Companies ‘failing to value employee asset’

Thursday, 12 November 2015 00:00 - - {{hitsCtrl.values.hits}}

Many companies claim that ‘people are our greatest asset’ but new research commissioned by the Chartered Institute of Management Accountants (CIMA) shows that few really bother to value that asset in practice.

The survey of 513 senior decision-makers across industry has revealed that while nearly all (97%) believe that good management and investment in employees has a direct, positive impact on a business’ performance, the majority (57%) are either unaware of or do not use any data on their human resources when deciding business strategy. Ninety-four percent of those surveyed said that they think poor management of employees can contribute to corporate failure.

The research has been published following the CIMA President’s Dinner event which highlighted the importance of human capital metrics - measures which capture and evaluate a company’s investment in and management of its people - both to the business itself and to its external investors. Less than a fifth (19%) of those surveyed has heard of human capital metrics. While the vast majority (83%) report they undertake some form of investment in their employees other than salary, no more than a quarter of companies report annually on any of those investments, such as staff benefits (22%), training and development costs (23%), recruitment costs (15%) and employee satisfaction scores (25%).

Helena Morrissey CBE, CEO of Newton Investment, chair of The Investment Association and the keynote speaker at the CIMA President’s Dinner, said: “A great many companies say that their talent is their greatest asset and they invest significantly in that talent.”

“However, there isn’t really a framework for reporting on the value of that talent, making it difficult for all of us, including investors, to assess this vital aspect of a company’s future prospects. The gap also means that companies are less motivated to ‘finish the job’ of developing a fully inclusive approach to talent - it can feel less significant than it could and should do when they report to the street or the investor community,” she added. Myriam Madden, president of CIMA, said: “Talent is a strategic driver of business success and so it is crucial we cultivate and manage that talent using an inclusive, gender intelligent model. Organisations must plan for and source the relevant information needed to create strategies for human capital management and wider business.”

“We created the Global Management Accounting Principles to give companies a blueprint to do this well, helping leaders to integrate thinking and reporting across their organisation to achieve sustainable success. Our members are best-placed to understand and facilitate the value we can derive from an inclusive, integrated approach – harnessing all their talent to take the best decisions to drive success,” Madden concluded.