HUMAN CAPITAL AS AN ASSET: PAGE 28 AN ACCOUNTING FRAMEWORK Total Workforce Value FOR THE NEW WORLD OF WORK A FRAMEWORK FOR HUMAN CAPITAL ACCOUNTING MARKET PRICE OF As noted previously, it is essential that the workforce be viewed as EMPLOYEES IN ALL JOBS an asset rather than as an expense or liability, with investments in the BEGINNING workforce (such as learning and development) being captured and WORKFORCE VALUE reflected in the overall change in workforce value. There is a relevant precedent for this view when we consider how we account for MARKET PRICE OF OTHER TALENT natural resources. The total workforce value metric illustrated below would reflect the market price of all human talent (employees and non-employees) engaged in the business, adjusted for investments in the workforce, such as talent acquisition and development, or INVESTMENT IN DEVELOPING THE changes in workforce engagement or impairment of skills. WORKFORCE TOTAL VALUE WORKFORCE ADDED VALUE While it might be challenging to have a measure of total workforce value appear as a MARKET PRICE OF line item on the balance sheet, it would be relatively straightforward for any organization TALENT ADDED to provide this information in the supplementary disclosure of its annual report so that investors and other stakeholders have a more accurate picture of the true value created TM TM by the company. Similar to TCoW and RoW , the data underpinning this metric should be relatively accessible, with perhaps the exception of measurements related to IMPAIRED / impaired/redundant skills. However, total workforce value has the benefit of having all of REDUNDANT its data elements fall within the purview of one function: HR. SKILLS The data can also be supplemented with innovative sources, such as publicly VALUE available opinions on sites such as Glassdoor or LinkedIn data to augment and REDUCED benchmark all-staff survey data to determine decreases in workforce engagement. DECREASE IN WORKFORCE TM TM ENGAGEMENT As we noted with TCow and RoW , tracking, reporting and aligning this metric to how company performance is measured, executives are compensated and board oversight is exercised will be essential, particularly if we are serious about treating human capital as an asset. Figure 4 — Total workforce value — Source: Willis Towers Watson