% of chief
executives and chief financial executives respectively said that
the information is too difficult to obtain in this regard.
“It is vital that organisations embed a robust
human capital strategy within the wider business plan and develop
appropriate metrics and key performance indicators that are subject
to the same level of scrutiny as financial data,” CIMA chief
executive Charles Tilley said.
According to Tilley, professionals who train
to become CGMAs are able to reconcile financial facts and
non-financial information in an objective and independent
Tilley added that CGMAs can help organisations
create closer collaboration at the executive and operational levels
and in particular between finance and human resources