An HR Leader’s Dream Come True: Human Capital Financial Statements

Updated: Jul 5, 2019


I might be classified in the traditional HR professional camp. I didn’t get a business degree. I didn’t even take Finance in college. I did take 4 years of chemistry and calculus. But that really didn’t count when I got into the business world. And, yet, somehow I made my way from an analytical role into an operational HR role.


I learned Accounting and Finance the hard way at one of my former employers. I was an HR leader for a large health care provider organization with many hospitals, senior care facilities, and a home care agency. It was the year after an amazing financial turnaround, and I’ll never forget the budget planning process. Our finance leadership decided to have us all start with a blank sheet. We had to justify every penny on that sheet. We created every kind of scenario you could imagine. Unfortunately, we didn’t really analyze the human capital detail of our prior year performance.


Looking back, it would have been great to start with the Human Capital Asset Statement from the prior year. The Human Capital Asset Statement allows organizations the ability to look at human capital as a value producing; not just a cost. Trending the value contribution of the workforce during that difficult year would have given us great insight into the jobs and facilities that were adding value. We knew that we had critical jobs and roles like nursing. But, we were fairly blind to the value some of the other jobs like housekeeping brought to the organization. If you are a patient in the hospital, you can appreciate the value of a nurse. What many patients don’t realize is that the housekeeping employees are critical to the operations, too. If the rooms aren’t clean, patients can experience delays upon check in. Empty beds mean lost revenue. Or worse yet, if the facility isn’t cleaned well, patients are at risk of developing infections. Trending and analyzing human capital value add to the organization would have given us the ability to plan hiring, training, and other HR efforts.


What HR leader wouldn’t want to be able to pinpoint the value produced by human capital?


To learn more about how Human Capital Financial Statements are helping HR build better cases, download the HCMI whitepaper.  Follow our series of blogs that explain how Human Capital Financial Statements benefit HR, Finance, and Investors.

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