A summary of the CIPD Executive Briefing
The CIPD’s programme of work on human capital has to date included a number of studies and reports. These confirm the importance to the bottom line of the contribution of people and the policies and practices to manage them. They also clarify and argue the case for better human capital reporting and provide practical case study examples of what can be done.
This briefing was commissioned to complement the earlier work and is about furthering the debate on the human capital issues already identified. It is available to purchase online – please visit our bookstore for more details and to find out how to order.
To stimulate debate we posed a number of questions to a selected group of thinkers and asked them to answer from a particular perspective. The questions we asked were:
- What does human capital reporting contribute to the day-to-day operation of business and what are its implications for the personnel practitioner?
- What benefits has human capital evaluation and reporting brought to date?
- Do you believe that more and more companies are going to be encouraged to report on human capital more widely both externally and internally?
- What’s the likely impetus for human capital reporting?
- What does this mean for HR practitioners and the HR function itself?
Each of the authors was asked to express his individual views and comments in the essays.
The first essay is by Paul Kearns and focuses on human capital management. He charts the development of HCM and the difficulties in defining it, concluding that it has to be about value in hard cash terms if it is to become a working management methodology. He argues that it has the potential to replace short term thinking with long term investment considerations and if it succeeds could become the glue which unifies all stakeholders in the pursuit of a common goal.
The second essay, by Mike Walters, is about the role of HR process. He discusses the role of HR process in maintaining and enhancing the value of human capital. He goes on to offer a framework for practitioners to develop their understanding of how HR should prioritise processes which support and develop human capital alongside processes which enable the effective translation of human capital into organisational value.
The third essay, which is by Andrew Mayo, considers the questions from the perspective of the human capital management information that is available, namely data. He concludes that human capital management is about seeing people as value creating rather than mere resources of headcount. He argues that anyone who believes that the right people in the right place at the right time make a difference to business performance must make every effort to make sure that people and the contribution they make is recognised as a business performance indicator.
Jim Matthewman was given the perspective of measurement, and his essay looks at what is measured in organisations. He concludes that if the purpose of measurement is to change and improve, then the process of reporting data will not add value unless it includes insight, interpretation and recommendation. Human capital measurement needs to be forward-looking, challenging and focused on adapting, optimising and exploiting competitive advantage through people.
Finally Michel Syrett looks at the skills HR people need to develop for effective human capital management. He ends his essay by concluding that if organisations are to get a return on their investment in human capital their main challenge is to build up a cadre of business-facing HR staff with the partnering skills to apply the new insights to the needs of the business. This, he says, is the payoff without which all HC activity is a useless waste of time.
These essays provide an eclectic mix of the theoretical and the practical. We hope they will fuel the debate on human capital as well as offering some practical guidance for managers.
KEARNS, P., WALTERS, M., MAYO, A., MATTHEWMAN, J. and SYRETT, M. (2006) What’s the future for human capital? Executive briefing. London: CIPD.