Intangibles in the workforce are becoming more important, and are being subjected to more intense scrutiny. One of the largest intangibles is the investment every company makes in its workforce—also known as human capital. Companies are starting to see that rather than looking at employees as a cost, employees are their most valuable resource.
This video looks at some human resources (HR) trends for 2022.
According to Enterprise Engagement, “Investments in human capital account for about 70% of organizational expenditures in U.S. organizations. Talent represents both the largest cost and the most critical asset, thus decisions about talent are among the most important any organization will make.”
Canadian Accountant adds, “[P]arallel to increased scrutiny by regulators, a revolution is taking place in the world of human resources. Driven by the growing realization of the importance of people in the knowledge economy, HR is being forced to “up its game,” especially in the area of metrics and human capital reporting.”
Human resources departments are being called on to measure human capital metrics;
Notes Enterprise Engagement,
The downturn in the current economy has made it imperative for businesses to make the most of resources using cost-effective methodologies. Because there is so much scrutiny on profitability and headcount, the measurement of ROI [Return On Investment] and the value of tangible assets are increasingly critical. The most challenging assets and programs to measure, however, are those with largely intangible outcomes. The effectiveness of HR programs and human capital itself falls into this category. Nonetheless, numerous and credible research clearly links better HR practices and quality talent to revenues and profits.
These metrics include employee engagement, employee retention/turnover, absenteeism, employee productivity, measuring training effectiveness, employee satisfaction, etc.
Again per Enterprise Engagement, “Assessments and diagnostics, properly chosen and implemented, followed by rigorous analysis, disciplined action and measurement, will often spell the difference between HR program success and failure. In an era in which human capital accounts for most of an organization’s expenses and nearly all of its competitive differentiation, organizational success depends more than ever on effective HR and human capital management.”
Just like companies need to keep track of what they pay for materials and what they charge for their product, companies need to keep track of how their employees are performing, and, at long last, how they are feeling. The investment in the tracking and the processes to improve employee performance and attitude have been found to be invaluable in creating a happy, prosperous workplace.
Contact Shaw & Associates Chartered Accountants for accounting help you can count on. One complimentary meeting with us will put you and your business on a more profitable and positive path.