Human Capital and Human Capital Report (HCR)
Human capital is the sum of your staff’s professional skills. It takes into account the capabilities, experience, skills and abilities that your staff have and that enable them to meet the needs and solve the problems of your customers.
An internal and external Human Capital Report (HCR) helps to manage the value that human capital brings, in line with your business plan. It is applicable to all organisations, regardless of the type, size, nature or complexity of the business, whether in the public, private or voluntary sector, or a non-profit organisation.
Contents of the HCR Report
We highlight the following points from the Human Capital Report:
Scope. The report establishes the scope, to determine whether it applies to the entire organisation or only part of it.
Regulatory references to identify the legal and non-legal requirements that human resources management must comply with.
4. Human capital reporting process
4.1 Overview
4.2 Guiding principles
The guiding principles of human capital management are:
diversity;
leadership;
organisational culture;
— health, safety and well-being of the organisation. It has an influence on work performance derived from its influence on the physical, intellectual, sensory and emotional capacities of workers. A healthier worker is able to perform better. Investment in healthcare should be considered an investment, reducing the risk of losing work productivity due to worker illness.
— productivity; Training activities should not only apply to new employees but also to experienced workers, as training employees consists of giving them the knowledge, attitudes and skills they need to achieve optimal performance. Organisations in general must provide the basis for their employees to have the necessary and specialised training that will enable them to perform their daily tasks in the best possible conditions.
— recruitment, mobility and turnover;
— skills and abilities. Employee development through training and loyalty are fundamental to the company. Training and development programmes contribute to raising the quality of the workforce’s output. When workers are better informed about their job duties and responsibilities, and when they have the necessary knowledge and skills, they are less likely to make costly mistakes at work.
4.3 Target groups and relevance of stakeholders
4.4 Tools and procedures for data collection
– Performance evaluation. Methods used to assess performance objectively and appropriately: Checklists; By objectives; 360º feedback; Peer feedback; Feedback to the boss; Self-assessment; Benchmarking; By processes or By competencies.
– Assessment Centre (A.C.) to evaluate competencies, using tools such as the “Critical Incident Interview”, “In basket or inbox”; “Problem solving”; “Business games”; “Group techniques” such as the case method; “Self-assessment questionnaires” or the “Kelly grid”.
– Work environment, conflicts, and organisational health (using tools such as the “health ladder” and “roles and conflicts”).
4.5 Report structure
– Human Capital Index (World Bank)
4.6 Risk management
To maximise human capital management, we must correctly identify and manage the associated risks. The most common risks are:
– Hiring oversized or overqualified staff, i.e. with a profile higher than that required for the position.
– Hiring underqualified staff or staff with a profile lower than that required for the job.
– Poor job design, resulting in an inadequate job profile or one that is inconsistent with the activity and processes involved.
– Hiring staff “referred” by executives or senior management, with a predominance of cronyism and nepotism, thus bypassing the recruitment, selection and employment process.
– Uncompetitive remuneration and compensation policy, or undervaluing of jobs.
– Failure to test and investigate candidates for positions in the company, in accordance with the formal recruitment, selection and employment process. The process seeks to attract human resources that meet the required profile and are suitable for the company, so that they can apply their strengths, including their abilities, skills and talents, while the position represents a challenge for the employee.
– Preferential treatment in establishing special financial allowances. In some cases, these are applied preferentially to certain groups, which generates discontent among the majority of staff because they consider the treatment to be discriminatory.
– Training or education programmes that favour some workers over others.
– Subjective employee performance evaluations. The likelihood of this occurring in a company is high when the process has not been formally structured and the supervisors and/or managers responsible for evaluating their subordinates have not been properly trained or educated.
Each of these situations poses its own risks, including fraud, actions against the physical integrity of assets, and leaks of confidential information, which result in financial losses for the business.
4.7 Reporting areas
4.8 Document reports
4.9 Frequency of reporting
In preparing the Human Capital Report, we take into account the requirements of ISO 30414.