The Department of Trade and Industry (DTI) has set up a new task force to examine how human capital issues affect profitability. The 'Accounting for People' group will be headed by Denise Kingsmill CBE, Deputy Chairman of the Competition Commission and report to Trade and Industry Secretary, Patricia Hewitt.
The new body will look at ways in which organisations can measure the quality and the effectiveness of their Human Capital Management as a means of increasing their competitive advantage.
It will also create new best practice guidance for organisations on how they can relate people management to profits in their annual reports.
Human Capital Management, says the DTi, is a key source of competitive advantage and, ultimately, profitability. Any business that wants to compete successfully needs to ensure that its work force has the right mix of people, with all their skills and experiences, to fit the needs of its business.
The decision to set up the Accounting for People Task Force follows one of the recommendations in the Kingsmill Review into Women's Pay and Development. The Report showed that many organisations do not pay close enough attention to Human Capital Management, leading to an under-utilisation of the talent in the workforce.
The Kingsmill Review recommended that organisations account meaningfully for their human capital assets in a professionally audited statement in the Annual Report and Accounts. This would encourage senior management and, crucially, investors, to pay greater attention to the effect of Human Capital Management on profitability.
"There is increasing research evidence that good people management gives companies an edge when it comes to profitability," Denise Kingsmill said. "We want to get away from simply paying lip service to the idea of 'people being our finest asset' or simply accounting for people as a cost."
"At the heart of this project is the desire to provide solid performance benchmarks for stakeholders, particularly investors. Our task is to show how this information can be presented meaningfully, in Annual Reports."
The nine-strong group comprises:
- Helen Alexander, Chief Executive, The Economist Group
- Patti Bellinger, Group Vice President Diversity and Inclusion, BP
- David Bishop, Senior Adviser, KPMG
- Sandra Dawson, Professor of Management Studies, Director of the Judge Institute of Management and Master of Sidney Sussex College
- Fred Goodwin, Chief Executive, The Royal Bank of Scotland Group plc
- Ed Smith, Partner - UK Board, PricewaterhouseCoopers
- John Sunderland, Chief Executive, Cadbury Schweppes plc
- Ed Sweeney, General Secretary, UNIFI
