· 2 min read · Features

People must be valued as a corporate metric

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When people are valued as a corporate metric, it places HR in a stronger position

Sometimes I wish I could put a tax on the phrase ‘our people are our greatest asset’. If I could pocket some cold, hard cash every time a business leader said those words to me, I probably wouldn’t need to be editing HR magazine that much longer.

Even when there’s genuine sentiment behind it, it often comes across as meaningless and clichéd. But the perennial problem is this: how do you prove you value people and understand the contribution that they make to organisational success and sustainability?

This is why the movement to quantify – or at the very least better qualify – the materiality of human capital to corporate performance is so critical. In the words of Neil Stevenson, managing director for global implementation at the IIRC (International Integrated Reporting Council), which offers an alternative for organisations to communicate value creation beyond the financial: “We have to put an end to ‘our people are our greatest asset’; we need to find a way of describing the value that asset is bringing.”

The investment and corporate reporting agenda may seem anathematic to some HR professionals. There can exist a sense that people issues are too important to be ‘reduced’ to the other measures a company’s performance is judged on.

This is short-sighted. Raising the importance of human capital management so that it can play a role in how investors make decisions, and contribute materially to shareholder value, can only raise it up the agenda for businesses more widely. And this is good for all stakeholders.

Socially responsible analysts and investors (and that’s a growing group), recognise that this is not about ‘sweating the assets’. It’s about, to quote Leon Kamhi from Hermes Investment Management, “looking for a happy, productive workforce, and the data that reflects that”.

The wider question centres around what we value in our economic system. If the answers are people, ideas, discretionary effort and ethics, then of course human capital needs to be reported on. And of course investors need to be holding companies to account around how they manage that human capital. When people are finally valued as a corporate metric, it places HR in a stronger position to do the right thing for the business, the people within it, and even society at large.

Ultimately this comes down to an accountability agenda, and good corporate governance can’t exist without good HR. The question is whether the profession is equipped to seize the opportunity offered by increased interest from the investment community – and whether it is willing to do so.

Katie Jacobs is editor of HR magazine