HUMAN CAPITAL AS AN ASSET: Total Cost of Work (TCoW) PAGE 27 AN ACCOUNTING FRAMEWORK FOR THE NEW WORLD OF WORK and Return on Work (RoW) A FRAMEWORK FOR HUMAN CAPITAL ACCOUNTING To reflect the changing nature of work, metrics to how company performance is measured, executives are compensated and board oversight is exercised is essential to any organization that seeks to be relevant organizations should seek to place their “plurality in the Fourth Industrial Revolution. As the remit of the HR function shifts from being of means” for getting work done on a level a steward of employment to being a steward of work, a lack of metrics that provide a clear and holistic view of the cost of work rather than employment will hinder the playing field. This requires having integrated and enterprise’s ability to achieve the optimal combination of talent and technology. Metrics such as TCoWTM TM and RoW (see Figure 3) are essential to enabling this pivot holistic measures of cost and productivity that in the role of the function and monitoring changes over time. capture the full range of ways in which work is TM organized and resourced, including those related Return on Work (RoW) = TM to technology implementation to replace or Total Revenues/Total Cost of Work (TCoW) augment work. From a holistic perspective, this means capturing the cost and productivity of all TOTAL COST TOTAL VENDOR ANNUALIZED OF WORK LABOUR COST COST CAPITAL types of talent (e.g. employees, gig, outsourced) CHARGE FOR CAPITALIZED and automation on a like-for-like basis through INVESTMENT such measures as the Total Cost of Work TM TM 27 (TCoW ) and the Return on Work (RoW ). (FTEs + free agents (annual cost of + talent platforms + (outsourcing cost capital charge volunteer engage- + AI/robotics vendor for AI/robotics and The data to calculate these measures is readily available but captured by different ment costs) cost) alliances) functions: HR might have the employee data, procurement might have the free agent and vendor data, corporate strategy the information on alliances, and finance the information on capitalized automation. Tracking, reporting and aligning these two Figure 3 — Total cost of work and return on work — Source: Willis Towers Watson