The Department for Business, Energy and Industrial Strategy Select Committee has today published its report on Corporate Governance , in which it makes key recommendations to improve the way organisations talk about their human capital. This is a great win for HR, as it shows that at top levels in government the importance of people data is being recognised. The full recommendation from government in their report is as follows:
“112.In an increasingly knowledge-based economy, where value lies more in human than capital assets, companies should be judged on the whole structure of their rewards, workforce and investment in people. Outline information should be provided on the breakdown of the workforce, including the proportion on fixed term contracts and zero hour contracts, the number employed via agencies and other intermediaries such as umbrella companies and personal service companies. We agree with the Chartered Institute of Personnel and Development (CIPD), who outlined a process of “human capital reporting” which includes a narrative on workforce composition, including diversity, recruitment and turnover; investment in training and development and measures of employee engagement and wellbeing.221 As Helena Morrissey argued, there should be an opportunity for companies to set out: “‘This is what we believe in; this works for our company,’ and then sell it in to the shareholders and stakeholders, to earn trust properly.”222 This wider responsibility for overseeing its people strategy might be overseen by the remuneration committee or taken on by the board itself, but it should form an integral part of pay reporting.223 We recommend that companies should set out clearly their people policy, including the rationale for the employment model used, their overall approach to investing in and rewarding employees at all levels throughout the company, as well as reporting clearly on remuneration levels on a consistent basis. The FRC should consult with relevant bodies to work up guidance on implementing this recommendation for inclusion in the Code.” (BEIS, 2017)
This recommendation is important as it shows that as the Corporate Governance Code changes to include more information about the workforce, there will be a need to consider how we standardise the measures that we use to describe our people. We have been working with HR through our Valuing your Talent research to look in to what needs to change with corporate reporting, and we recommended that the quality of data being produced must improve. As the BEIS report illustrates, the Government has now started to look more closely at how this could be implemented, and in particular this includes voluntary reporting. This means HR will need to step up to deliver better quality data to senior teams.
In HR we should look to improve the way we use our human capital data, and how we collect data with HR analytics. The Valuing your Talent work has been part of this agenda, but there are also important steps HR professionals can take today to improve their understanding of people data. People data is set to become an even more important component of the HR function, and if it is to be used in external reports the way in which we think about standard measures, and the narrative to describe our workforce must improve.
Data is an important source of evidence that illustrates how our employees are performing, but also how they are benefiting from the work they do. Our HR Outlook research shows that their are gaps in how we use data and evidence, and these will need to be overcome if capability is to improve. HR leaders in particular will play a central role in investing in the capability and building the profession so it can deliver value in line with the BEIS recommendations.
We have been looking at this topic for some time and will be releasing new research this Summer which looks more closely at HR analytics and some of the ways in which we can improve our human capital measurement. We have worked with some of the leading academics in this space to explore our current understanding of HR analytics, and how it is currently being used in some published case studies of practice, taken from peer-reviewed academic literature. This research will show just how vital good analytics is. And as this news from government shows, the value and importance of HR in delivering analytics to senior teams will only increase, and its now a great time to invest in capability and build our understanding of data across the profession.
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