Canadian chief financial officers are examining the true value of their employees.
Brookfield Asset Management Inc. measured the value of its workforce as part of a project led by The Prince’s Accounting for Sustainability Project. The purpose, according to a press release, was to increase the effectiveness in how the company organizes, develops and deploys its employee base.
It found the value of employees in its asset management business represented almost 60 per cent of its market capitalization. The finding reinforced the importance of its human capital as a competitive advantage.
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“One of the things we were trying to achieve with this was to understand human capital in the context of the overall business,” says Brian Lawson, Brookfield’s managing partner and chief financial officer. “For us, one of the key takeaways, and one of our objectives, was to communicate and observe the value of our human capital in the similar ways we might think about financial capital on our balance sheet — or in our case, the value of our client relationships.”
Further, the organization found the value of its 1,700 asset management employees was about twice the value of their cost. The study also evaluated how to strengthen the links between departments and focus on retaining talent. “Something we’ve observed within our own organization, I think, is common to all organizations . . . we all want to know what is the role we play within the organization, and where does that fit in within the overall value of the organization?”
Measuring the value of workforces is increasing in importance to employers as they seek to support and retain employees, said the release, noting human capital valuation is also becoming significant when faced with technological change and competition between firms trying to attract a skilled workforce.
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“This is not about trying to mechanically ascribe a value to an individual or a group of people,” says Lawson. “This is more of a way of looking at an incredibly important part of an organization and understanding how it interacts with other capitals within the business. And so for us to be able to further explain that thinking in a way we can wind it up against the other capitals is helpful.”