The Willis Towers Watson and World Economic Forum publication, Human Capital as an Asset: An Accounting Framework to Reset the Value of Talent in the New World of Work, offers businesses a model to reshape how they value and make decisions about their workforces.
Drawing on principles developed by Willis Towers Watson and the World Economic Forum in an earlier publication, the paper outlines a human accounting framework that can help organisations to measure and quantify the contribution of their people in the same way that they would measure returns on financial and intellectual capital.
The framework sets out seven guiding principles to shift how organisations value people. These include shifts from profit to purpose; corporate policy to social responsibility; standalone entities to ecosystems; and employees and jobs to people, work and skills.
The paper also includes examples of companies that have put these principles into action, from upskilling their workforce to sharing workers to avoid layoffs.
“Covid-19 has accelerated a shift to new ways of working, prompting companies to rethink how, where and by whom work gets done,” said Ravin Jesuthasan, managing director at Willis Towers Watson and co-author of the paper.
“As companies look to reset their business models, they need an approach to valuing talent not as an expense but as an asset so that boards and management can be held accountable for their investment in people and for delivering better outcomes.”
The paper says intangible assets, including human capital and culture, are now estimated to comprise 52% of a company's market value on average. It argues that human capital is a key differentiator that can be a company's greatest asset and make or break the business strategy.
It adds that while chairs or CEOs often cite 'people' or 'talent' as a top priority, the frameworks needed for human capital management have been lagging and the human capital agenda needs to be part of board-level decision-making, integrating human capital metrics with financial and operational measurements.
Speaking to HR Magazine, Liz Sebag-Montefiore, co-founder and director of 10eighty, stressed the importance to every business of its workforce.
“Without people there would be no company; it's all around the people, the skills they bring and their strengths. For me, people come first and then the culture that you've got will follow and the numbers will go up.
“In terms of how you keep people, it's around having an employee-centric approach; focus on what does the employee want rather than what you as a manager or you as the organisation want because you'll get much more from them if you focus on them and the skills that they have.”
She added: “Particularly [post-coronavirus], if somebody wants to work four days a week but two days from home, if a manager perceives them as high talent, you can get much more from someone working four days but two days from home than working with someone who isn't culturally the right person or the right fit doing five days.”