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Levelling Up: how to measure quality of life

Author: ICAEW Insights

Published: 12 Apr 2022

Human capital holds the key to determining levels of wellbeing, according to the government’s Levelling Up White Paper. We explore how this may work in practice, in the context of work.

Among its extensive catalogue of proposals, the UK government’s Levelling Up White Paper finds space to include thoughts on human wellness. As it points out, the entire concept of wellbeing “captures the extent to which people across the UK lead happy and fulfilling lives – the very essence of levelling up”.

The White Paper cites human capital as central to the economic and social wellbeing of people and places. Improving the essential foundations of human capital, it notes, will ensure that “everyone, wherever they live, can enjoy fulfilling, healthy and productive lives”.

Which leaves us with the question of how to define and measure human capital. How do we gauge people’s quality of life?

Holistic view

In 2001, the Organisation for Economic Cooperation and Development (OECD) noted that some researchers define human capital as “the knowledge, skills, competencies and attributes embodied in individuals that facilitate the creation of personal, social and economic wellbeing”.

The overlap between human capital and wellbeing is a realm of intangibles that, on the surface, cannot always be expressed in terms of hard, numerical values. So, how should stakeholders in the Levelling Up programme appraise this terrain?

Nick Gallimore is taking a keen interest in the Levelling Up debate. He is director of talent, transformation and insight at Advanced, a provider of human capital management tools. In his assessment of the UK initiative, the government is measuring human capital characteristics by examining the total lifetime earnings of an individual, as a means of pinpointing regional imbalances.

“While that economic approach is interesting, it lacks a holistic view that may take into account more of the things that make humans productive. Health, happiness, management practices and organisational cultures are all factors that directly impact the performance of a human at work.”

Gallimore prefers to define human capital as the total potential performance of the humans in any organisation. “That definition is much harder to measure – but enables us to look critically at many of the other facets that influence output at work.”

Gallimore considers the link between performance and wellbeing as a self-sustaining loop. “Happier, healthier people are more likely to drive better performance outcomes,” he says, “and to more effectively acquire and apply the skills, knowledge and competences that complete the view of human capital.”

Positive impact

Last November, the Institute of Occupational Safety and Health (IOSH) launched Catch the Wave, a global awareness campaign around the topic of ‘social sustainability’ – a system of identifying, monitoring and managing the positive and negative ways in which business impacts people’s lives.

In an accompanying report, the organisation drew a direct link between social sustainability and human capital. As IOSH research programme lead Dr Christopher Davis explains: “It’s a similar relationship to the one that more physical forms of capital share with commercial sustainability.

“For example, where an organisation invests in equipment and facilities to safeguard its ongoing functional cohesion, it should also see that human capital requires investment over time to ensure its sustainability.”

How can an organisation undertaking such efforts see that they are working?

“In a very basic way,” Davis says. “The social sustainability of a workforce may be gleaned from the degree to which people are kept safe, healthy and well. However, the fuller story of social sustainability acknowledges a much broader worker experience, whereby safety and health are just the beginning of the narrative.”

In other words a true, socially sustainable workforce comprises people who, through the very process of being looked after by their employer, experience feelings of value, engagement, trust and vitality, he says, and go on to have a positive impact within, and beyond, their work.

Root causes

Conversely, Davis says: “A socially unsustainable organisation would be one in which people are unwilling – or even unable – to work. This means workers will have either low enough job satisfaction that they wish to find work elsewhere, or an inability to work because of occupational ill-health or injury.”

Given that those particular outputs are quantifiable, Davis explains, they have been used in reporting processes as proxies for sustainability measurement. However, they could point towards any number of root causes that may require greater effort to uncover.

For example, he says: “It may be that workers are not routinely consulted on matters relating directly to their work; that they are not provided with relevant training or career development opportunities; or simply that they feel their basic welfare needs, such as toilets and/or catering facilities, are not prioritised.

“Ultimately, organisations with socially unsustainable practices will often be those that – systematically, and over time – fail to recognise that it is their people who hold the key to long-term success.”

There are several ways to holistically measure quality of life across the workforce, Gallimore says. Employee engagement surveys will indicate the role that work is playing in supporting individuals’ lives. Wellbeing surveys and platforms that measure staff happiness levels enable leaders to see how their people are feeling at any given moment.

However, he adds: “To really zero in on quality of life, organisations should take a careful look at how they are measuring performance. Fit and healthy people will perform better than others. They’ll hit more goals – and at a faster rate – while reporting high levels of engagement.

“Sadly, though, performance management is an area where many companies’ approaches are seriously lagging – so being able to accurately and usefully measure performance is a task at which lots of firms struggle.”

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