Pressure is growing for employers to define the worth of their workforce as a capital asset, says Steve Crabb
One of the hottest issues in people management right now glories under the title of human capital management'. If you are one of those people who thought human resources' was actually a pretty dehumanising way of talking about the workforce, you are probably feeling doubly outraged right now, but read on ­ the human capital initiative actually has the potential to do a lot of good for our economy and society at large, if it's handled properly.
Companies have traditionally shied away from trying to put any kind of value on the people they employ. It's easy enough to put a value on David Beckham, but lesser mortals move jobs, get promoted, gain new skills, have good days and bad ones­ in short, the value of human capital' goes up and down by the hour.
However, the pressure on companies to account for the contribution of their people has been growing steadily. As I reported a few months ago, a huge proportion of the share price of leading companies is now down to intangible factors such as the knowledge, skills and performance of the workforce. People aren't just the most important asset, as the old cliché goes ­ in many cases they are the only asset that matters. And as Geoff Armstrong, director general of the Chartered Institute of Personnel and Development, wrote recently: "Companies have been sleepwalking into disaster by using only traditional accounting measures."
Following work done by the institute and some of the big accounting institutions, the Department of Trade and Industry has now set up a task force to look into what companies tell the world about their people practices and what they ought to be doing in future. The Accounting for People Task Force put out a consultative report last month, which suggested companies disclose information about their people practices in four broad areas.

Fundamental change
These are: the size and composition of the workforce, including figures on the number of people employed (including agency and contract staff), broken down by age, gender and ethnic background; employee motivation, staff turnover and absenteeism rates; staff training and development, with a nod to the link between skills and business objectives; and pay and fair employment, including information on how pay is determined, and what measures are in place to prevent discrimination.
All of this could turn into another massive regulatory burden for employers if the government opts for a standardised one-size-fits-all approach. Or it could fundamentally change the way companies and their investors think about the contribution of people to business performance.
The institute ­ which is advising the DTI's task force ­ has produced its own, more extensive framework for measuring and reporting back on human capital management practices. It calls for companies to publish an annual human capital strategy, and puts more emphasis on the importance of management and leadership.
The DTI task force is due to report back in the autumn and it will be taking responses to its consultation document up to July 4. If you have any responsibility for people management in your organisations, log on to www.accountingforpeople. today and get involved in the debate.
For further information on the Chartered Institute of Personnel and Development framework, see changeagendas
n Steve Crabb is editor of People Management