Canadian HR Reporter

CANADIAN HR REPORTER JULY 2019 8 NEWS Co-operators, Brookfield measure human capital in sustainability project A4S focuses on sustainable decision-making, provides guide for employers BY SARAH DOBSON AS A CO-OPERATIVE, the Co- operators Group has always made a point to focus on sustainability. So when a Canadian chapter of the A4S (Accounting for Sustain- ability) CFO Leadership Network was formed a few years ago, there was a logical alignment with the insurance company. Established by HRH the Prince of Wales in 2004, the A4S project is about making sustainable deci- sion-making "business as usual." For the Co-operators, that meant implementing learnings from the A4S Essential Guide to Social and Human Capital Ac- counting. It defines human capital as the "knowledge, skills and attri- butes of the workforce and others across the value chain," looking at issues such as job creation, reward and recognition, health and safety and privacy. On the human capital side, the insurance company decided to look into its approach to mental health in the workplace. at's been an important initiative for the co-operative, not only for em- ployees but in helping group ben- efits clients, said Karen Higgins, CFO at the Co-operators Group in Guelph, Ont. "As finance professionals, we know that we need to measure outputs and outcomes in order to improve the management of our business... "mental health is no different," she said. "And a business case obviously talks about why we would do this work, the costs associated with the work, but also… to the finance community, what are the benefits of this? And we want our business partners to think about projects in a way that if you're going to spend money on it, what are (you) going to get back for that? And that's really the heart of where finance played a key role with this work is attaching the metric to this initia- tive, and really putting a number to the benefit." As a result, the team did a cost- benefit analysis to make the busi- ness case to the executive man- agement team. "By connecting finance with the project team, with our HR busi- ness partners, and our group ben- efits disability partners, we were able to really put numbers to those benefits," said Higgins. "By establishing those benefits and the metrics associated with some at the very beginning of the project, then we were able to track them throughout and we will be able to track them on a go-for- ward basis… that was the genesis of what we call a mental-health scorecard, and the metrics that were associated with it." For example, the Co-operators looked into the savings employ- ers could see from a reduced du- ration of a claim or fewer claims, she said. "So rather than an employee being off for six months, maybe with appropriate support, differ- ent coverage, different treatment plans, they are only off for two months." However, it was difficult to find data to support that, because go- ing back a few years, people might have gone off work with a mental health issue — but it wasn't la- belled as such, said Higgins. "at was one challenge that we had, was just establishing what's an appropriate baseline so that we could measure against that." Overall, it took some "pretty intensive thinking" about how the measurement would work, along with having finance and HR con- necting for the project, she said. "We have a really great working relationship already. But at times when they want to do something it was 'OK, well, how are we going to measure that?'" Interestingly, the Co-operators found that by increasing the cov- erage available through its ben- efit plan and boosting resources for employees, there were more claims, said Higgins. "That is understandable, be- cause we really have quite appro- priately opened the door on an is- sue that needed the door opened. But, in reality, what we expected to have happened by now hasn't happened at all. And we absolute- ly believe it will happen," she said. "But in the interim period, the benefits aren't yet being realized. Because employees feel safe about saying, 'Look, I have an issue. And I need some help.'" "Our ultimate objective of im- plementing this initiative and the strategy will be realized, but it will take a longer period of time." Having completed the project and committed to continuing to measure going forward, Higgins encouraged other employers to do the same. "I would encourage other com- panies to read the guideline to think about how human and so- cial capital should get measured… (It's about) putting our money where our mouth is, in terms of employees being the most impor- tant resource that we have." "It isn't something that gets measured," she said. "We can measure all kinds of things de- pending on the organization and industry that you work on, but the value of our human capital, and even less so for social capital, is really important for organiza- tions. It's not going to land on the balance sheet somewhere but it really puts a number to some- thing that doesn't normally have a number attached to it… and as soon as that gets done, it takes on a different meaning within your overall framework of measure- ment within an organization." Providing guidance Chartered Professional Accoun- tants (CPA) of Canada's mandate for sustainability was also well aligned with the A4S project, said Davinder Valeri, director of strategy, risk and performance at the Toronto organization, which opened up the Canadian chapter of the A4S CFO leadership Net- work in 2017. "We're trying to transform the way decisions are made from a fi- nance perspective — we want to scale up action. And then we want to figure out how can we actually make an impact," she said. "Every organization has a mis- sion (but) how do you — espe- cially from the social and human capital accounting perspective — take that mission, and bring it down to what's most valuable to your organization? And if people are what you say, with respect to adding the most value to your or- ganization, how do you bring it down to that core denominator of people?" e A4S guide provides tools and guidance to put numbers on issues that will drive successful organizations, said Valeri. "For example, the talent pipe- line — how would an organiza- tion figure out what to do with their talent? How do they know that they've got the skills for the future? How do they know they're investing in the right kind of skills? And how do they understand the dependencies and the risks and opportunities that come associ- ated with some of these issues?" e A4S guides are full of prac- tical examples, and they address how companies can account for social and human capital, and how to embed that into decision- making, she said. It's also important for com- panies to have key departments working together, said Valeri. "When you embed sustainabil- ity into your whole decision-mak- ing, that means it's not a silo, it has to be across the organization," she said. "And it has to be multifaceted in that way." "So finance and HR, and even other departments… will have to work together because they have some common denominators that they need to work out. HR has some of the... confidential infor- mation; finance can convert that to some numbers and get some value to it." Brookfield dives deep When Brookfield Asset Manage- ment decided to get involved with the social and human capital ac- counting guide, finance and HR had to work well together, said Brian Lawson, managing partner and CFO at Brookfield in Toronto. "Fortunately, in our organiza- tion, the teams are integrated, and have a great relationship to begin with, so it was pretty easy to do that." e company decided to mea- sure the value of its human capital in order to increase the effective- ness of how it organizes, develops and deploys its employee base. In- stead of looking at the number or cost of employees, consideration was given to their overall value, he said. "at then enables you to po- sition that in terms of... the value of what you might ascribe to your client relationships, or your use of natural capital, or — in our case — financial capital, balance-sheet capital." It's about being consistent with how a company can assess other forms of capital, said Lawson. "You can't stack them all be- side each other and think of what each means as a percentage, or as a component of the overall or- ganization, if you aren't thinking about them or measuring them in the same way." In the end, the company found that the value of human capital in its asset-management business represents almost 60 per cent of its market capitalization, and the value of its roughly 1,700 asset- management employees was about twice the value of their cost. CAREpath is the only Canadian Health Care navigation program of its kind offered in Canada. We have extensive experience in navigating Canadians through the health care system. Cancer Assistance Seniors' Care Assistance HealthCare Assist Your Wellness Partner "It's about putting our money where our mouth is, in terms of employees being the most important resource we have." ONGOING > pg. 10

• Cover