- Over 40% of respondents believe this has contributed to stifling innovation and is having a serious impact on their bottom line
- Report finds a significant disagreement at the senior management level about who should be responsible for addressing this problem and how best to resolve it
The CGMA report, Talent pipeline draining growth: Connecting human capital to the growth agenda, reveals that the financial performance and growth prospects of many businesses are being blighted by their failure to make the most of their human capital.
The survey of more than 300 CEOs, CFOs and HR Directors highlighted that over two fifths (43%) of respondents partially attributed the failure of their firms to achieve key financial targets to ineffective people management, whilst almost the same proportion (40%) say it has reduced their company’s ability to innovate.
There is also a significant disconnect at the senior management level with regards to talent development as many business leaders do not agree on where the responsibility for measuring a firm’s talent management strategy lies.
An overwhelming proportion of HR directors (83%) believe it is their remit yet conversely less than 30% of CEOs and CFOs agree. This hinders effective decision making in key areas such as workforce skills, training and qualifications. For example 77% of CEOs advocated cutting investment in these areas in the next 18 months, but only 18% of HR directors agreed.
The survey was carried out by the Economist Intelligence Unit (EIU) on behalf of the Chartered Institute of Management Accountants (CIMA) and the American Institute of Certified Public Accountants (AICPA).
Charles Tilley FCMA, CGMA, Chief Executive, CIMA, said:
“Ideas are the currency of the knowledge economy so human capital must be managed as rigorously as financial capital. It is clear from our research that many companies are falling short of their potential because they lack thorough, relevant information about their people to support effective strategy, hiring and training decisions.
“CGMAs can bridge this gap, combining broad perspective and analytical rigor to ensure the right focus and metrics that align talent management with business strategy.”
Agenda for change
In order to stay competitive and grow in today's challenging and volatile business environment, Talent pipeline draining growth: Connecting human capital to the growth agenda calls for business leaders and organisations to:
- Embed human capital strategy within the wider overall business strategy - develop relevant human capital metrics and KPIs aligned to support and implement the wider strategy. The measurement and performance management of such metrics need to come under the same level of scrutiny, focus and controls for both accuracy and relevancy as other key data such as financials.
- Focus on getting the right information and translating to actionable insight - develop trust in the available data via credible, accurate human capital information. Data needs to be analysed and translated into relevant and actionable information and insight to provide more effective decision support.
- Leverage the relevant skill set for credibility and actions - ensure there is clarity on responsibility, accountability and ownership for human capital performance management. Firms should look to use unique management accounting skills in uniting financial facts and non-financial information to provide insight from a base of independence and objectivity.
- Structure the organisation to ensure alignment of human capital to business strategy - proactively structure for closer collaboration at the executive and operational levels, especially partnering between finance and HR.
For press enquiries and a copy of the full report please contact:
Senior Account Manager, Four Colman Getty
T. +44 (0)20 3023 9012
M. +44 (0)773 627 8697
Account Executive, Four Colman Getty
T. +44 (0)20 3023 9095
Profile and Communications Officer, CIMA
T. +44 (0)20 8849 2427
Notes to editors
Chartered Global Management Accountant (CGMA)
Two of the world’s most prestigious accounting bodies, AICPA and CIMA, have formed a joint-venture to establish the Chartered Global Management Accountant (CGMA) designation to elevate the profession of management accounting. The designation recognises the most talented and committed management accountants with the discipline and skill to drive strong business performance.
Chartered Institute of Management Accountants (CIMA)
The Chartered Institute of Management Accountants, founded in 1919, is the world’s leading and largest professional body of Management Accountants, with more than 195,000 members and students operating in 176 countries, working at the heart of business. CIMA members and students work in industry, commerce, the public sector and not-for-profit organisations.
American Institute of CPAs (AICPA)
The American Institute of Certified Public Accountants (AICPA) is the world’s largest member association representing the accounting profession, with nearly 386,000 members in 128 countries and a 125 year heritage of serving the public interest. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting.