Rather like Sherlock Holmes’ observation on the curiosity of dog that didn’t bark when he might have been expected to, the recently passed Companies Act in the UK is curiously quiet on the matter of Human Capital Management and reporting.
Those of us who care about HCM reporting had great hopes when the government-driven Accounting for People Taskforce reported in November 2003. The thoughts of contributors were fed into the legal framework for the Operating and Financial Review (OFR), which required all listed companies to report on their Human Capital in some way. The reporting requirements were non-specific, but they were there – until chancellor Gordon Brown with no warning pulled the plug on the OFR two years later. Not everyone was pleased. Deloitte reckoned that 82% of companies were preparing for the OFR or something like it, and were put out that all their work had been for nothing. More importantly, those in the financial community who had wanted the beginnings of a coherent set of metrics for reporting on Human Capital were disappointed.
There had been some hope that the new Companies Act, which at 1300 sections is the largest single piece of British legislation, would address the matter, and introduce a form of mandatory HCM reporting, however vague, but like Holmes’ dog, it remains silent.
However, all is not lost. There is no sight of obligatory HCM reporting now on the horizon, but there are plans for an employer-led group, The Human Capital Reporting Forum, to be set up by the Chartered Management Institute. Because it would be employer-led, and – crucially – include input from the financial community, there are good reasons to believe that the Forum will derive a short, sensible set of metrics for HCM reporting that are useful to all.