Accounting | Sustainability

Measuring employee value: Canadian companies take on the task

Human capital accounting has been around as a concept for a long time, but it has yet to develop into an accepted practice. These two Canadian organizations aim to change that

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manager listening to his co-workers among a casual informal seating at an officeWhile the concept of human capital accounting has been around for decades it has yet to be practically applied in most businesses. An even bigger hurdle? It is difficult to weight it with a dollar value. (Getty Images/Caiaimage/Rafal Rodzoch)

When leaders at Manulife set the goal of becoming a truly digital company for the 21st century, they faced a tall challenge: a shortage of talent required to deliver customer-centric digital products and services.

Soon, the financial services group recognized the value in developing their own employees and investing in human capital—defined as the knowledge, skills and attributes of the workforce and others that contribute to a successful organization—as the key to achieving long-term success. 

While the concept of human capital accounting has been around for decades it has yet to be practically applied in most businesses. An even bigger hurdle? It is difficult to weight it with a dollar value. “When we look at human capital, it’s clear it’s strategically relevant, but there aren’t many metrics in place [that allow us] to measure it, and measure our progress,” says Phil Witherington, chief financial officer of Manulife.

As a member of the Canadian Chapter of The Prince of Wales’s Accounting for Sustainability (A4S) CFO Leadership Network, Witherington has a particular interest in cracking the code for practical measurement of human capital. 

Alongside fellow Canadian Chapter member Brian Lawson, chief financial officer of Brookfield Asset Management, he took on the challenge of finding a way. 

For guidance, finance teams in the two companies turned to the A4S Essential Guide to Social and Human Capital, a document developed by finance teams for finance teams and published by the global A4S network in 2017. 


At Brookfield Asset Management (Brookfield), the finance team’s challenge was to find a practical way to calculate the fair market value of its human capital. 

The multinational company, which is headquartered in Canada, has a long history as an investor in real assets and more than 80,000 employees. But over the past 15 years, it has transitioned to become a global asset manager, operating assets on behalf of investors.

As a result of that transformation, Brookfield has become increasingly service-oriented—which puts human capital front and centre in its strategic decisions. Brookfield’s human capital accounting project focused on the 1,700 members of its service-oriented asset management team.

The approach involved assessing the value added by each team, including those whose activities are directly linked to revenue, and those whose supporting roles indirectly add value to the company’s bottom line.

By strategically managing its human capital—according to data—Brookfield can attract, retain, engage and compensate its employees more effectively, says Lawson, explaining that an effective workforce forms the foundation of a sustainable business.

“At the end of the day, if an investor is going to partner with us as an asset manager, they are going to do so because of our people,” he says. 


At Manulife, the project is just one part of the company’s larger goal of leaping ahead of competitors in the 21st century, says Witherington.

“We have an aspiration to become a truly digital, customer-centric organization,” he says. “In fact, to lead our industry…we felt the most obvious place to start was in our technology skillsets.” 

The company employs 35,000 people worldwide, but its pilot focuses on the 13,000 staff members in its Canadian division. Manulife plans to scale up the project to include employees in Asia and the United States.

The big question for Manulife was whether to train existing employees to take on more technological work, or to downsize and then hire new people with the desired skills. 

“Without…data, it’s difficult to make that decision,” says Witherington. But by calculating and taking into consideration the value of training to the employee, as well as the economy, such decisions can be more strategic—and more sustainable.

Manulife’s team measured the potential earnings of its employee base before training, then compared that number to earnings at a future point, after a significant investment in training. Calculating the potential change in value can help them plan human resources decisions more strategically.

“We have the conviction that by investing in our people, our workforce, we’ll deliver benefits to all three stakeholder groups [customers, employees, shareholders] and also the wider economy in Canada,” he says.


Both Manulife and Brookfield are part of a series of four sustainable finance pilot projects that came out of the Canadian Chapter of the A4S CFO Leadership Network’s decision to focus on applying human and social capital accounting practices. 

Other participants include the Canadian insurance company The Co-operators Group, as well as the Ontario-based government agency, the Workplace Safety and Insurance Board (WSIB). 

By publishing worked examples that reveal methods and early outcomes, the network aims to catalyze change within the wider finance community through open conversation and collaboration.

“Collaboration can bring about real and effective change,” says Joy Thomas, president and CEO of CPA Canada. “The potential offered by the Canadian Chapter of the A4S CFO Leadership Network is enormous and we believe it also helps to cultivate the Canadian ideal of good business championed by our organization because it values sustainable growth, compassion and sustainable development.”