main part hcr

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Chapter 01: Introduction

Human capital reporting (HCR) has received considerable academic and practitioner attention

across the globe recently. There has been an increasing consciousness that workforces are

considered not only as a vital resource for a business but also a key basis of competitive

advantage in todays changing business environment. As a result, substantial investments

towards upgrading stocks of Human Capital are evident among firms that believe human

resources are their most valuable assets. Studies argue that skilled employees, employees

knowledge and spirit, leadership quality, etc. facilitate the improvement of company

performance (Stewart, 1994; Bozzolan et al., 2003; Bontis, 2003). Similarly, Bontis et al.

(2001) opined that Human Capital representing the collective knowledge stock of an

organization provides a sound base for enjoying competitive advantages over others.

Nevertheless, Human Capital information has traditionally only been reported internally by

organizations. This is because there have been no disclosure related standards by which such

information might be reported in their annual reports. In todays knowledge based economy,

researchers endeavor to identify means of viewing corporate performance more

comprehensively, including establishing a common framework for describing and representing

intangibles in a reliable manner (Brooking, 1996; Low et al., 1999; Stewart,1994; Petrash,

1996). Many companies in the Bangladesh and developed countries are presenting the

information relating human capital in the annual report as a part of narrative reporting.

Abeysekera and Guthrie (2004) argue that the need for firms to be able to effectively manage,

measure, and report on intangible assets has been reinforced with the development of a number

of measurement instruments. Prior research studies (Buckowitz and Petrash, 1997; Flamholtz

and Main, 1999; Stittle, 2004; Creelman, 2006) evidence that different firms such as the

Skandia Group, the Canadian Imperial Bank of Commerce, Hughes Space and

Communications, Dow Chemicals, Buckman Laboratories International, and Chartered

Institute of Personnel and Development(CIPD) have incorporated the measurement of Human

Capital (among other intellectual capital (IC) measurements) into their both types of internal

and external reports and strategic management issues in the past decades.


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1.1 Origin of the report

The report was originated to make a study on Human capital reporting practices by listed

companies in Bangladesh as a part of the fulfillment of internship program required for the

completion of the Master of Business Administration (MBA) program of the Department ofAccounting & Information Systems of the Faculty of Business Studies of University of Dhaka.

This internship report was prepared under the supervision of Sadia Afroze, Associate Professor,

Department of Accounting & Information Systems, Faculty of Business Studies, University of

Dhaka.

1.2 Scope of the study

This paper has tried to present the picture and extent of human capital reporting practices of

listed Bangladeshi companies. To present this picture, studied on the annual report of differentcompanies in different industries in 2011and in annual report only the human capital related

disclosures were the scope of study.

1.3 Objective of the study

The purpose of this paper is to examine the extent of human capital reporting practices by listed

companies in Bangladesh. In this paper other objectives to examine the extent of human capital

reporting practices are as follows:

To examine the extent of industry wise human capital reporting practices. To examine the major location in the annual report for disclosure of human resources by

different companies.

To examine how many words the companies using to disclose the human capital relatedinformation and industry wise condition.

Actually, throughout the study this paper will try give a brief description of the human capital

reporting extent by the listed companies in Bangladesh.


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1.4 Methodology of the study

The main objective of the study is to find out the extent of human capital reporting by the listed

Bangladeshi companies. To fulfill the objective of the study Guthrie framework for the

disclosure of human capital related information in the annual report has been used. The reason

behind the using of Guthrie framework is that it is well accepted to the researchers and very

much relevant to this study though there is no generally accepted framework in this case.

Because of the nature of the study it is a descriptive research. Secondary sources of data have

been used for the study. The detailed methodology for the fulfillment of the objectives is as

follows:

1.4.1 Collection of data

The data collected for the purpose of the study involves the examination of annual reports of

different companies of different industries in 2011. For the purpose of the collection of data has

the official website of different companies and the annual report have been used. Using a check

list prepared under the framework of Guthrie for human capital reporting, the relevant

information regarding human capital disclosure of different companies has been collected.

1.4.2 Presentation of data

After collecting the data using the check list, the information and extent of human capital

reporting of different companies by sector or industry wise has been presented. To represent the

information sector wise, different tables and charts for making information easily

understandable to the readers have been used.

Three-point scale of disclosure

To present the collected information regarding the human capital reporting and to analyze the quality of

disclosure, the three point scale has been used. The scale is as follows (Norhayati Mat Husin et el

,2009):

0 Information not disclosed.

1 Obscure i.e. the disclosed information was discussed in limited reference or whilstdiscussing other topics.

2 Descriptive i.e. the disclosed item was discussed (not with other topics) using sentences.

3 Quantitative/monetary/visual image and descriptive i.e. the disclosure item is clearlydefined using sentences and supported with either quantitative/monetary or visual images.


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1.4.3 Ranking of Sectors

In case of ranking the different sectors Geometric Mean (GM) has been used because the GM

gives good answer in case of percentage. Firstly, GM has been calculated by sector wise then

ranked the different sectors on the basis of the higher GM. Throughout this rank we will be able

to know about the high performing sectors for human capital disclosure practices.

1.4.4 Sample size

In this paper, 123 listed companies of Dhaka stock exchange have been selected. In case of

selection of companies of different industries judgment has been used and tried to select the

large and small companies on the basis of market capitalization to show actual picture and

extent of human capital reporting practices in Bangladesh. It has been believed that, because of

the way of sample selection the possibility sampling error will minimize. The list of selected

sample companies in different industries has been presented in the Appendix 01.

The summary of the sample table is as follows:

Sl. Industry Total company Sampled company Percentage of total

company

1 Bank 30 16 53

2 Non Bank Financial

Institutions(NBFI)

22 12 55

3 Engineering 21 11 52

4 Food & Allied 14 7 50

5 Fuel & Power 12 7 58

6 Jute 2 2 100

7 Textile 25 13 52

8 Pharmaceutical &Chemical

17 11 65

9 Service 4 4 100

10 Tannery 4 4 100

11 Ceramic 4 4 100

12 Cement 6 4 67

13 IT 6 4 6714 Insurance 43 16 37

15 Telecom 2 2 100

16 Travel & Leisure 2 2 100

17 Miscellaneous 8 4 50


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1.4.5 Content analysis

For coding HC disclosures, the content analysis of annual reports method has been used. In this

paper Guthrie framework of human capital disclosure for content analysis has been used.

Guthrie framework for human capital disclosure is as follows:

No. HC Contents Illustration1 Employee training It includes e.g. training policies, description of programs,

time, number of employees trained per period, and trainingresults.

2 Education Educational background of employees3 Lists of training and

employees participationDetailed lists of training and participants of the employeesfor the respective training.

4 Number of employees Employee count of a company5 Employee

compensation plan andbenefits

Types of employee compensation plan and benefits used bythe company.

6 Employee Motivation Information on companys policies to motivate employeesand evidence on the implementation of those policies. Thisincludes reward (internal) and incentive scheme e.g.employee explicit recognition.

7 Employee involvementin the communityactivities

Employee social competence that can be reflected by their

involvement with community or their contribution to the

environment8 Establishment of own

training instituteDisclosure of establishment of own training institution forthe employees.

9 Employee attitudestowards company

Information on employees attitudes towards their workingenvironment. Relevant disclosures could be employeecommitment to the organization.

10 Employees safety andhealth

Companies activities for securing the health and safety of theemployees.

11 Entrepreneurial spirit It refers to companies effort in developing employeesentrepreneurial skills

12 Rate of staff turnover Rate of employee turnover by different years.13 Employees opportunity

for job rotationDetails of employees opportunities for job rotation and jobrotation policies.

14 Employee skill and

competence

Knowledge, skills, experiences and competences of

employees for the job.15 HC statistics (i.e. interms of profitabilityper employee, sales peremployee

Information regarding the profitability per employee, salesper employee.

16 Career developmentand opportunities

Companies policy for the career development opportunitiesfor the employees.

17 Employee equality Information on equal treatment of employees irrespective ofsocial and cultural differences. Relevant information


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includes policy on employee equality and evidence ofenforcement.

18 Employee value Information related to the employee value to the companies.19 Employees recruitment

policiesCompanies policy for the recruitment of a employees.

20 Employee leadership Information regarding to the employee leadership.

1.4.6 Word Count

To find out words used by the different companies in different sectors the general word count

procedure has been followed. In case of counting the words the preposition and articles have

been omitted. Other approaches such as line count, sentences count and proportion of pages are

also widely adopted in different studies (Guthrie and Parker, 1989; Trotman and Bradley, 1981;

Hackston and Milne, 1996; Abeysekera and Guthrie, 2005). However, the use of words and/or

sentences seems to be preferred by most researchers. This study considers word count as the

unit of analysis.

By the outcome of the word counting procedure we will be able to learn about the how

different companies giving importance on the human capital disclosure.

1.5 Limitation of the study

This study has gone through sampling basis, so the sampling itself has a risk to represent fair

information and researcher has taken Guthrie framework only for the content analysis.

Furthermore, companies listed on the Chittagong Stock Exchange or indeed some unlisted

firms in Bangladesh, e.g. Unilever Bangladesh, might report HC items, but have been omitted

from the study. The study was limited only to the investigation of companies annual reports.

Sample firms might report HC-related information using other disclosures means such as the

print and broadcast media, brochures, and newsletters. Finally, the findings of the study must

be interpreted within the sample size.

1.6 Further scope of research

This study has tried to find out the extent of the human capital reporting practices of different

listed Bangladeshi companies. Obviously there is a further research scope on this topics. This

paper just has tried to examine the extent of human resources reporting practices after finding


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out that researcher may link it to the stock prices of the high performing companies. Researcher

may go for comparative analysis of different years. The study has provided an insight into HC

reporting practices across a range of business sectors in a developing country i.e. Bangladesh. It

should catalyze further research that seeks to compare and contrast these results with the

business sectors of other developing or developed countries. Future research endeavor can also

be directed at exploring why companies pursue HC reporting in Bangladesh, possibly using

case or field study research designs.


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Chapter 02: Literature Review

2.1 Human capital reporting

Human capital reporting has been largely a matter of voluntary initiative. It has been a cyclical

and fashion driven issue with very little required by the companys legislation to be reported in

the companys annual report.

Our present reporting framework does not make any provision regarding the reporting of

human capital as a part of financial reporting and even the provisions for the operating and

financial review did not guarantee that information about employee relations would feature in a

companys narrative qualitative report. Indeed this fact has been the subject of negative

criticism by a number of commentators who argue that employee matters could not be

considered as immaterial to an understanding of the companys position and future prospects.

2.2 Definition of human capital

While various terminology in relation to Human Capital have been used in the literature, for

example, human assets (Likert, 1967), human resources (Brummet et al., 1968; Heckmian

and Jones, 1967), cultural capital (Thompson, 1998), worth of employees (Roslender and

Dyson, 1992), and Human Capital (Liebowitz and Wright,1999).

Now one of the first issues of controversy in human capital reporting is the definition of human

capital. The lack of a settled definition perhaps contributes to the failure to develop this aspect

of corporate disclosure.

Wells (1999) adopts and refines an OECD definition and provides the following definition of

human capital: the knowledge, skills, competencies and other attributes embodied in

individuals or groups of individuals acquired during their life and used to produce goods,

services or ideas in market circumstances.


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Abeysekera and Guthrie (2004) define HC as:

Combination of factors possessed by individuals and the collective workforce of a firm which

also encompass knowledge, skills and technical ability; personal traits such as intelligence,

energy, attitude, reliability, commitment; ability to learn, including aptitude, imagination and

creativity; desire to share information, participate in a team and focus on the goals of the

organization.

In the 2003 Accounting for People Consultation Paper human capital was defined as the

relevant knowledge, skills, experience and learning capacity of the people available to the

organization.

Stiles and Kulvisaechana(2003) argue that human capital is broader than human resources.

Human capital emphasizes collective knowledge but also the individuals must commit or

engage with the organization if effective utilization of human capital is to happen. Thus, from

their perspective, a company requires social capital and organizational (structural) capital as

well as human capital. These three forms contribute to intellectual capital.

For human capital to be of practical value it requires a commitment to use it in such a way that

enhances the companys reputation and ultimately that benefits the company in the long term.

A company also needs to have a clear human capital management policy in operation in order

to benefit from that human capital. Reporting on human capital is a necessary aspect of human

capital management since the process of collecting and presenting information enables

managers to assess the contribution of their employees and others to the companys success.

2.3 Origin of the term human capital

A. W. Lewis is said to have begun the field of Economic Development and consequently the

idea of human capital when he wrote in 1954 the "Economic Development with Unlimited

Supplies of Labor." The term "human capital" was not used due to its negative undertones until

it was first discussed by Arthur Cecil Pigou "There is such a thing as investment in humancapital as well as investment in material capital. So soon as this is recognized, the distinction

between economy in consumption and economy in investment becomes blurred. For, up to a

point, consumption is investment in personal productive capacity. This is especially important

in connection with children: to reduce unduly expenditure on their consumption may greatly

lower their efficiency in after-life. Even for adults, after we have descended a certain distance


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along the scale of wealth, so that we are beyond the region of luxuries and "unnecessary"

comforts, a check to personal consumption is also a check to investment.

The use of the term in the modern neoclassical economic literature dates back to Miners article

"Investment in Human Capital and Personal Income Distribution" in The Journal of PoliticalEconomy in 1958. Then T.W. Schultz who is also contributed to the development of the subject

matter. The best-known application of the idea of "human capital" in economics is that of

Mincer and Gary Beckerof the "Chicago School" of economics. Becker's book entitledHuman

Capital, published in 1964, became a standard reference for many years. In this view, human

capital is similar to "physical means of production", e.g., factories and machines: one can invest

in human capital (via education, training, medical treatment) and one's outputs depend partly on

the rate of return on the human capital one owns. Thus, human capital is a means of production,

into which additional investment yields additional output. Human capital is substitutable, but

not transferable like land, labor, or fixed capital.

2.4 Main approaches to reporting on human capital

Clear cut demarcations between different approaches cannot be done, since most approaches

tend to be overlapping. Nevertheless, even a primitive division of main approaches, as provided

in the table does provide an indication of the gradual shift of orient:

Approach Calculating costs ofpersonnel policies

Human capitalaccounting

human capitalmanagement

Strategicmanagement

Period oforigin

mid 1960s early 1960s late 1970s early 1990s

Characteristic Financial utility ofpersonnel selection

Financial value ofenterprises human

capital

Learning anddissemination of

knowledge asinternal

managementstrategy

The combination offinancial indicators,

human capital,internal

business processes,customer relationsandinnovation

Methodsapplied

Utility analysis - human resource

accounting,- human resourcecosting and

accounting

- the learning

organisation,- knowledgemanagement

the balanced

scorecard
http://en.wikipedia.org/wiki/Neoclassical_economicshttp://en.wikipedia.org/wiki/Economicshttp://en.wikipedia.org/wiki/Gary_Beckerhttp://en.wikipedia.org/wiki/Chicago_school_(economics)http://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Rate_of_return_on_investmenthttp://en.wikipedia.org/wiki/Means_of_productionhttp://en.wikipedia.org/wiki/Means_of_productionhttp://en.wikipedia.org/wiki/Rate_of_return_on_investmenthttp://en.wikipedia.org/wiki/Capital_(economics)http://en.wikipedia.org/wiki/Chicago_school_(economics)http://en.wikipedia.org/wiki/Gary_Beckerhttp://en.wikipedia.org/wiki/Economicshttp://en.wikipedia.org/wiki/Neoclassical_economics


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ReportingFramework

Cost and benefit

calculations

Financial statements non-financial

statements (ifany)

Generic

performancemeasurements

2.5 The potential benefits of human capital reporting

Several studies show a positive link between human capital, competitiveness and performance

and shareholder value. For example, the Chartered Institute of Personnel Development research

suggests that the quality of people management is a better predictor of performance than

business strategy, research and development or quality management. Successful firms are more

likely to focus on employee measurement recognizing that workers feelings about their jobs

and companies impact on their performance and the companies performance.

As there is a significant amount of evidence to suggest a link between human capital and a

companys financial performance this gives rise to an argument for reporting on human capital

management practices. For example, according to the Accounting for People Report:

For most organizations the link between HCM policies and practices and performance is

sufficiently central to be a material factor whose disclosure might reasonably be expected to

influence assessments of their value and effective stewardship by management. In such cases

disclosure increases the value of financial reports and will be important for the effective

operation of capital markets . . . More generally, people are looking for reports that

demonstrate to other stakeholders (such as customers, suppliers, employees and regulators)

that the organization is focusing on all the drivers of value.

The report of the Taskforce suggests that there are a number of benefits in reporting on human

capital. Reporting on human capital management helps employees and prospective employees

to understand their contribution to overall performance and how they are valued. This improves

the organizations ability to attract, motivate and retain the people they need.

High quality reporting on human capital management will, according to the Taskforce, assist

investors seeking long-term performance.

Other benefits considered to result from external reporting on human capital management

include demonstration of commitment to diversity and inclusiveness, health and safety and

respect for employees, achievement of buy-in and support from senior level; improvement of

stakeholder confidence; provision of internal benchmarks on which to improve year


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to year; facilitation of prioritizing of resources and efforts to improve performance. Human

capital reporting can also improve communications for a company, especially in situations in

which there is uncertainty about a companys performance or about its future performance. The

companys expressed attitude towards its employee contribution and how it values its

employees may provide others with a deeper insight into the character of the company.

Indeed, external reporting of human capital may improve accounting standards and company

valuation and thereby make possible better decision-making by senior managers, investors,

analysts and other organizational stakeholders.

In short, the main reasons for companies introducing human capital reports are to attract

investors; to establish an internal information system on human resource issues; to pursue a

cost-benefit analysis of investments in human resources; and to improve human resource

management. They also seek to build the companys image and indicate their social

responsibility and ethical values to the outside world in order to attract and retain customers

and qualified employees.

2.6 Limitation of human capital reporting

Despite the potential benefits of human capital reporting it is easy to idealize and overstate

them. Currently, the return side of human capital is not easily measured and so companies are

left with benchmarking which is not an exact science and tends to concentrate on the

investments and processes and indirect measures rather than on the direct gains arising from

human capital.

A number of obstacles stand in the way of effective human capital reporting. First, the

information may be commercially sensitive because it could reveal a competitive advantage.

Other sensitivities include the potential reaction of employees and trade unions to information

disseminated in the reports. Secondly, the costs involved in human capital reporting may

outweigh the benefits and thereby reduce the incentive to engage in this reporting process.

Thirdly, lack of guidance, for example with regard to measures and comparators make the task

of human capital reporting more difficult, in particular in transnational or group companies

where there may be different human resources demands and priorities. Fourthly, human capital

reports rarely provide a full picture of the human capital dimensions in the company.


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This lack of completeness makes human capital reports difficult to use in terms of evaluating

the companys performance. Fifthly, human capital reporting tends to have a low status with

little support from senior management.

The lack of meaningful measures to communicate the value of a companys human capital in

the marketplace is clearly an obstacle to effective reporting. Even though the Centre for

Excellence in Management and Leadership Report offered some possible measures that may be

helpful, including morale, motivation, investment, long-term development, external perception,

it recognized that the problem with this menu approach is that it does not allow for

comparability either at a sector or economy level.

These obstacles might create the impression that a meaningful practice of human capital

reporting cannot be achieved.

Summary of Barriers on HCR Accounting barriers:

No requirement under Generally Accepted Accounting Practices (GAAP) No official standard or framework Human capital is not included in the valuation of a business

Other barriers: HR data often collected for administrative and labor compliance rather than

evaluation purposes Disclosure can be competitively sensitive Resistance to change Human capital reporting it is easy to idealize and overstate them.

2.7 Human capital reporting framework

Four fundamental principles for the human capital measurement and reporting

4 Principles

Human capital should be viewed as a bridging concept linking business strategy andHR practices.

It is a precarious assetthe potential mobility of individual employees could and canundermine an organization's ability to deliver.

It is a paradoxical asset the qualities that individuals bring, notably flexibility,mobility and personal commitment, the very same factors that create competitive value,

are some of the most difficult to measure.

Human capital measurement is context-dependent.


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2.7.1 Chartered Institute of Personnel and Development (CIPD) guideline for the human

capital measurement and reporting

The purpose of this Guide is to help organizations move forward with their internal HC

measurement and reporting, by providing practical information and setting out a clear process

to follow. This process has five key stages, and each section of the Guide will cover each of

these stages in turn.

Step 1Setting human capital management in context

This section defines what HC is and its links to the business strategy, and provides an overview

of the frameworks and models necessary HCM and measurement.

The most commonly used models and frameworks for HCM are:

1. The human resource benchmarking model2. The balanced scorecard3. The Human Capital Monitor4. The Human Capital Index5. The engagement model6. The organizational performance model.

Checklist Define human capital management in the organization. Articulate a human capital strategy to support your business objectives. Produce a human capital plan. Select a human capital management and measurement work to demonstrate the links

between people and performance

Step 2Getting started: gathering and collating the data

Gathering and collating human capital data requires an understanding of type, analysis and use.

Once the relevant data have been identified, you can build a measurement platform and start to

interpret the information, then you'll be ready to demonstrate the connection between human

capital management practices and business objectives and performance. This step Includes:

1. Gather the right facts2. Assess the data sources and information systems3. Identify and collect the relevant data


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4. Build the human capital measurement databaseStep 3Measuring human capital: tools and methodologies

This section presents the spectrum of measurement techniques for HC, introduces statistical

methodologies which can be deployed to leverage the measurement platform, shows how to

communicate results internally and select key metrics to guide human capital decisions.

Checklist

Identify the measurement technique to apply to the human capital analysis. Formulate and test hypotheses by establishing causality Interpret the analysis and communicate the results Monitor and report the key metrics

Step 4Reporting the data: from internal to external reporting

This section is related to the reporting guideline for external reporting requirements. What kind

of information investors are expecting, and propose a framework for external reporting are the

key consideration of this steps.

What kind of Information are Investors Expecting?

The profile of the workforce and its diversity Senior executive remuneration The quality of leadership and management strength Evidence of a coherent, robust people strategy which is mapped to the stated business

strategy for the next three years Evidence that current people management practices are affecting organizational and

business performance Current and forecasted returns on people investments The valuation of current human capital assets and future investments

Step 5Developing a route map to human capital reporting

This final step covers developing your own route map, identifying who in your organization

should be involved, determining stakeholders expectations, and embarking on the human

capital measurement journey.

Checklists

Identify who should be involved in the human capital team. Review your current position in the capital management Journey and plan what isrequired for you to move to the next stage. Review the Guide, take each step, and tick off all the checklist's items. Embark on the journey to HC measurement and reporting


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2.7.2 Seven Steps to Making HR a Strategic Asset

This guideline has been given by Kaplan and David P. Norton through the article Having

Trouble with Your Strategy? Then Map It on Harvard Business Review. The brief discussion

on this guideline is as follows:

Step 1: Clearly Define Business Strategy

Our focus on implementation assumes that a consensus strategy exists and that it can be clearly

described and communicated to the entire organization.

Step 2: Build a Business Case for Why and How HR Matters for Strategy Implementation

HR will only become a strategic asset when both line managers and HR professionals assume a

shared responsibility for implementing strategy. For this to happen, both parties need to have a

common understanding that HRs strategic value is linked to the extent to which it directly

contributes to better strategy execution.

Step 3: Build a Strategy Map Describing the Causal Flow of Strategy Implementation

A strategy map takes what tends to be an externally focused vision in Step 1 and links it to an

internal roadmap that show(s) how an organization plans to convert various assets into desired

outcomes. It is an essential part of managing HR as a strategic asset because it provides the

basis of aligning the HR Architecture with the firms strategic drivers. It provides the

organizational logic that transforms HR from a transaction and operationally oriented function

to an organizational asset with strategic impact.

Step 4. Link HR Architecture to Strategy Map

This may be the most important step in transforming HR to a strategic asset. The term HR

Deliverable is just a short-hand term for the outcomes of the HR Architecture that directly drive

successful strategy implementation. The question is where in the HR Architecture to locate the

HR Deliverables? Should we focus on employee performance and behaviors, or the drivers of

those behaviors? We believe those HR Deliverables should focus on employee performance

behaviors because they most directly influence the strategic goals of line managers.

Step 5: Design HR System in Alignment with HR Deliverables

The strategic behaviors in the Organization (HR Deliverables) are driven by competencies,

motivation, work structure, strategic focus, etc. Therefore, the HR system (recruiting, selection,


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compensation, rewards, career development, etc,) must be focused on those behavioral drivers.

The result is an HR system that is both externally aligned with the requirements of the strategy

map, and internally aligned among the various elements of the system.

Step 6: Design HR Strategic Measurement System (The HR Scorecard)

Steps 1-5 lay the foundation for managing HR as a strategic asset. Next the organization will

need a measurement system that will not only guide that management process, but also validate

HRs contribution to firm performance. We use the term HR Scorecard because it is designed

to extend the concepts of the Balanced Scorecard to an organizational asset, in this case the HR

Architecture. In other words, based on Steps 1-4 above, there is a very clear logic that links the

strategic results for the HR Architecture with the ultimate financial success of the organization.

Step 7: Implement Management by Measurement

Managing HR as a strategic asset will be a significant change initiative for most organizations.

It will require a new perspective on HR, as well as acceptance this new role, by both line

managers and HR professionals. Senior line managers need to understand that if the

organization is going to reap the benefits making people our most important asset,

implementation of the HR Scorecard needs to be approached as a major change initiative.

Ultimately the success of this initiative will turn on whether the people in the organization who

are charged with implementing the firms strategy, understand the logic of the strategys

execution, and their role in that logic.

2.7.3 Other models on human capital are as follows

Investment in people model by UK researchers. Guideline for Intellectual Capital StatementsA Key to Knowledge Management by

Danish researchers.

Guidelines for the Management and Disclosure of Information on Intangiblesotherwise known as the MERITUM model by Spain researchers.

2.8 Guideline for effective reporting on human capital

Information should be neutral, free from bias, dealing with good and bad aspects Content must be relevant, reliable consistent and complete


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Use comparatives / historic data and basic accounting concepts such as matching andthe consistency concepts

Measurements disclose source, assumptions and benchmark data Should be audited

2.9 International practices on reporting of human capital: A case of Kelly Group

Kelly Group is in the business of providing people management solutions that add value to

every link in the human capital management chain.

While the group already offers the full spectrum of staffing services ranging from permanent

and temporary staffing, vendor management and managed services to learner ships deploymentand payroll and compliance services it is always re-inventing itself to meet the needs of the

changing world of work.

Through the provision of new and innovative solutions, developed as a result of over 40 years'

experience of managing divergent and multiple workforces within many different

environments, the group seeks to help clients improve productivity and reduce costs.

With a nationwide network of more than 75 offices and a database of hundreds of thousands ofcandidates, the Kelly Group is South Africas leading service provider in the employment

industry.

2.9.1 People Value Statements: delivering on the brands promise

Kelly Group in the annual report presented People value statement to measure the

effectiveness, attitude and efficiencies of its people so that stakeholders can see the value of

their people as a sustainable business asset. In the people value statement they described the

following issues:

o Staff complemento Staff turnovero Length of service (retention of corporate memory)o Absenteeismo Demographics


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age / generational aspects / gendero Employment equityo Intellectual capital data baseo Skills development / leadership development initiativeso Employee assistance programs / wellness initiativeso

Employee relationship index critical improvement issues, loyalty analysis and commitment index

2.9.2 Customer Satisfaction Index (CSI)

In the customer satisfaction index Kelly group presented the survey result of different years

customers satisfaction that is measured independently. This represent the brand promising to

the customers.

2.9.3 Employee Loyalty Analysis

In case of employee loyalty analysis Kelley group analyzed their customer loyalty by the

independent surveyor firm. Through the graph they showed their truly loyal customers and

other types of customer.

2.9.4 Calculating the value of your human capital

The Kelly Group has devised a simple formula to value its people:

(current monthly salary / 1 000) x (average training days per year of service)x (average cost

to company per training day) x ((100age)/age)

According to this formula the intellectual capital within the group is approximately R2.08

billion (2008); R1.73 billion (2007)

2.10 International Accounting Standard(IAS) 38

2.10.1 Objective of IAS 38

The objective of IAS 38 is to prescribe the accounting treatment for intangible assets. The

principal issues are the timing of recognition of assets, the determination of their carrying


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amounts, the amortization charges to be recognized and specific disclosures about intangible

assets.

2.10.2 Definition of Intangible Asset

An intangible asset is an identifiable non-monetary asset without physical substance Theasset must be:

(a) controlled by the entity as a result of events in the past, and

(b) something from which the entity expects future economic benefits to flow.

2.10.3 Three criterias for Intangible asset are

1. Identifiability2. Control3. Future economic benefit

An asset will be indefinable when

a) sold, transferred, licensed, rented, exchanged either individually or together with arelated contract

b) arises from contractual or legal right2.11 Bangladesh and HC research: a brief overview

While predominantly an agriculturally driven economy, the manufacturing and services sectors

contribute increasingly to the growth rate of gross domestic product in Bangladesh. At the same

time, the countrys economic growth is accelerating via the continued increase in exports and

the inflow of remittances in recent years (Ahmad and Khanal, 2007). In the past years, the

economy of Bangladesh was particularly dependent on the export of ready-made garments and

other knitwear industries; since the mid-1990s, more than 70 per cent of Bangladeshs exports

were ready-made garments and leathers products in where most of these products are matured

products with relatively low value-added. The availability of abundant cheap labor provides

Bangladeshi firms with a competitive advantage compared with other Asian countries such as

Malaysia, Vietnam, China, and India. However, except in the garments sector, which requires

less mechanical and management skills, the country experiences the deficiency of skilled

manpower both in technical and management areas. As a result, different institutions have been


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set up to develop skilled manpower for the sake of filling the gap in the skilled industrial and

other sectors workforce (Ahmed and Kabir, 1995). On the other hand, IC/HC results in the

creation of high value-added in production. Thus, it can provide Bangladeshi firms a

competitive advantage to be successful in the knowledge-based global economy.

In Bangladesh, while there are a number of empirical studies of the issues of corporate social

responsibility (CSR) reporting, together with a few others on IC reporting practices (Belal,

1997; Imam, 2000; Khan et al., 2009; Ali et al., 2008), practically, no research has yet been

carried out to observe the status of HC reporting under the framework of IC in different

business sector. A study conducted by Ali et al. (2008) on IC reporting practices of selected

firms in Bangladesh using content analysis revealed that companies report very few IC items,

including information on HC. Khan and Ali (2010)s study on Bangladeshi commercial banks

IC disclosures report the similar findings. A much older study conducted by Bala and Habib

(1988) found that separate financial reporting to employees is not mandatory in Bangladesh and

thereby organizations disclosed only mandatory types of employee-related information, such as

employee salaries and remuneration, provident fund, gratuity fund, welfare fund, festival

bonuses, and other cash incentives based on employees annual performance, in accordance with

the provision of Bangladesh Accounting Standard-19 employees benefits and the first

schedule of The Income Tax Ordinance (1984) (Bala and Habib, 1988). Hossain et al. (2004)

also report that their sample of companies made few disclosures on HC information. However,

their study fails to investigate human resources disclosures under the framework of IC or lacks

of applying content-based analysis.

Overall, these studies fail to address the wide range of HC reporting-related items. For

example, while Hossain et al. (2004) consider 12 items to examine HC information, Ali et al.

(2008) and Khan and Ali (2010) focus on only six items. The present paper thus differs from

these studies in that it delineates a broader scope of HC information. Specifically, the study

addresses additional HC information such as rate of staff turnover, employees involvement in

the community activities, employees value, the establishment of own training provision,

employee health and safety, opportunities for job rotation, employee leadership, and HC

statistics. Similar to the literature and Bangladesh-related social reporting studies, as a whole,

reflecting on these elements in this study, it is taken as an imperative to outline the complete

human resources information for a firm (Khan et al., 2009; Khan, 2010).


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2.12 Geometric Mean(GM)

In mathematics, the geometric mean is a type ofmean oraverage, which indicates the central

tendency or typical value of a set of numbers.

The Geometric Mean is useful in finding the average change of percentages, ratios, indexes, or

growth rates over time. It has a wide application in business and economics because we are

often interested in finding the percentage changes in sales, salaries, or economic figures, such

as the GDP, which compound or build on each other. The geometric mean will always be less

than or equal to the arithmetic mean. The geometric mean of a set of n positive numbers is

defined as the n to root of the product of n values.

Formula

if the numbers are , the geometric mean satisfies
http://en.wikipedia.org/wiki/Meanhttp://en.wikipedia.org/wiki/Averagehttp://en.wikipedia.org/wiki/Averagehttp://en.wikipedia.org/wiki/Mean


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Chapter 03: Findings and Analysis

3.1 State of Human Capital Reporting

Human Capital(HC) related items reported by the sample of listed companies in Bangladesh are

shown in Table 1. The result indicates that the disclosure practices of listed companies in

Bangladesh in relation to HC items are not as low as projected in relation to the total list of

items. Majority of the sample firms reported more information on such items as details of

employee training, numbers of employees, education of top employees, employee

compensation plan and benefits, employee skill and competence and employee recruitment

policies. Accordingly, it becomes evident that leading Bangladeshi firms devote a significant

amount of resource into training their personnel to be familiar with work-related skills.

Throughout the study it has been found that total 83 sampled companies irrespective of industry

reported the number of employees, so it is evident that it is the most common component for

reporting on human resources. Moreover, employee leadership, employees opportunities for job

rotation, entrepreneurial spirit and HC related statistics are very much infrequent items or

component for reporting on human resources in the annual report by the listed companies in

Bangladesh, because only two or three companies reported this items in the annual report. The

majority of the high quality reporting e.g. scored 3 was educational qualification of the top

level employees. Most of the companies have given the details educational background of the

top level employees e.g. board of directors or executive employees. In case of employee

training most of the sampled companies disclosed this component and some companies

disclosed the detailed list of the training with the participants list. But the concerning fact is

that majority of the sampled companies are disclosing obscurely e.g. scored 1. For example, in

case of employee training 38 companies(62% out of total frequency) disclosed the items

obscurely or with other topics, 11 companies(18%) disclosed separately and only 12companies(20%) disclosed quantitatively or with visual evidence. So frequency of reporting is

not much lower but the quality of the reporting is not up to the mark.


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The summary of the result has been listed below:

HC Items 0 1 2 3 Frequency

of disclosed

Employee training 62 38 11 12 61

Education 52 33 22 16 71Lists of training and employees

participation99 7 8 9 24

Number of employees 40 20 56 7 83

Employee compensation plan and benefits 54 38 27 4 69

Employee Motivation 65 38 17 3 58

Employee involvement in the communityactivities

113 7 1 2 10

Establishment of own training institute 105 10 6 2 18

Employee attitudes towards company 99 19 4 1 24

Employees safety and health 88 25 9 1 35

Entrepreneurial spirit 120 3 0 0 3

Rate of staff turnover 117 5 1 0 6Employee skill and competence 58 50 12 3 65

HC statistics (i.e. in terms of profitability

per employee, sales per employee

120 0 0 3 3

Career development and opportunities 84 33 5 1 39

Employee equality 96 24 3 2 29

Employee value 81 41 1 0 42

Employees recruitment policies 64 41 16 2 59

Employee leadership 121 1 1 0 2

Employees opportunity for job rotation 121 2 0 0 2

Table 1: Summary of the result on human capital reporting

3.2 Sector wise disclosure of human capital items

To understand the state of human capital disclosure by the listed companies in Bangladesh

clearly sector wise reporting condition has been designed. In case of sector wise disclosure

quality of reporting has been presented on the three point score e.g. 0,1,2,3 and percentage of

disclosed( on the basis of total sampled companies related to the sector) to examine the

popularity of component for reporting among the sampled companies.


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Bank(n=16)

In case of banking sector the disclosure on human capital is much better. Majority of the bank

reported the employee benefit and compensation plan, employee motivation, employee

training, lists of training and employee participation, number of employees, employee

recruitment polices components. The top disclosed items are the employee benefit &

compensation plan and employee motivation related information, so it is inferred that majority

of the bank gives the attractive benefit & compensation to the employee and reports it to the

annual report accordingly. Specially Prime bank, Eastern bank ltd and Dhaka bank disclosed

the extensive information regarding the human resources.

Eastern bank ltd in the annual report disclosed People first, that is the motto of EBL. We are

the investor in people. Our people resourcing policy is, we look for the best fit. We do not offer

them a job rather we shape their career

Eastern bank reported the human resources in separate Human resource statement. Islami bank

analyzed their manpower age wise and other related information in detailed. Only Dhaka bank

and Trust bank addressed the employee leadership component out of 123 sampled companies.

Employees opportunity for job rotation and rate of employee turnover were not reported by the

any bank out of the sampled banks.

HC Items 0 1 2 3 Frequency of

disclosed

Percentage

of disclosed

Employee training 2 4 4 6 14 88

Education 3 4 4 5 13 81

Lists of training and employeesparticipation

4 2 2 8 12 75

Number of employees 2 3 9 2 14 88

Employee compensation plan and benefits 1 4 10 1 15 94

Employee Motivation 1 9 5 1 15 94


13 3 0 0 3 19

Establishment of own training institute 6 5 3 2 10 63

Employee attitudes towards company 12 3 1 0 4 25

Employees safety and health 8 6 2 0 8 50

Entrepreneurial spirit 14 2 0 0 2 13

Rate of staff turnover 16 0 0 0 0 0

Employee skill and competence 5 7 4 0 11 69



13 0 0 3 3 19

Career development and opportunities 7 6 3 0 9 56

Employee equality 10 5 0 1 6 38


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Employee value 8 8 0 0 8 50

Employees recruitment policies 4 3 8 1 12 75

Employee leadership 14 1 1 0 2 13

Employees opportunity for job rotation 16 0 0 0 0 0

GM 32

Table 2: Summary of disclosure on human capital by banking sector

Pharmaceuticals & Chemical(n=11)

In Pharmaceuticals & Chemical companies reported the number of employees, employee

training, employee skill and competency and employee safety and health most but the

concerning fact is that the quality of the reporting on human resource is not up to the mark. For

example, in case of disclosure of employee skill and competence out of 11 companies 10

companies reported this component but 1 company(10% out of total sampled companies)

reported high quality or detailed information e.g. scaled 3. List of training and employees

participation, employee involvement in the community, entrepreneurial spirit, HC related

statistics, employee leadership and employee opportunity for job rotation, total 6 items, were

not reported by any companies.


disclosed

Percentage

of disclosed


Education 4 4 1 2 7 64

Lists of training and employees participation 11 0 0 0 0 0




Employee involvement in the community

activities

11 0 0 0 0 0







HC statistics (i.e. in terms of profitability per

employee, sales per employee

11 0 0 0 0 0







GM 10

Table 3: Summary of disclosure on human capital by pharmaceuticals sector


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Engineering(n=11)

In the Engineering sector, employee training, education, number of employees, employee skill

and employee recruitment policy were the frequent disclosure items for reporting on human

resources. Moreover, employee involvement in the community activities, HC statistics,

entrepreneurial spirit were not disclosed in the annual report by any sampled companies. Aftab

auto, Golden sons did not disclose any items relating to the human capital reporting. To

comment on the quality of reporting none of the companys disclosure for any items or

components were high quality disclosure e.g. scaled 3. So the quality of the human capital

reporting in this sector was not up to mark though they are reporting some items obscurely. The

detailed summary is as follows:

HC Items 0 1 2 3 Frequency ofdisclosed

Percentage ofdisclosed








activities

11 0 0 0 0 0







HC statistics (i.e. in terms of profitability peremployee, sales per employee

11 0 0 0 0 0







GM 11

Table 4: Summary of disclosure on human capital by engineering sector


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Non Bank Financial Institution(NBFI)[n=12]

In case of NBFI 12 out 12 companies disclosed the employee training, education, number of

employees, employee compensation plan and benefits and employee skill and competence

items. On the other hand employee leadership, entrepreneurial spirit and HC statistics were not

disclosed by any other companies. In case of quality of disclosure, the quality is not bad it is

much better because many companies disclosed the high quality reporting scaled on three.

Specially Uttara finance and Prime finance reported the human resources in the annual report

with separate human resource statement. Prime finances reporting quality was nice because

most of the disclosure component graded on scale 03. None of the company found which did

not disclosed any components. Every companies disclosed minimum 7 components out of 20

components. So the overall performance of NBFI for human resource reporting was

satisfactory.


disclosed

Percentage

of disclosed


Education 0 2 7 3 12 100

Lists of training and employees

participation

9 0 0 3 3 25





activities

10 0 1 1 2 17









12 0 0 0 0 0







GM 28

Table 5: Summary of disclosure on human capital by NBFI sector


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Fuel & Power(n=7)

Employee training, number of employees, educational background of top level executives,

employee recruitment policies, employee motivation were the highly frequent disclosed items

out of 20 items. Out of 7 sampled companies Borkatullah power company did not disclose any

items regarding human capital. Summit power and Mobile Jamuna Ltd reported more items of

HC but the quality of reporting were not high. None of the companies disclosed the employee

spirit, employee leadership, HC statistics, rate of staff turnover, employee opportunity for job

rotation related information.


disclosed

Percentage

of disclosed








activities

6 1 0 0 1 6








7 0 0 0 0 0







GM 6

Table 6: Summary of disclosure on human capital by Fuel & Power sector

Food & Allied(n=7)

Educational background of employees, employee skill and competences, number of employees

were the frequently disclosed HC items. Other hand lists of employee training, employee

involvement in the community, employee leadership, employee opportunity for job rotation

were not disclosed by any other sampled companies. Apex foods and Fu-Wang foods did not


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disclose anything about HC. But the other companies reporting were not quality full. Any

companies disclosure quality for any components of HC scored high quality e.g. scored on 3.


disclosed

Percentage

of disclosed




participation

7 0 0 0 0 0





activities

7 0 0 0 0 0





Rate of staff turnover 6 1 0 0 1 14Employee skill and competence 2 5 0 0 5 71

HC statistics (i.e. in terms of profitabilityper employee, sales per employee

7 0 0 0 0 0







GM 9

Table 7: Summary of disclosure on human capital by Food sector

Jute(n=2)

In the Jute sector out of 2 companies every companies has been selected. Only Sonali Ash ltd

disclosed 1 items i.e. number of employees in the notes to the financial statements. So the

disclosure quality of this sector is not good at all.


disclosed

Percentage

of disclosed








2 0 0 0 0 0




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2 0 0 0 0 0







GM 1

Table 8: Summary of disclosure on human capital by Jute sector

Textile(n=13)

Employee compensation plan, employee motivation, employee safety and health were the

frequently disclosed items. On the other hand employee leadership, employee opportunity for

job rotation, HC statistics, rate of staff turnover did not disclosed by any other companies.

CMC Kamal textile, Envoy textile, All tex, Mallek textile did not disclose any thing regarding

HC. None of the companies quality of reporting were high. Generation next textile, Mithun

textile and Bex tex disclose the employee safety and health issue separately.


disclosed

Percentage

of disclosed

Employee training 10 2 1 0 3 23Education 9 1 3 0 4 31






activities

13 0 0 0 0 0








13 0 0 0 0 0







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GM 9

Table 9: Summary of disclosure on human capital by Textile sector

Service(n=4)

Out of four service companies all companies have been selected in this study. Somorita hospital

ltd did not disclose any thing about HC. Other companies reported average 4 or 5 items but

none of the items were graded high quality. Employee benefit plan, employee motivation,

educational background, number of employees were the frequently disclosed items.


disclosed

Percentage of

disclosed



Lists of training and employeesparticipation

4 0 0 0 0 0


Employee compensation plan and

benefits

2 2 0 0 2 50



3 1 0 0 1 25









4 0 0 0 0 0







GM 7

Table 10:Summary of disclosure on human capital by service sector

Tannery(n=4)

Every companies in this sector has been selected to examine the disclosure of HC. Educational

background, number of employees were the high frequent items for the reporting of HC. Out of

four legacy footwear and Samata footwear did not disclose any thing about HC. Apex footwear


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and Bata shoe companies disclosed some of the components but any component graded as high

quality.


disclosed

Percentage

of disclosed








activities

3 1 0 0 1 25









4 0 0 0 0 0







GM 5

Table 11:Summary of disclosure on human capital by Tannery sector

Ceramic(n=4)

Every companies in this industry has been selected for the study . Employee compensation plan

& benefit, employee motivation were the high frequent items for reporting of HC. Every

companies in the ceramic sectors disclosed the on an average 5 items but the quality of

reporting average. RAK ceramic disclosed the HC related information in the separate statement

named as Investment in Intangible.

HC Items 0 1 2 3 Frequency ofdisclosed

Percentageof disclosed







Employee involvement in the community 1 0 0 0 0 0


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activities









4 0 0 0 0 0







GM 6

Table 12:Summary of disclosure on human capital by Ceramic sector

Cement(n=4)

Out of the 6 companies, 4 companies have been selected for the study and all the sampled

companies reported on an average 4 items. But the quality of the reporting was not up to the

mark. Out of four companies Laferge surma ltd reported highest 7 items and reported in the

directors report. Employee compensation plan & Benefits, employee motivation were the

frequently disclosed items.

HC Items 0 1 2 3 Frequency ofdisclosed Percentageof disclosed








activities

1 0 0 0 0 0








4 0 0 0 0 0






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GM 6

Table 13:Summary of disclosure on human capital by Cement sector

IT(n=4)

Out of 6 companies this study has collected information about disclosure of HC for 4

companies and it represent 67% of the population. Out of companies BD com online and Agni

systems ltd did not disclose anything about HC in their annual report. In this sectors Aamra

ltds reporting of HC was better but not the up to the mark. Only Aamra ltd disclosed 8

components out of 20 components of HC framework but none of components graded as high

quality reporting. In this sector employee educational background was the frequently disclosed

items.


disclosed

Percentage

of disclosed








3 1 0 0 1 25









4 0 0 0 0 0







GM 5

Table 14:Summary of disclosure on human capital by IT sector


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Insurance (n=16)

Out of 16 sampled companies People insurance, Agrani insurance, Meghna life insurance,

Dhaka insurance did not disclose anything about HC. Employee educational background,

number of employees, employee motivation, employee skill and competence were the

frequently disclosed items out of twenty items of HC framework. None of the companies

disclosed anything about employee involvement in the community, entrepreneurial spirit,

employee leadership, employee opportunity for job rotation. Prime insurance ltd disclosed high

quality HC reporting in the insurance sector. Prime insurance disclosed total 12 items

separately in the Human Resource Statement.


disclosed

Percentage

of disclosed

Employee training 11 5 0 0 5 31Education 9 4 2 1 7 44


participation

14 2 0 0 2 13





activities

16 0 0 0 0 0







HC statistics (i.e. in terms of profitabilityper employee, sales per employee

16 0 0 0 0 0







GM 11

Table 14:Summary of disclosure on human capital by insurance sector

Telecom(n=2)

Out of 2 telecom companies every companies have been selected. BD submarine cable ltd

disclosed only 3 components e.g. number of employee, employee skill & competence and

employee value in the Chairmans statement but the quality of disclosure was low. Grameen


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phone disclosed 6 items of the HC framework e.g. list of employee training, employee

motivation, employee skill & competence, career development opportunity, employee

recruitment policy, educational background of top level employees. In this industry employee

skill & competence was the frequently disclosed items as a disclosure of human capital.


disclosed

Percentage

of disclosed








activities

2 0 0 0 0 0









2 0 0 0 0 0







GM 5

Table 15:Summary of disclosure on human capital by Telecom sector

Travel & Leisure(n=2)

Out of 2 companies every companies have been selected in the study. United air disclosed 4

items in the annual report e.g. list of training, number of employee, employee compensation

plan and employee motivation. Unique hotel and resort disclosed 2 items e.g. number of

employees and employee compensation plan for disclosure of HC in the annual report. Two

companies in this industry reported the HC related information in the notes to the financial

statement. Sixteen items of the HC framework were remain undisclosed by the two companies

in this industry.


disclosed

Percentage

of disclosed



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participation

1 0 1 0 1 50


Employee compensation plan and

benefits

0 0 2 0 2 100



2 0 0 0 0 0









2 0 0 0 0 0







GM 2

Table 16:Summary of disclosure on human capital by travel & leisure sector

Miscellaneous(n=4)

In this type out of 8 companies 4 companies have been selected for the study. Beximco ltd did

not disclose any information regarding HC. Only Amramit ltd disclosed 7 items of HC

framework in the Directors report of the annual report. Out of 7 disclosed items 1 item scored

2 e.g. number of employee other items were graded as low quality reporting e.g. scored 1. G Q

ball pen ltd disclosed only 1 items e.g. number of employee graded as high quality e.g. scored 3

in the notes to the financial statements. Number of employee is the frequently disclosed items

in this industry. The overall disclosure practice of this industries was not up to the mark.


disclosed

Percentage

of disclosed








4 0 0 0 0 0




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4 0 0 0 0 0







GM 5

Table 17:Summary of disclosure on human capital by Miscellaneous sector

3.3 Ranking of Sectors

In case of ranking of different sectors Geometric Mean(GM) has been used. On the basis of

outcome of the GM the position of different industries for the human capital reporting practices

have been determined. The summary of the outcome of the rank has been presented below:

Sectors GM Rank

Bank 32 1

Non Bank Financial Institutions(NBFI) 28 2

Engineering 11 3

Food & Allied 9 5

Fuel & Power 6 7

Jute 1 10

Textile 9 5Pharmaceutical & Chemical 10 4

Service 7 6

Tannery 5 8

Ceramic 6 7

Cement 6 7

IT 5 8

Insurance 11 3

Telecom 5 8

Travel & Leisure 2 9

Miscellaneous 5 8

Table 18: Summary of the ranking of different industries

Banking sector has been ranked number 1 i.e. highest ranking out of the overall sampled

industries for the better human capital reporting practices. Jute industries ranked number 10 i.e.

lowest ranking for the human capital reporting practices. Some industries got similar ranking

because of similar GM and it represents the similar HC reporting practices.


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3.5 Word Count

To examine the emphasis of HC to the companies word count procedure has been used. The

summary of the words classification and frequency of disclosure has been presented below.

Words classifications Frequency of disclosure

Less than 50 words 55

51-100 words 24

101-300 words 19

301-500 words 1

501-1000 words 13

1001-1500 words 4

1501-2000 words 7

More than 2000 words 0

Table 20: Summary of the words classification and frequency of the disclosure

From the above summary table it is clear that most of the companys disclosure on HC were

limited to less than 50 words. Only 7 companies spent between 1500 to 2000 words. It

represent that these 7 companies gives much emphasis on human capital reporting and consider

human capital as an important one.

3.5.1 Industry wise HC disclosure (word count)

In the banking sector 4 companies i.e. 25% out of total 16 sampled companies spent words

between 1501-2000 words and 3 companies i.e. 19% spent words between 1001-1500 and 7companies i.e. 44% spent words between 501-1000. Only 2 companies spent less than 300

words out of sampled companies. Prime bank, South East bank, Eastern bank and Dhaka bank

spent words between 1501- 2000 and put more emphasis for the reporting of HC in the annual

report.

In the NBFI sector 9 companies i.e. 75% out of 12 companies spent more than 500 words to

report HC related information and on the other hand 3 companies i.e. 25% spent less than 500

words to report HC items in the annual report.

Other than Insurance sector all sectors spent less than 301 words to report on HC related

information in the annual report. In the Insurance sector only Prime insurance spent 600 words

to report on HC.


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So the overall picture represent that the majority of the companies i.e. 98companies (80% out

of 123 companies) spent less than 301 words and only 25 companies i.e. 20% spent more than

300 words to report information on HC in the annual report.

Industries 0-50 51-100 101-

300

301-

500

501-

1000

1001-

1500

1501-

2000

More

than

2000

Total

Bank 1 1 7 3 4 16

Non Bank

Financial

Institutions(NBFI)

2 1 5 1 3 12

Engineering 9 2 11

Food & Allied 3 4 7Fuel & Power 1 3 3 7Jute 2 2Textile 10 3 13

Pharmaceutical &

Chemical

1 3 7 11

Service 2 1 1 4

Tannery 2 1 1 4

Ceramic 2 1 1 4

Cement 2 1 1 4

IT 2 1 1 4Insurance 12 3 1 16

Telecom 1 1 2

Travel & Leisure 2 2Miscellaneous 3 1 4Total 55 24 19 1 13 4 7 0 123

Table 21: Summary of Industry wise HC disclosure by word count


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4.2 Conclusion

Using the technique of content analysis, this study investigates the extent of HC reporting

practices by listed companies in Bangladesh. Overall the result shows that sample firms did

disclose HC items to at least a moderate level. More specifically, Bangladeshi firms disclose

more information on such items as employee training, number of employees, educational

background of top level employees, employee skill and competence, career development

opportunities that firms provide and employee recruitment policies these items being reported

by most of the sample companies, than other items. Whilst most firms reported on employee

benefit in details, the educational backgrounds of employees, employee compensation plans,

number of employees and the list of training programs took place and employees

main part hcr

Documents