CHIEF EXECUTIVES’ assertions in annual reports and accounts that “our people are our greatest asset” risk remaining as airy clichés unless the British Government does more to strengthen reporting requirements in their latest proposals on accountancy reform, according to the Chartered Institute of Personnel and Development (CIPD)
CHIEF EXECUTIVES’ assertions in annual reports and accounts that “our people are our greatest asset” risk remaining as airy clichés unless the British Government does more to strengthen reporting requirements in their latest proposals on accountancy reform, according to the Chartered Institute of Personnel and Development (CIPD).
The British Department of Trade and Industry (DTI) has proposed that all quoted companies introduce a new operating and review section in their annual report and accounts from 2005, to provide a more strategic and forward looking perspective, and place a greater emphasis on the importance of intangible, largely human assets.
However the CIPD said the department’s proposals would require only a minimal amount of such reporting, such as the total number of employees – telling investors little about how well a company generates value through its staff.
A DTI taskforce recommended that companies be compelled to include information in their OFR about their human capital management strategy, which it defined as “an approach to people management that treats it as a high level strategic issue and seeks to systematically measure how people policies and practices create value”.
It specified areas that should be reported on such as training investment, employee turnover rates, and staff attitudes and satisfaction.
“Yet in these latest proposals none of this is required and it is left to the discretion of the ‘directors of the company to review and identify the relevant factors in their particular case’, or omit them altogether if they see fit,” said CIPD assistant director Duncan Brown.
“The DTI produces national competitiveness indicators to encourage companies to better manage and invest in their people, to help move the UK economy in the desired direction up the added value chain,” he said.
“Yet it appears to be backing away from making individual companies do the same. Leaving this decision to individual companies and their directors, risks institutionalising airy clichés about the importance of people, while leaving investors and staff in the dark about the real picture.”
He said high performing companies such as Standard Chartered, Royal Bank of Scotland and Asda already monitored and reported on a wide range of human capital statistics, and were able to demonstrate that they produce high added value for shareholders by being a great place to work.
