Regnan calls for greater disclosure on people strategy

From

Pauline Vamos

Regnan has called for greater transparency by large corporates about their longer term people strategy in the face of a very disruptive environment. To support this outcome, Regnan has launched a paper to provide guidance to corporates on improving disclosure of issues of material significance related to strategic management of people (human capital).

The preservation of a company’s share value and growth has never depended as fundamentally on effective management of their people as it does today.

Rapid technological change – including advances in automation and artificial intelligence – are reshaping the modern business environment, requiring new organisational and strategic responses.

Regnan considers the ways in which knowledge, skills and abilities are organised to achieve corporate objectives – or, strategic human capital management – to be an increasing determinant of longer term share value, given that it is strategic management of human capital that supports a business in responding to the evolving external risks, threats and opportunities it faces. As such, strategic human capital management is a key underpinning of strategy execution.

Regnan’s CEO Pauline Vamos says, “We hear companies claim that ‘people are our most important asset’ so often that it has almost become clichéd. Yet the reality is that for the majority of companies today, a significant portion of company value is deeply connected to its people. That is, the value created through the knowledge, skills and capabilities that reside in employees, as well as their shared knowledge as a group.”

“However, the true value story of a company’s people is rarely told well in corporate disclosures. Without a fulsome picture communicated to the market, it is likely that company valuations will be misinformed. And this affects the entire investment chain.”

Strategic human capital management represents a significant information gap which can shed light on these risks and opportunities, as well as a company’s future prospects. To date, disclosure in this area has not kept pace with the changing business landscape.

Vamos continues, “Our aim with this paper is to highlight the gap in knowledge of long term investors and provide companies with practical guidance to better communicate with their current and future investors those issues of strategic importance that relate to human capital management.”

Regnan’s paper, Strategic Human Capital: Closing a material gap in corporate disclosure, is available for download

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