Human Capital

Defining 'Human Capital' is critically a point of view of the organisation which has initiated the concept. Policies that focus on organisational development look at Human Capital as the start of defining the structure and potential of the organisation basically by strategics these fundamentals the right way. What is 'Human Capital?', well the best and simple way to explain the above topic is " the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organisation. This concept realizes that not all employee are the same nor are they remarkably of equal quality and or importance.

There are a lot of attributes that have to be considered for the benefit of the organisation on an economical point of view. For example of late statistically quoting, school leavers or students have found it very difficult to secure any form of employment because of lack of skill and experience. After the recession there were a lot of cut-backs hence the difficulties faced by the whole job market and school leavers who always depended on a healthy economy to provide employment.

Now back to 'Human Capital', why is it of great importance for the organisation to understand this concept and invest in Human Capital??

The term ‘human capital’ is widely used in HR to describe people at work and their collective knowledge, skills, abilities and capacity to develop and innovate. Human capital reporting aims to provide quantitative, as well as qualitative, data on a range of measures (such as labour turnover or employee engagement levels) to help identify which sort of HR or management interventions will drive business performance.

It is now commonly accepted that the value of organisations is drawn from a mixture of tangible assets in the form of equipment, money, land or other physical objects together with intangibles in the form of brand, reputation, knowledge and, of course, people – critically important in an increasingly knowledge-based economy.

However, the evaluation of human capital remains difficult for most companies. There are a number of reasons for this:

• The contribution of people is difficult to isolate from other factors such as the economic situation, market forces and customer or social trends.
• The value of people is often expressed in qualitative rather than quantitative terms that make it difficult to represent in traditional accountancy models.
• HR data has traditionally been collected for administrative rather than evaluation purposes.
• HR people do not always have the skills or resources to interpret or explain data to evaluate the contribution of people to business performance.
• Senior leaders or stakeholders do not recognize human capital as a performance measure and therefore do not demand human capital information. 

These difficulties have been further compounded by the varying definitions of human capital developed over the years and not assimilated fully... http://www.cipd.co.uk/blogs/cipdbloggers/b/health_well_being/archive/2013/01/17/Human-Capital.aspx

Human Capital Panel -;

To further its programme of work on human capital, the CIPD is developing a Panel comprising a small number of companies already recognised as 'human capital champions'. Although the requirements for mandatory reporting on human capital from companies is as yet still unclear, most of the FTSE companies would agree that as companies recognise the merits of human capital reporting, there will be increasing impetus to strengthen reporting, and for companies who currently do not report to do so. 

We have therefore developed what we hope will become a vehicle to encourage and disseminate best practice. By starting with a small number of companies who already have a good track record for human capital reporting and are skilled in the process we hope to be able to add momentum to the debate and encourage others to strengthen their data in this area. 

Purpose of Human Capital Panel -;

The Panel's purpose is to produce regular material tracking the development and use of measures to demonstrate the value and contribution of human capital.

While carrying out research for this purpose, the Panel will also seek to provide information on the following issues:

• how measures link to bottom line performance indicators
• how this data is reported externally within the requirements for business reporting
• whether any generic measures are emerging which might have value for comparability across sectors or organisations
• what skills the HR profession needs to develop to make progress on human capital evaluation.