HUMAN CAPITAL AS AN ASSET: Seven guiding principles to shift how PAGE 17 AN ACCOUNTING FRAMEWORK FOR THE NEW WORLD OF WORK human capital is valued GUIDING PRINCIPLES TO SHIFT HOW HUMAN CAPITAL IS VALUED From quarterly to generational An unintended consequence of today’s standard of frequent financial reporting and increased emphasis on short-term results has been to incentivize management to focus on quarter-on-quarter performance improvements. This has caused some companies to overcapitalize, engage in share buybacks and dividend policies at the expense of capital reserves and embark on cost-cutting exercises (such as job cuts) to manage profitability over the short term. Better human capital accounting would expose the costs of such decisions. The result of investing in the workforce to achieve business results often appears in the mid to long term. Therefore, a longer-term view will inform human capital policies such as: building versus buying talent; investing in employee upskilling and reskilling; and reinventing jobs based on technology augmentation and alternate ways of working. Approaching business strategies and associated investments from a multi- year or generational (i.e. 15-year) perspective will likely require different metrics and bases for assessing performance, including new metrics for valuing human capital as set out in this paper.