1. Accounting for people
Dr Michael Reddy

2. Companies look after their human capital through a wide variety of Human Resource Management (HRM) initiatives.

3. HRM Retention Management Attendance Management Talent Management
Health Risk Assessment
Employee Assistance Programmes

4. HRM initiatives are linked theoretically to performance and highlighted in discussion with the Finance Director.

5. Return on Capital Profit Margin Share Price Dividends
Financial Ratios
Return on Capital
Profit Margin
Share Price
Dividends
Sales Per Employee

6. The link between HRM initiatives and the bottom line has to be intuitive because it can’t be directly measured. Can it?

7. HRM Financial Ratios Retention Management Return on Capital
Profit Margin
Share Price
Dividends
Sales Per Employee
Financial Ratios
HRM
Talent Management
Retention Management
Attendance Management
Health Risk Assessment
Employee Assistance
Programme

8. Is it possible to connect them with a solid line and make the linkage predictive as well as intuitive?

9. HRM Return on Capital Retention Management Profit Margin
Share Price
Dividends
Sales Per Employee
Financial Ratios
HRM
Employee Assistance programmes
Talent Management
Retention Management
Attendance Management
Risk Assessment

11. How might one design an audit to measure the value creation component of employee efforts?

12. Step 1 Decide on your top five HRM categories, like this:

13. Knowledge Accessibility
Leadership Practices
Employee Engagement
Knowledge Accessibility
Skill Optimisation
Learning Capacity
Business Results Measures

14. Step 2 Assign five second order components to each headline, like this:

15. Five Areas of Investigation
Communications
Inclusiveness
Supervisory Skills
Executive Skills
Systems
Job Design
Mgmt Commitment
Time Management
Availability
Collaboration
Team Work
Information Sharing
Processes
Conditions
Accountability
Hiring Decisions
Innovation
Training
Development
Priority of Learning
Organisational Support
Leadership Practices
Employee Engagement
Knowledge Accessibility
Skill Optimisation
Learning Capacity
Business Results Measures

16. Step 3 Write three questions for each of the 25 sub headings, making them factual rather than related to beliefs, opinions or feelings. Test for validity and reliability.

17. Step 4 Put the questionnaire online and automate the scoring system.

18. Step 5 Publish the results like this:

19. Pinpointing Improvement
Critical Factors
Knowledge Accessibility
Workforce Optimisation
The red squares indicate a low level of maturity in managing Human Capital. Blue squares indicate a high maturity in managing Human Capital
HCM factors that are the most critical drivers of business results (I.e. sales, employee commitment, customer satisfaction) for this organisation at this point in its evolution
Operating
Divisions
Plants

20. This puts human asset management on a par with all other company assets. It allows it to be seen where people’s contribution has a particular impact.

21. www.hpa-group.com www.mcbassi.com www.workonomics.com

22. HRM Return on Capital Retention Management Profit Margin
Share Price
Dividends
Sales Per Employee
Financial Ratios
HRM
Employee Assistance programmes
Talent Management
Retention Management
Attendance Management
Risk Assessment

24. People are vulnerable and volatile assets, subject to mishaps, decay and misbehaviour

25. Money is thrown away on a regular and predictable basis through unmonitored costs of certain human behaviours.

27. Locating and collating these costs is a chore and there is often little interest in doing this.

28. Profit and Loss: people costs are often an undershoot, and allow financial reports to escape closer scrutiny.

29. There is a need to account for people more accurately and more honestly in financial reports

30. There is a need to develop auditing tools to measure the contribution of people as creators of value

31. There is a need for methods of quantifying the costs of behavioural risks