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  29th July 2014      
 Company News

Businesses ‘need to show return on their people’

Framework aims to help firms quantify value of their employees

Businesses should aspire to an easily understood set of metrics that demonstrate the effectiveness and importance of their people, according to a far-reaching initiative that offers a fresh perspective on the issue of human capital metrics.

Valuing your Talent, a joint effort involving organisations including the CIPD, UKCES and the Chartered Institute of Management Accountants (CIMA), has released a new framework to help organisations begin a dialogue on the value of people, from defining inputs such as pay and skills to cataloguing their effect on culture, productivity and performance.

At a launch event in London, CIPD CEO Peter Cheese said HR departments had been “challenged in our ability to provide real metrics and insight… People want to work for organisations who fundamentally understand what they do and can show them where they add value”.

In part, he said, this was about “moving from quantifiable things to qualitative ideas such as indications of culture”. Cheese urged the government to get behind the initiative and consider including certain elements in legislation.

At its heart, Valuing your Talent hopes to devise a ‘return on people employed’ metric comprising employee engagement survey scores, recruitment costs, training and development costs, and staff compensation and benefits. This could align with an integrated reporting framework and, with the support of the investor community, eventually help make the 80 per cent of ‘intangible’ assets on balance sheets, which are mostly employees, as easily understood as the remaining 20 per cent.

But, added McDonald’s chief people officer for Europe, David Fairhurst, the most important thing is to reward the organisations who have consistently invested in their people: “Whether we end up with a single set of metrics is immaterial — it’s the dialogue around it all that matters. Every employer organisation is facing significant challenges. Our customers are increasingly demanding, and society’s scrutiny of working practices and process has never been greater.”

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