The usefulness of human capital disclosures: Perspectives of human resource managers

Human capital has been described as an important resource for value creation and sustainability in organisations. This is why organisations allocate sizeable resources to human capital issues such as recruitment, training and retraining. The department at the forefront of these activities is usually the Human Resource Department in organisations. The research problem follows from the absence of sufficiently conventional valuation and reporting models to accommodate a comprehensive human capital report in the corporate annual reports. The study therefore seeks to gain an understanding of the nature and usefulness of Human Capital Disclosures from the perspectives of the Human Resource Directors/Managers of the top 60 Johannesburg Stock Exchange (JSE) listed companies in South Africa. The methodology involves the administration of survey questionnaires on the Human Resource Directors/Managers of these companies to determine whether the 91 human capital disclosure checklist developed are provided by them for inclusion in the corporate annual reports of their respective companies and state whether those items are considered important to value creation. Our major finding showed that although the Human Resource Directors/ Managers considered majority of the human capital items important, they were not being disclosed in the corporate annual reports of their companies. The study therefore recommends that information flow from the HR directorate to the finance directorate should be improved upon to enable the latter capture more information on human capital in the corporate annual reports.