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SSE publishes report quantifying the value of its human capital

Energy company SSE has published a report that attempts to quantify the value of its human capital.

The report, which was compiled with professional services firm PwC, estimates the economic value of SSE’s people at £3.4 billion, as of 1 April 2014. This works out as an average value of £173,000 per employee.

An income-based approach was used to calculate the value of SSE’s people. The methodology uses the expected lifetime earnings of each employee – depending on skills and qualifications – and adjusts for factors such as expected length of service and company-level risk.

The report also connects the impact of training to the value of the firm’s human capital, and calculates the total economic effects of its various training programmes.

SSE HR director John Stewart said he expected the report would help the organisation develop employee skills and capabilities.

He said: “Human capital should not be thought of as an asset a company owns, rather it’s the people SSE ‘borrows’ from society that allow our business to operate and to grow.

“This report shows in black and white how both a company and society benefits from proper investment in its workforce, through increased earnings for individuals and resulting increased tax payments.”

PwC partner Alan McGill said reporting around human capital needs to be “radically changed” to give companies more insight.

He added: “This work shows how a paradigm shift can be achieved in company reporting and how this can be integrated into corporate thinking.”

As previously reported in HR magazine, while human capital is rising up the corporate reporting agenda, results are mixed. Research has suggested HR is missing out on the potential benefits of becoming more involved in corporate and integrated reporting.