A new white paper that aims to provide organizations with a model to reshape how they value and make decisions about their workforces in a post-COVID-19 world of work, outlines seven guiding principles to shift how organizations value people. These include shifts from profit to purpose; corporate policy to social responsibility; stand-alone entities to ecosystems; and employees and jobs to people, work, and skills. The paper includes examples of companies that have put these principles into action — from upskilling their workforce to sharing workers to avoid layoffs.
The new white paper is published by Willis Towers Watson and the World Economic Forum titled “Human Capital as an Asset: An Accounting Framework to Reset the Value of Talent in the New World of Work”.
“COVID-19 has accelerated a shift to new ways of working, prompting companies to rethink how, where and by whom work gets done,” said Ravin Jesuthasan, Managing Director at Willis Towers Watson and co-author of the paper. “As companies look to reset their business models, they need an approach to valuing talent not as an expense but as an asset so that boards and management can be held accountable for their investment in people and for delivering better outcomes.”
The paper, which draws on principles developed by Willis Towers Watson and the World Economic Forum in an earlier publication, outlines a human accounting framework that can help organizations measure and quantify the contribution of their people in the same way it measures returns on financial and intellectual capital. A company’s intangible assets, including human capital, are now estimated to comprise on average 52 percent of its market value.
“If you ask any Board Chair or CEO what their top priorities are, invariably most would cite People among the top three issues. However, in most cases, the frameworks needed for optimal human capital management have been lagging. Human capital management needs to be on the Board’s agenda, the same way financial, technology, and operational issues are.
“Traditional HR metrics tend to be representations of what has happened in the past, such as employee turnover. To create a level of change requires a huge mindset shift on the part of shareholders and management, and companies need to consider new HR metrics that focus on forward-looking value creation for businesses,” added Shai Ganu, Managing Director, Executive Compensation Global Practice Leader, and ASEAN and South Asia Talent & Rewards Business Leader, Willis Towers Watson.
“As companies enter a new normal following the COVID shock, they must place talent at the heart of their business,” said Saadia Zahidi, Managing Director, World Economic Forum. “By fundamentally revaluing and investing in their workforces, organizations will be better able to do what is right for their business, their employees and societies.”