Investment in human capital contributes to economic and business growth for the benefit of employees, employers and the wider economy.
This is now widely understood, but measuring the impact of that investment and reporting on it effectively is challenging.
Making direct links between human capital and organisational impact may be difficult, but the employee capacity and potential, and the quality of leadership need to be understood and communicated.
Bringing human capital into the mainstream of business decision making has knock-on effects, meaning more efficient allocation of human resources, which in turn contributes towards higher skills levels, increased productivity and greater innovation.
Organisations embracing the concepts of Integrated Reporting <IR> understand the need to establish the role that human capital plays in their current and future performance.
Understanding the links between human capital and organisational outcomes brings benefits. <IR> can have a double impact on human capital management – encouraging enhanced process and better outcomes. It can also fill an information gap, providing valuable insights to the providers of capital and other stakeholders on an organisation’s potential to succeed over the short, medium and long term.
Finding data that links those inputs with outputs and outcomes in the form of enhanced productivity, growth or value creation is more difficult.