Accounting for people

Accounting for people

Peters and Waterman (1982) reminded us that

•       “our people are our greatest asset”

Some never needed convincing of this

Marx’s labour theory of value - employees as source of all value

•       providers of socially necessary labour

•       surplus value is the creation of capital

Employees create value for and deliver value to customers

•       without their input there can be no value

Human asset accounting

Initial approach to taking people into account – Hermanson

•       incorporate people in the balance sheet

•       robust financial valuations

Launched a quest for valuation techniques and methodologies

A voluminous literature evolved by the late 1970s

Less evident during next 40 years although still a challenge

For me it was never going to happen

Human resource accounting

Complementary approach developed by Flamholtz from late 1960s

Focus is on cost of using scarce resources

•        costs beyond wages and salaries

•       how best to account for these discretionary costs

•       managing rather reducing costs

Failed to result in ‘better’ employee accounting

A key precursor of (strategic) human resource management 

Human capital accounting

Human capital is the primary form of intellectual capital

Reporting growth of stocks of employee attributes

•       education and training

•       experience and expertise

•       creativity and capacity for innovation

•       flexibility and continuous learning

•       soft skills

Details of the building of an enabling culture

Health and wellbeing

As important an attribute as any of the others.

In UK sickness absence cost a minimum of £20B per year

And continues to be a growing, if hidden, problem

The reality is undoubtedly very worrying

•       long term absence continues to increase (as do sickies)

•       mental health and wellbeing issues continue to increase

•       growing impact in white collar and professional occupations

•       presenteeism and leavism

Employer response remains modest despite a lot of noise

The accounting and reporting nexus?

Complement the existing information, e.g., CIPD survey

What would you measure and report?

•       ‘good’ news (obviously)

•       the growth of a healthy organisation

Why – competitive advantage underpinned by better employee health

A critical role for self-narratives exists

•       ‘how I improved my health by working here….’