The fact that people, supposedly our biggest asset, are nowhere to be found on the balance sheet makes no sense. It is equally surprising that, on the Profit and Loss Account (P&L), employees are accounted for not as human capital but among a miscellany of expenses and costs.
In today’s ‘knowledge era’, the P&L in its present form struggles to account for value creation. Human Potential Accounting (HPA) brings into play not only the people drivers of business success but also the behavioural risks and costs, which are the other side of the equation. HPA separates out the people component of costs, and supports strategic and operational change to optimise financial performance.
