{"id":611,"date":"2015-11-24T11:57:06","date_gmt":"2015-11-24T11:57:06","guid":{"rendered":"http:\/\/www.omservices.org\/?p=611"},"modified":"2016-06-28T09:25:13","modified_gmt":"2016-06-28T09:25:13","slug":"investors-start-to-see-the-tangible-value-of-human-capital","status":"publish","type":"post","link":"https:\/\/www.omservices.org\/?p=611","title":{"rendered":"Investors start to see the tangible value of human capital"},"content":{"rendered":"

\"human<\/a>Friday 20 November 2015<\/a> may well be remembered as a seminal moment in corporate history. It was the day when the debate about human capital reporting ended and the professional practice of mature, human capital management was established.\u00a0 One where the investment community showed clear recognition and concrete affirmation that Human Governance, and the human capital management practices that support it, are not just material to the value of companies, and the risk factor they carry, but a specific quantum is identifiable.\u00a0 This was the day when the accountant\u2019s long-held barrier for not being able to measure or manage value from human capital was overcome; a day when the term \u2018intangibles\u2019 became obsolete in corporate parlance.<\/p>\n

The London Stock Exchange was the venue chosen by the Investment Association to for its launch event on Human Capital Reporting.\u00a0 There could be no more appropriate a location to remind capitalists just how much people matter; and no better way to influence and convince than by using the City\u2019s own hard measures of corporate performance.<\/p>\n

This was the platform from which Stuart Woollard, Managing Partner, presented OMS\u2019s organizational maturity rating (OMR) of BBB- and its Research Note for Nestl\u00e9 to a number of senior figures from the investment community.\u00a0 Research that was described as \u201cexcellent\u201d by the Chair of the Panel, Ian McVeigh, Head of Governance at Jupiter Asset Management. \u00a0Stuart clearly and unequivocally advised that Nestl\u00e9 has much to do from a Human Governance (HG) standpoint and declared that it could be worth 5-10 additional percentage points on current margins. On Nestl\u00e9\u2019s 2014 figures this would equate to another CHF4.58-9.16bn (c. \u00a32.9 – 5.9bn) of profit.<\/p>\n

Another senior fund manager present on the panel, who had large holdings in Nestl\u00e9 stock, had minor \u201cquibbles\u201d with OMS\u2019s analysis and accepted the broad conclusion that Nestl\u00e9 could significantly and sustainably enhance its value through better HG.\u00a0This was recognition that conventional investment research and analysis had been short of the missing piece in company valuation for far too long and it now enables investors to \u2018price in\u2019 how effective a company is in Human Governance terms.<\/p>\n

OMS\u2019s ground-breaking work, under the auspices of the Maturity Institute, is rapidly finding acceptance with other investment professionals who are encouraged to make confident approaches to companies with the \u2018key questions for investors\u2019 that OMS\u2019s Human Capital Reporting Template\u00a9<\/sup> provides. For example, rather than accept meaningless metrics such as staff training hours or employee engagement scores at face value, investment teams are wanting to find out what lies beneath the PR surface; asking about the extent to which a company creates value from learning and how engagement drives value creation in the long term. This is only one short, step away from requiring companies to provide much better evidence that they are making every effort to improve Human Governance in a way that will directly create higher, material value.<\/p>\n

Before the Investment Association event last Friday, human capital reporting was still seen as a subject for debate; a hypothetical situation that might never exist. That particular debate is now consigned to history.\u00a0 OMRs have made it a reality and disavowed investors, boards and executives of any notion that human capital is intangible or immaterial.\u00a0 OMRs use the common language of credit rating and based on a universal rating scale (that mirrors S&P).\u00a0 Ian McVeigh referred to the OMR scale, remarking that Nestl\u00e9\u2019s BBB- was, in effect, only one point above \u2018junk\u2019 status. \u00a0Helena Morrissey, President of the Investment Association, said in her Welcome note for the event that it was time to \u2018turn ideas into actions\u2019; OMS already has and human capital analysis in investor research is here to stay.<\/p>\n","protected":false},"excerpt":{"rendered":"

Friday 20 November 2015 may well be remembered as a seminal moment in corporate history. It was the day when the debate about human capital reporting ended and the professional practice of mature, human capital management was established.\u00a0 One where the investment community showed clear recognition and concrete affirmation that Human Governance, and the human … Continue reading Investors start to see the tangible value of human capital<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1],"tags":[9,6,7,12,10,11],"class_list":["post-611","post","type-post","status-publish","format-standard","hentry","category-uncategorised","tag-helena-morrissey","tag-human-capital-reporting","tag-investment-association","tag-maturity-rating","tag-nestle","tag-omr"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p5zQHw-9R","_links":{"self":[{"href":"https:\/\/www.omservices.org\/index.php?rest_route=\/wp\/v2\/posts\/611","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.omservices.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.omservices.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.omservices.org\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.omservices.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=611"}],"version-history":[{"count":4,"href":"https:\/\/www.omservices.org\/index.php?rest_route=\/wp\/v2\/posts\/611\/revisions"}],"predecessor-version":[{"id":1013,"href":"https:\/\/www.omservices.org\/index.php?rest_route=\/wp\/v2\/posts\/611\/revisions\/1013"}],"wp:attachment":[{"href":"https:\/\/www.omservices.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=611"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.omservices.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=611"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.omservices.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=611"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}