New protocol will stress importance of human capital
Corporate and governmental decision makers will soon have access to a new global protocol that is under development, one that aims to bring human capital into the mainstream of business decisions. The protocol, which is driven by the Social and Human Capital Coalition (SHCC), will be designed to help facilitate the mainstreaming of measurement and valuation of people and communities – shifting the improvement of social and human capital performance from an optional extra to a core part of business decision making. The premise: elevating the importance of people will play a key role in a transition to a more sustainable world.
The protocol will provide:
- A consistent process to guide companies through the journey of measuring, valuing and better managing social and human capital.
- A framework for collaborative action towards harmonized approaches.
The Center for Safety and Health Sustainability (CSHS) was among those who contributed expert viewpoints during a three-month public consultation period.
“The good news is that there is growing alignment between organizations in the need for the identification and measurement of human capital in business today,” said Kathy A. Seabrook, CSP, CFIOSH, EurOSHM, chair of the CSHS Board of Directors. “It has to be a multi-stakeholder process resulting in increased investor and customer expectations of corporate sustainability measurement and reporting.”
Reporting is vital
In its public comments, CSHS stressed the coalition’s protocol must take a strong stand on the public reporting of human capital metrics; assume a leadership role in the standardization of data collection methodology, reporting formats and definitions of terms used in reporting; and conduct pilot programs to test theories and approaches.
Human capital – commonly defined as people’s competencies, capabilities, experience and motivation to innovate – is responsible for carrying out a company’s day-to-day work. That may involve shelving goods at a store, caring for hospital patients, investing assets to provide retirement benefits, or helping to implement an organization’s strategic initiatives.
Better management = better performance
There is broad consensus that human capital management is an integral part of corporate culture and therefore important to a company’s bottom line and long-term value creation. A large body of empirical work indicates that skillful management of human capital is associated with improved corporate performance, safer and healthier workplaces, and better risk mitigation. Human capital disclosures can shed light on the quality of upper management and the stewardship of a company, possibly signaling broader challenges that lie ahead.
Government policy, investor requests and consumer expectations are all driving companies to better manage their social impacts and dependencies while integrating sustainability into core business principles.
“Greater transparency in human capital management enhances the safety and health sustainability of the workplace,” Seabrook said. “Our push for a higher degree of integrated reporting seeks information on all factors that create value, not just traditional measures of financial and physical capital.”