Discussions about Human Capital in business are no longer just about disclosure. Human Capital is also about the investment companies make in training their teams to learn and use new technology tools. Companies are also looking for ways to incorporate Human Capital Management (HCM) into their organisation to drive profound, proactive and positive impacts on their culture. Human Capital is gaining momentum and it is here to stay. Moving forward, here is how I see Human Capital impacting the ever-changing world of work.
Workforce Analytics is more than just a tool to calculate ROI for employee-related investments. It is an ultimate guide or a roadmap companies can use to grow their companies as a whole and not at the expense of employees.
The way HR gather employee data is now more dynamic allowing companies to determine value from intangible assets. For example, employers are more likely to hire people with hard skills relevant to their operation and then, they provide training to improve soft skills such as critical thinking, people management, communications and adaptability.
In 2021, the ISO released a document to set the standard on how to measure workforce metrics under leadership and report them to internal and external stakeholders. The ISO/TS 30431 under human resource management “provides a method for measuring the value of leadership in an organization, including trust, span of control and leadership development.”
Workforce Analytics go beyond productivity, cost and employee turnover. Now, with Human Capital Management, we can measure and analyse metrics such as succession planning, diversity, organisational culture, employee health and safety, and more.
This is not a business strategy through employees or people. This is a people strategy through business that unlocks the true potential of the workforce.
Is the Great Resignation all about employees quitting their work? No, it’s not. Employees are not just quitting, they are also reevaluating their priorities, preferences and values when looking for an employer. Meeting them halfway won’t cut it. Human Capital also tackles why employees quit and how companies can hold on to their top performers.
HCM software enables organisations to strategically and operationally improve employee retention and engagement. HCM helps HR better understand employee retention metrics. With that, companies are able to pursue targeted investments according to demographics, interests, preferences, circumstances, and more when retaining their employees. It is important to remember that motivations to resign vary.
Many employees today are more willing to take pay cuts than to take a job that would most likely lead to burnout. Mature and experienced employees prefer companies that provide equal treatment when it comes to reskilling employees.
Employee retention should not be perceived as an issue that can be solved through a holistic approach.
A good example for this is computer software company Cadence headquartered in San Francisco. When it comes to establishing company values, they consider different influences that would align with their employees coming from different backgrounds and preferences. Their arsenal in retaining employees also include clear sustainability strategies, diverse training programs and pay equity.
In my last article, I talked about how Human Capital can usher in the age of transparency through companies taking disclosure more seriously and improving accountability. Last month, it was reported that SEC Chairman Gary Gensler and his team were busy establishing strong regulatory agendas that include proposed rules of more Human Capital disclosures on workforce management.
In a statement released by the SEC, Gensler said, “Today, investors are demanding additional information from companies beyond what they’ve sought historically, with respect to climate risk, human capital, and cyber security risk.”
This is not just proposing suggested disclosure reporting standards that companies can selectively incorporate or not. We are talking about disciplinary rulings that should encourage, not just force, companies to be credible when it comes to telling the world how they treat their employees.
In his letter to CEOs this year, Blackrock CEO Larry Fink championed Stakeholder Capitalism. Fink defined it as “capitalism, driven by mutually beneficial relationships between you and the employees, customers, suppliers, and communities your company relies on to prosper.”
Stakeholder Capitalism focuses on the creation of long-term value for all stakeholders, especially employees. One of the ultimate objectives of HCM is achieving and maintaining healthy Stakeholder Capitalism. This is about companies giving and driving value to who matters the most.
An article about company takeover deals by Harvard Law School revealed that Stakeholder Capitalism is still the top objective for most corporate leaders in the US. The article’s finding reads, “Overall, our findings cast substantial doubt on the claims made by supporters of stakeholder capitalism. Those who seriously care about corporations’ external effects on shareholders should not harbor illusory hopes that corporate leaders would protect stakeholder interests on their own.”
There is still a long way to go when it comes to Stakeholder Capitalism. Human Capital is a key driver to establishing a world of work that values employees and does not exploit them. There are corporate leaders who are paving the way for capitalism centered on employees to reign.
This is something we continue to strive for here at Will International; to support our team members, and encourage our clients and partners to do the same.
This statement describes Will International (Will)’s commitment in partnership with its subsidiaries (‘hero brands’) to protecting data, ensuring individual privacy, and confidentiality of information.
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