Will the sometimes tenuous relationship between HR and Finance get more involved?
A new proposed disclosure on Human Capital, developed by a committee at SHRM chaired by Lauri Bassi, CEO of McBassi & Co., is in process of being considered by ANSI (American National Standards Institute).
David McCann wrote an article on the proposed Human Capital Standard in CFO Magazine this week, and says that the proposal “could ultimately have a profound impact on investors’ understanding of why companies succeed or fail. Or it could have no impact at all.”
Whether the proposal will have an impact or not remains to be seen. I first learned of this proposed project in September 2010 when I had the opportunity to meet with Lee Webster, Director of HR Standards at SHRM at a conference. I was involved in a Taskforce at the beginning of the process, but I stopped being involved after a few meetings due to personal time constraints.
However, I was (and still am) enamored with the idea that a standardized manner of reporting human capital can add value to investors and other users of information. I believe that solely reporting financial capital to investors without giving valuable and relevant information on human capital gives them incomplete information on the assets and performance of an organization.
Most accounting and financial reporting standards develop over time. They need to start somewhere. Having human capital reporting standards that are voluntary can lead to better information which will lead to better decisions. So this is a good thing.
I’m curious as to what impact this reporting will have on the relationship between Finance and HR in organizations. Having identified HR as a key Relationship for CFO Success (Read: CFO Relationship Map), and surveyed CFOs relationships with HR (Read: CFO / HR Survey Results), CFOs and HR in many companies have challenges working together.
Will the need for HR and Finance to work closely together to make reporting on human capital have a positive impact on the Finance / HR Relationship?
I’m hopeful. What about you?