An in-depth survey by the FT Research Centre on behalf of Ceridian, one of the largest providers of human resource services in the world, reveals that while human capital is top of the corporate agenda most companies do not measure its value. The interviews were conducted with 50 financial and human resource directors of medium and large UK companies.
The majority of correspondents (66 per cent) felt that human capital issues were at the top of the agenda for their company, many stating that it was essential to the company particularly if the business was relationship-driven or service-based. Recruitment and retention of good people was also strongly emphasised. Those not placing human capital issues at the top of the agenda nevertheless thought they were a high priority.
Only just over half of respondents (56 per cent) thought they or their financial directors had the right information to report on human capital key performance indicators (KPIs) and 40 per cent of respondents were not confident KPIs could be reported accurately. Financial directors were the most confident but many companies did not measure productivity or returns on their human capital investment. Indeed, just over a quarter stated HR did not directly show their effect on the bottom line. Six out of ten respondents believed there was very little or no pressure at all to report on human capital KPIs, with 80 per cent saying there was no shareholder or investor pressure.
Penny de Valk, strategy director at Ceridian in the UK, commented: “Our survey of 50 top companies reveals that for two-thirds of respondents, human capital is their most important issue. This supports findings that half of chief executives are kept awake at night worrying about how they are going to find and keep good people.
“However, if human capital is critical to competitive advantage, companies still struggle to link people and their contribution to business performance. Companies need to understand the contribution of their human capital to their business success so they can measure and manage it more effectively. Key performance indicators need to improve to measure not only efficiencies but, more importantly, effectiveness.”
The top three most important human capital issues were revealed as
Employee engagement, maximising productivity and keeping people motivated, was also ranked highly, especially among financial directors.
Download a copy of the full report ‘Understanding FD and HRD attitudes to valuing human capital in UK business: today’s opportunity to build tomorrow’s advantage’.