Measuring human capital to increase the company’s productivity is the innovative idea of a project launched by CFOs and accountants.
In a time of labour shortages, technological progress and increased competition, companies have to constantly renew themselves. The Accounting for Sustainability (A4S) project proposes calculating the real value of the workforce to improve performance and keep the workforce competitive.
This initiative, set up by the CFO Leadership Network: Canadian Chapter with the collaboration of Chartered Professional Accountants Canada (CPA Canada), puts the emphasis on the person. It assumes that the company’s competitiveness, innovation and potential for change depends on its employees: the company’s success is linked to human capital.
The Brookfield Asset Management firm has already put it into practice: the value of the human capital managing its assets represents nearly 60% of its market capitalization. Brookfield’s CFO is convinced that this knowledge will ensure their success.
The project is based on the idea that employees represent a company’s most important asset. In 2009, a study by the Université de Sherbrooke highlighted the central character of human capital in a company. Therefore, it is important to select employees well, train them and develop and deploy their expertise.
As far back as 1995, a study by Statistics Canada showed that the development of human capital (particularly by professional training) was complementary to innovation and technological development.
Measuring a company’s human capital to manage it effectively and sustainably therefore has a direct impact on its performance. “If human capital is actually the most important asset in companies, it is absolutely essential to quantify it and use the data to make informed investment decisions,” explains Jessica Fries, president and CEO of the A4S.
Since 2004, the A4S has had the mandate to promote sustainable business models and to incorporate environmental and social issues in financial decision-making. For the French consulting firm Service&sens, having sustainable management is above all a matter of truly taking the needs of employees into account: well-being, health, healthy relationships based on trust, etc.
With this in mind, the Co-operators Group has been involved in the A4S project to take action on the mental health of staff, an issue of increasing concern. Thanks to the results of the analysis, the group has set up a Mental Health project with the goal of organizing a supportive environment, training and a “robust support” for employees. CFOs hope that this approach will ensure the success of the cooperative.