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May 24, 2016

Non-financial reporting: the value of human capital and workforce talent

A research report entitled Reporting Human Capital. Illustrating your company’s true value has been launched in London today by an ad hoc partnership which includes the Chartered Institute of Management Accountants (CIMA).

The report has reviewed the practices of UK FTSE 100 companies when it comes to measuring and reporting on human capital issues, notably how to capture the value of their workforces’ knowledge, skills and abilities.

A particular focus of the report is how the investor community can conduct accurate human capital valuations of a company’s staff.

The report found an overall increase in the reporting of these issues among FTSE 100 constituents. For example, it has been noticed a superlative increase, 127% between 2013 and 2015, in human rights reporting.

Human rights reporting are among the topics that companies will have to disclose in management reports from December 2016 under the EU Non-Financial Reporting Directive.

In addition the report observed how the reviewed companies pay special attention to succession planning, with noticeable good practices when companies report "on the value of successful talent pipelines".

Similarly, the reporting on diversity and equality issues (e.g. mechanisms such as diversity councils and enhanced training and development programmes) featured as a trend on the rise.

However the report warned:

"Even though it would appear that there has been an overall increase in HC [human capital] reporting, it is debatable whether investors and other stakeholders will be able to make informed decisions based on what are, on the whole, generally positive reports on a variety of HC issues."

The other partners of the so-called Valuing your Talent initiative are the UK Commission for Employment and Skills; the Chartered Institute of Personnel and Development; the Chartered Management Institute; and Investors in People.

Full report: Reporting Human Capital. Illustrating your company’s true value

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