Brave new world

This is a series of articles on Human Capital reporting. ISO 30414:2018 Human Resource Management – Guidelines for Human Capital Reporting for Internal and External Stakeholders is the new global standard that outlines requirements to disclose Human Capital information for companies of all sizes for internal and external users.

Guiding principles

Let's start with the guiding principles that should be used when preparing reports on Human Capital for internal and external users:

  • strategic focus and materiality of human capital metrics that are consonant with the organization’s strategy and values;
  • n approach that is practicable to the organization’s operating model and external context, based on a cost benefit comparison including opportunity cost (e.g. time, quality, volume) analysis (financial and/or non-financial value);
  • relevance for organizations of all types, sizes, sectors and geographic locations;
  • valid and reliable evidence-based measures and the integration of high-quality data to provide insight that informs business decision making;
  • comparability of reported metrics across similar organization types and sectors;
  • HCR narrative based on the concept of materiality that identifies the important aspects for the organization and its internal and external stakeholders;
  • transparency of reporting that clearly identifies human capital risks and opportunities to key governance bodies and stakeholders.

11 areas of reporting

This standard requires reports on 11 key areas.

  • Compliance and ethics – 5 metrics.
  • Costs - 7 metrics.
  • Diversity - 7 metrics.
  • Leadership - 3 metrics.
  • Organisational culture – 2 metrics.
  • Organisational wellbeing, health and safety - 4 metrics.
  • Recruitment, mobility and turnover - 15 metrics.
  • Recruitment, mobility and turnover - 15 metrics.
  • Skills and capabilities - 5 metrics.
  • Succession planning - 5 metrics.
  • Workforce availability - 5 metrics.

We plan to discuss each metric in more detail in the next articles.

Are you ready?

Here is the list of metrics your company should disclose grouped into SEC four focus areas:

  • Attraction: time to fill, time to fill critical positions, percentage of positions filled internally, percentage of critical positions filled internally.
  • L&D: total cost of training and development, percentage of employees who receive training in compliance and ethics, percentage of employees who receive any training, average hours of formal training per year, percentage of leaders who receive training, percentage of leaders who receive leadership development.
  • Retention: turnover, turnover for critical positions.
  • Additional metrics: engagement score, leadership trust score, diversity by gender, age, disability, race or national origin, leadership diversity, pay equity, human capital ROI, total workforce cost, number of FTEs, contingent/contract and temporary workers.

Do you generate them internally? Are you ready to disclose them? If yes, how they would compare with metrics of other organisations?

New rules of the SEC are relevant to the companies that are listed on the stock exchange. But soon it would be relevant for all other companies. What employee will want to go to work for an organization that refuses to share its important human capital metrics? Why work for a company that refuses to share how much it invests in employees or what career development paths it has? The only reason not to share this information is because their metrics are poor.

In one way or another, ISO 30414:2018, SEC or market will force companies to adopt Human Capital Reporting (HCR).

Investors also need information on Human Capital. If we all know that human capital is the primary driver of stock price, so can you imagine investing in a company where there is no visibility to the primary driver of value? It's the same as invest in companies that don't share any information - as it was before 1934.

Welcome to the future!

This is a new era of transparency for employees and investors. Make sure your bosses know about it. Somebody has to start with the strategy to prepare Human Capital reports.

It is also an excellent opportunity to speak to top managers about additional resources, because soon the leaders of your organisation will need to comment data on L&D and HR processes.

They should be interested to have the most accurate data as the last thing they want is to have to make a public apology for incorrect data.

This is the new world in which reports, prepared by HR professionals have the same significance as reports signed by CFO. More time would be spent preparing, analysing and commenting HR and L&D metrics. And in 10 years we will wonder how we lived all these years without this level of transparency - just as now we wonder how could people buy stocks or bonds of companies without obtaining the basic information from them - as it was before 1934.

Leadership development

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Managing intellectual capital

В предыдущей статье мы с вами определили тенденции, в которых сегодня приходится действовать HR-профессионалам. В этой статье я постараюсь показать, почему в новых условиях неизбежно происходит «утяжеление» роли HR, то

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Three myths of leadership development: company is successful because it is managed well

Три основные задачи менеджмента Mенеджмент является феноменальным явлением в истории человечества. Несмотря на то, что с самых древних времен обществу необходимы были люди, которые бы координировали и направляли деятельность групп

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