Intangible assets such as corporate culture, employee wellness and transparency are becoming more pertinent in today’s business. The future of work will revolve around non-financial data with organisations embracing the agenda of stakeholder capitalism, advocating the people and the purpose.
People – the greatest asset and Purpose – the greatest goal of every organisation. Stakeholder capitalism and disclosure of information representing the human capital value of employees will be the new business as usual moving forward. In fact, investors are arriving at a consensus to only support organisations that disclose employee-related information including health and safety, diversity and inclusion, training and leadership programs and pay equality. Now, it is the interests of all stakeholders first and organisation interests second.
When it comes to purpose, organisations must prepare to align their purpose of corporation with employee, environmental, economic and social considerations. We are now seeing public perception towards organisational purpose shift to a focus on long-term relationship and value creation. In short, people are looking for a stronger sense of purpose within organisations. Now is the optimum time for businesses and their executive teams to rally behind their people.
In 2020 amidst the pandemic, many people initially thought that the focus on employee health, wellbeing and engagement was a short-term adjustment, it is not. HR rewrote the rules during the pandemic to shift or, for some, bring back the focus to looking after our employees. We are now witnessing working practices and business models being remade to reiterate that business is and will always be about people.
An emerging truth is that there is strong financial value generated from non-financial data and intangible assets. With this, key stakeholders and analysts are urging organisations to improve on reporting and disclosing non-financial data to become more agile.
In September 2020, the World Economic Forum released its report on Stakeholder Capitalism – how to measure it and generate sustainable value creation from it. The report presented four pillars: Principles of Governance, Planet, People and Prosperity. The pillars are then broken down into core metrics, which are mostly non-financial data like governance body composition, risk of child labour, diversity and inclusion and training provided.
Data or information on corporate culture, an intangible asset, will be a strong indicator for investors and professionals when engaging an organisation. A 2020 survey by Edelman found that ‘maintaining a healthy corporate culture’ is the top contributor to generating trust from investors.
In 2019, it was deemed difficult to collect relevant data to effectively integrate ESG strategies into investment decisions. In 2020, we’ve seen ESG leaders outperform their peers during the crash of Q1 and then again on the rebound of Q2.
The pandemic accelerated the value of ESG strategies that often include human capital metrics. We expect ESG and human capital leaders to continue to overperform beyond the pandemic as the Covid-19 contagion also influenced changes in business models and behaviours, championing sustainability.
We are now seeing the future of work slowly take shape. Remote working, more tech investments, amplified employee wellness programs, and most important of all, a strong shift to the people and purpose first mindset.
The ‘S’ or Social in ESG is more important than ever for both employers and employees. There is a massive crackdown to eradicate social injustice inside and outside the office that stems from many issues. Investors and employees are calling executives and boards to be more involved in the discussion on human capital and ESG disclosure.
There is a renewed focus on enriching diversity and inclusion in the office. In California, publicly held corporations with six or more board members are required to have at least three female directors and those with five must at least have two under the Women on Boards law.
Data-driven HR will play a unique role in the future of work with people analytics given more value now that HR is able to establish a balance between automation and human roles. HR is helping the workforce understand that technology won’t replace them but actually enable them to accomplish greater things.
All these factors will focus on nurturing the greatest organisation assets, People and Purpose.
HR’s role is to encourage organisations to embrace the People and Purpose agenda and then to empower all stakeholders, especially employees, to fight for what they deserve. Through the People and Purpose agenda, the era of greater accountability, transparency, human capital management and reporting, and disclosure of non-financial data is upon us.
Here at Will, we are conducting online discussions to better understand human capital management and reporting with people within and outside of Will. In December last year, we facilitated an online focus group hosted by EGN Singapore with CEOs, CFOs and Managing Directors from different organisations in Singapore to discuss the connection between human capital and ESG strategies.
The top insights during the discussion included the alignment of organisation goals with ESG and human capital strategies being important for employees, especially millennials and Gen Z. Another insight is that human capital reporting is vital to ensure a healthy corporate culture.
Coming up with agreed-upon core metrics to monitor and report on is one of our top agendas for us to grow as an organisation and to help others as well.
For us here at Will, we believe that People and the Purpose will rule decision making, risk mitigation, operations and succession planning for organisations, not money.
In our next article, we will discuss what it means to be a great employer in today’s business landscape by embracing the people and the purpose.
For more insights about human capital and HR’s people first agenda, follow Will on LinkedIn for the latest updates as they are released.
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