HR urged to use OFR to forward the human capital agenda

A new report from Saratoga, the human capital measurement and benchmarking arm of PricewaterhouseCoopers, calls on HR professionals to seize the opportunity provided by changes to
Operating and Financial Review (OFR) requirements. "Despite the fact that human capital costs often amount to more than 40% of the total costs of the company, people have rarely had a prominent
position in a company's annual report and accounts," says Richard Phelps, lead partner at Saratoga. "The OFR is a huge opportunity for HR professionals to put the human capital agenda and its overall
business contribution in front of directors and investors, demonstrating clearly, perhaps for the first time, its critical role in the success of a company's activity,"

Saratoga's HR Guide to the OFR details three categories of human capital measurement which will provide shareholders and others with informative measurement and benchmarking positioning against other
organizations or which can be used to plot internal performance trends:

1. Generic human capital metrics, relevant to all commercial organizations in all sectors and all regions. Examples include: Profit per FTE, Cost per FTE, Remuneration/Revenue, Total Absence Rate and Cost per Hire.

2. Specific sector or sub-sector human capital metrics directly related to a company within its sector or sub-sector, region, and/or against direct competition. These metrics provide a more focused measurement of an organization. For example: in manufacturing it may be costs or productivity; in retail - staff turnover or customer service; in banking - key player capability; in eastern Europe - remuneration levels or value added.

3. Specific metrics related to issues or challenges likely to affect the future sustainability of a company. Saratoga highlights a range of key issues which it considers will affect future investment decisions and will increasingly attract the attention of shareholders. They are: leadership; succession; talent management; innovation; commitment and engagement; and human capital capability.

Source: PricewaterhouseCoopers Saratoga's HR guide to the OFR: The Operating and Financial Review. For more information see: http://www.pwc.com/uk