Guest author John R. Mattox, II, Ph.D., VP of People Analytics, Action Learning Associates, LLC
I doubt that your team is ready for the SEC. Let me explain.
The Securities and Exchange Commission (SEC) currently requires publicly traded companies to report ONLY ONE metric about human capital: number of employees. Human Capital is their biggest expense. For investors, that ONE METRIC does not provide adequate information about an organization’s most profitable intangible resource- human capital. For HR and business leaders, that one metric is NOT SUFFICIENT to monitor and manage the workforce effectively.
Human Capital metrics are essential to 1) manage the workforce and 2) drive business value.
On August 26, 2020 the SEC revised its rule on Human Capital Reporting. Anything that has a “material influence on the operations and profitability of the organization should be reported.”
Privately-owned businesses WILL follow publicly-traded organizations. They always have.
A wide range of human capital metrics will apply. Thankfully, there is a well-researched and comprehensive framework for measuring and reporting human capital metrics. We can help your team immediately.
The International Standards Organization, (ISO) which has improved product quality and consistency around the globe with ISO 9000, has developed a NEW standard for sharing meaningful measures of human capital called ISO 30414. You need to know about it.
The ISO 340414 standard outlines 11 areas that organizational leaders should measure and report on various aspects of your workforce. The purpose is to give investors insights into the people-side of the business. Equally as important, ISO 30414 gives the c-suite a standard set of metrics to monitor and manage to improve the organization.
What are the Human Capital Measures?
The ISO standard contains 11 general reporting areas which are listed below:
- Compliance and ethics
- Organizational culture
- Organizational health, safety, and well-being
- Recruitment, mobility, and turnover
- Skills and capabilities
- Succession planning
- Workforce availability
Along with these reporting areas, the new ISO 30414 standard provides specific metrics and recommended ways to calculate each of these measures.
You can expect updates to definitions and calculations in the coming years as practitioners adopt and apply these ISO 30414 standards. We can help you.
Back to my question: Is Your Organization Prepared?
The question for you is simple: Are you ready? I doubt it.
Is your organization ready to adopt this ISO 30414 framework, measure your workforce, take action to improve your organization, and also report that information internally and externally as needed? I doubt it.
If you have an HR analytics team, there is a good possibility that you can analyze and report some or even all of these metrics. If you do not have an analytics team, your system administrators might be able to cabal together a representative set of measures. But you will still require our help.
Based on the LinkedIn Global Talent Trends study (2020), 85% of those surveyed think people analytics will be a dominant function in human resources in the coming years. Yet, 55% of those surveyed say they “still need help putting basic people analytics into practice.”
Nearly half of all organizations are not prepared for ISO 30414 human capital reporting.
Sadly, I doubt that your team or organization is ready for the SEC. We can help you.
Is Human Capital Reporting Required?
This is a simple question that has a complex answer. The current answer is “no.” The SEC does not require publicly traded companies to report anything more than the number of employees. However, other countries like Germany are requiring extensive HC reporting and they are basing their efforts on the ISO 30414 standard. Dave Vance, the Executive Director of the Center for Talent Reporting (www.centerfortalentreporting.org), recently published an article in CLO Magazine describing when the SEC will require human capital reporting. The current answer is that the SEC is likely to require publicly traded companies to report “material information”—meaning anything that an investor would find valuable when considering buying a security. That is very broad language and will likely encompass all Human Capital measures.
The ISO 30414 provides a useful framework, valuable metrics, and informative calculations and will likely serve as a guide for future organizations. We recommend that YOU adopt these measures today.
Most organizations are not prepared today to augment current public financial statements about the health of their company with information about human capital. However, information about “material influencers of the business including human capital” are now required by the SEC for publicly traded companies.
ALL organizations need to prepare for ISO 30414 compliance. You will soon be required to leverage internal resources like analytics groups, HR systems, and standard measurement processes.
Most business leaders will need to hire external consultants like Action Learning Associates, with expertise with HR analytics and the ISO 30414 standard. Not only will you need to be compliant with new SEC rules, you will be able to recommend solutions to your c-suite leadership team. Your biggest expense is Human Capital. Soon you will be required to manage your investments in people and improve all aspects of your Human Capital business. Why wait?
Call us TODAY to get started.
John Mattox, PhD and Doug Gray, PhD can be reached at contact us or 615.236.9845.
There is plenty of nonsense from online extremists. I’m sick of it. You may be frustrated too.
One of my clients said, “I’m just paralyzed. I’ve submitted my PPP application to Wells Fargo because I trusted them to deliver. Now they say I should consider a new bank. I don’t know who to trust.”
Another client said, “We have adopted new norms for remote work. Everyone has a laptop with a secure virtual private network (VPN). But, people are late for meetings. WebEx doesn’t work. We get interrupted by crying children and barking dogs. Our deliverables are down 20% in 3 weeks.”
That’s why I want to give you these 6 great resources:
- As a species we have always adapted to aversive stimuli with resilience. 100 years ago over 600,000 people died as a result of the Spanish Flu Pandemic. Our grandparents survived. 100 years from now we will have new global health protocols. You and I will not be alive, but our children will learn from our work today. Resilience defines us. We can adapt. Some great resources are at the Greater Good Science Center.
- Teams are stronger than individuals. They always have been stronger. Consider any project team, family team, virtual or direct team… Teams will always will be stronger because teams provide different perspectives, tension, innovation, results. Social isolation leads to anxiety and depression, and kills more people than cardio-vascular disease, obesity and smoking. Combined. Lately I have been calling at least 5 old friends every day. Physical isolation is critical. Social isolation occurs when we do not reach out to one another. Some great free resources are here. You can strengthen your teams today.
- Networks of teams are stronger than individuals. Networks look like spiderwebs or a map of your favorite highways. Networked organizational maps make it possible for anyone to be a leader. One good article on the road ahead using networks of teams is from McKinsey. It’s worth sharing with your teams.
- The road ahead is paved with new leaders, from many networks. Consider recent examples of healthcare leaders like your local physicians and nurses, or Dr. Anthony Fauci. Consider thousands of leaders in education who quickly migrated course content online and are encouraging songs across the physical distance. Leaders emerge when teams practice using OKRs. Objectives and Key Results (OKR) increase accountability and engagement, especially with over 50% of the workforce who are millennials. Recently, over 20% of the U.S. workforce has lost their job or is underemployed. Please share this link from my newest book with anyone in a career transition. For anyone interested in learning about OKR Leadership, please share this link to chapter 1 in audio or digital format. You may be a great leader for your loved ones.
- We finally have a new language to describe our virtues and character strengths. Over 7 million people use the language of signature strengths to describe themselves or others “At your best.” For the past two years I have listed my signature strengths in my email signature as a small experiment. I strongly recommend that you take the free VIA assessment here and practice developing your strengths daily. When we leverage our strengths, then we are more capable of flourishing. The science and practice of character strengths has gained momentum during this pandemic, because people want to know, “What really works?”
Just thinking of you, today, at your best.
Doug Gray, PhD, PCC
CEO, Action Learning Associates, LLC
704.995.6647 mobile, 615.236.9845 office. Calendar Me.
My top signature strengths: creativity, hope, perspective, honesty, zest
Yesterday over 1,600 people registered for my webinar, and over 450 participated. Here is the content for your team.
Thanks for registering for our webinar on OKR Leadership Explained with Dr. Doug Gray.
Click the button below to access the recording of the webinar. Feel free to share it with your network! Below are resources for your continued learning:
If you’d like to learn more about how 15Five can help unlock the potential of your workforce, click here.
P.S. 15Five’s Best-Self Conference is right around the corner. Come learn from industry experts such as Simon Sinek, Amy Edmondson, Julie Zhou, and Claude Silver. Reserve your ticket now!
On January 23, 2020 this article was published at Alister Paine. You may like it.
The link is https://alisterpaine.com/2020/01/23/why-millennials-demand-okr-leadership-from-managers-and-leaders/ .
The text of the article is here for you to share.
The first paragraph is here…
Millennials think they are unique. Just ask one. However, throughout history there have always been population surges after wars, diseases and migrations. So, what makes the current population of millennials, born in the U.S. between 1981-1996, truly unique? They represent over 75 million people, 25% of the U.S. population, a larger population surge than the post-war Baby Boom, 30% of the voting age, more diversity than any previous generation, and about 50% of today’s workforce (see Brookings.edu). These millennials are uniquely qualified to use new tools such as digital technology to communicate, social media platforms to influence consumers and public opinions, graphic images and visual memes, ethnic and racial diversity to describe more inclusive perspectives. The result is massive impact from countless millennials in every workplace and business sector. Examples include social protests, outrage, political discord, lawsuits, reputational attacks. Millennials are agile learners who demand to speak and be heard. That fact requires that learning managers and leaders respond differently than ever.
I enjoyed writing that article. Let’s continue the conversation. Here are 6 great resources for you, your team, and your organization.
- Free ebook download and videos are at www.OKRLeadership.com
- Free digital courses on OKR Leadership are at www.Action-Learning.com
- Free copy of the first chapter of my new book, Objectives + Key Results (OKR) Leadership; How to apply Silicon Valley’s secret sauce to your career, team or organization (2019).
- Please buy and share copies of my book. Print and ebook versions are at https://www.amazon.com/dp/0975884166?ref_=pe_3052080_397514860. The audible copy will be available shortly.
- Invitation to join the 2020 OKR Leadership Project. I am collecting examples at Invitation to join the OKR Leadership Project. Think of this project as the 2020 version of “Chicken Soup for Practicing OKR Leadership.”
- Invitation to schedule a complimentary session with me at https://calendly.com/doug-gray/intro-call
All your best, Doug
FACT: Data Speaks.
Consider how this creepy image speaks to you.
This week, U.S. attorney General William Barr released a 400-page redacted version of special counsel Robert Mueller’s report on Russian interference in the 2016 election to Congress and the public. Consider how that data speaks to you. A client suggested that most people “see-speak-hear” that data as if we were monkeys… filled with bias.
Consider how these 3 data points speak to you…
- Twitter removed 70 million fraudulent accounts in only two months in 2018 (source: Inc, May 2019)
- Facebook removed 583 million fake accounts in the first three months of 2019 (source: Inc, May 2019)
- In my world of leadership consulting, “a lengthy global effort to create standards for reporting human capital metrics is expected to be announced this week. The International Organization for Standardization (ISO) will issue its guidelines for 23 human capital reporting measures, including a Leadership Trust Index (LTI) that may inform institutional investors, private investors and global business leaders” (Steve Maxwell presenting at the Center for Talent Reporting Annual Conference, February 21, 2019).
FACT: All leaders and managers struggle to collect and analyze data.
You probably know that ISO standards have defined quality improvement and safety investments in countless organizations since they were first introduced in 1947. These worldwide proprietary, industrial and commercial standards have been adopted in 164 countries.
What if your organization collected and distributed data on the following 23 human capital measures into these 9 categories?
- Ethics (number and type of employee grievances filed; number and type of concluded disciplinary actions; percentage of employees who have completed training on compliance and ethics)
- Costs (total workforce costs)
- Workforce diversity (with respect to age, gender, disability, and “other indicators of diversity”; and diversity of leadership team)
- Leadership (“leadership trust,” to be determined by employee surveys)
- Organizational safety, health, and well-being (lost time for injury; number of occupational accidents; number of people killed during work)
- Productivity (EBIT/revenue/turnover/profit per employee; human capital ROI, or the ratio of income or revenue to human capital)
- Recruitment, mobility, and turnover (average time to fill vacant positions; average time to fill critical business positions; percentage of positions filled internally; percentage of critical business positions filled internally; turnover rate)
- Skills and capabilities (total development and training costs)
- Workforce availability (number of employees; full-time equivalents)
How would that data speak in your world?
Privately held companies may use these human capital data for directional initiatives such as replacing managers with high turnover ratios identified as “toxic managers” or investing in high growth departments that require training in OKR leadership skills. For details contact us.
Publicly held companies may use these human capital data for multi-directional initiatives designed to retain more diverse employees, eliminating bias in hiring, or retaining desired employees with external coaching and consulting. For details see www.hcmi.co.
Consider one final example. Imagine a 17-year district sales manager who had regularly been promoted within her company as recognition for her history of ratings that “exceed expectations.” Then she was asked to relocate into a new geography and had 4 different managers within 5 years. The goal incentives were increased 300%. She had to hire 3 new direct reports within 8 weeks. Then her new manager stated that she “should not speak to anyone in the corporate office, even when he did not repeatedly provide required information for business decisions.” How does that data speak?
FACT: All leaders and managers struggle to collect and analyze data.
OPINION: I predict massive changes ahead in public accountability and transparency and data-driven decision making.
If you need expertise in collecting and analyzing data for your organization, then you should contact us today.
FACT: The market demands that you will increase the probability of competitive success if you can make more informed decisions before others.
In response to a client’s request, I created a free digital course called “OKR Leadership Skills” that you can take here. The Objectives and Key Results (OKR) management process has enabled countless F100 and small business leaders to increase accountability and transparency. OKR leadership has been described as the “secret sauce” that explains the largest migration of financial assets in human history to Silicon Valley in the last 30 years. OKR leadership is another example of How Data Speaks.
Here is one final example. Here is a 3-minute excerpt of a keynote presentation on OKR leadership that I provided in March, 2019 to over 700 business leaders in Denver, CO. You may need a similar data story in your organization.
Here’s to you, at your best,
Doug Gray, PhD, PCC, CEO of Action Learning Associates, LLC