Conceptualising a human capital measurement and reporting framework

Abstract

PURPOSE: This paper proposes a context-based framework for measuring and disclosing human capital in the financial statements of the Zimbabwean mining companies. The study was prompted by the lack of universal standardised framework that can be adopted by companies for use and existing of varied models with conflicting measurement metrics. The developed model is meant to bring harmony within the industry and across other sectors, particularly in developing countries such as Zimbabwe.

METHODOLOGY: This paper adopted an integrative literature review approach also known as the critical review approach in the development of the human capital measurement and disclosure framework. Corporate annual reports, existing related literature, and various human capital models were critically and systematically reviewed to conceptualise different views from various authors concerning human capital measurement and disclosure framework. A thematic analysis approach was adopted to analyse the qualitative findings. The analysis was conducted until a point of saturation was reached.

FINDINGS: The paper proposed a context-based human capital measurement and disclosure framework with six key primary factors. Furthermore, the paper proposed the measurement criteria and the disclosure requirements of the six primary factors established. The framework also acts as a starting point for human capital reporting since there is a lack of an established and generally accepted reporting framework in Zimbabwe. The benefit of this framework is that it is flexible, and it allows companies to develop human capital reporting guidelines based on key features specific to an individual company's human capital and can be applied to other similar contexts in the SADC region. This paper recommends the adoption of the human capital measurement and disclosure framework as to increase companies’ value, financial performance as well as economic growth at large.

ORIGINALITY/VALUE: The proposed framework is envisaged to reduce information asymmetry and improve corporate governance practices for both practice and policy formulation.