I was reading this February's Harvard Business Review and this article immediately caught my attention.
HBR Article was by PETER CAPPELLI. He is a George W. Taylor Professor of Management at the Wharton School and the director of its Center for Human Resources. He is the author of several books, including the forthcoming Our Least Important Asset:Why the Relentless Focus on Finance andAccounting Is Bad for Business and Employees (Oxford University Press).
The article talks about Human Resources and financial accounting practices can have a distorting effect on the human capital asset class by creating a disconnect between the value that employees bring to an organization and the way that value is measured and reported.
In terms of Human Resources, traditional practices such as the annual performance review process and the use of metrics such as headcount and turnover can create a focus on short-term goals and metrics that do not accurately reflect the long-term value of employees. This can lead to a lack of investment in employee development and training, and a lack of focus on retention and engagement.
In terms of financial accounting, the way that human capital is valued and reported can be limited by traditional accounting practices. Human capital is often not considered as an explicit asset on a company's balance sheet, and instead is considered as a cost. This can lead to a lack of visibility into the value of human capital, and a lack of investment in employee development and retention.
Overall, Human Resources and financial accounting practices can create a disconnect between the value that employees bring to an organization and the way that value is measured and reported, leading to a lack of investment in employee development and retention. To overcome this, organisations should adopt a more holistic approach to managing and valuing human capital, taking into account both short-term and long-term goals, and considering human capital as a strategic asset.
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About the author
Stephen Chan is the founder of ASIA Technology Ventures. As a creative and entrepreneurial thinker with deep knowledge in both business and technology, he has accomplished more than 2 decades of high-growth businesses, developed revolutionary Go-To-Market strategies, led & built teams across Asia Pacific. He also has strong understanding of technology like SaaS/Cloud infrastructure, mobile apps, developer tools, blockchain, artificial intelligence, etc. Asia Technology Ventures was founded to help Asia's businesses transform, scale and compete beyond their comfort zone.
This is driven by his personal belief that "Success is a journey, not a destination", in-line with his pursuit of helping others as the foundation for true, happy, and meaningful living.
