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.
You may think I’m a good planner. Not always true. When my loved ones want a Christmas gift they send me digital links. I select something. Then on Christmas Eve I run around Nashville, TN to pick up my gifts. It’s a long time habit. Full of joy and occasional last minute substitute gifts.
Apparently I’m not alone.
On December 24, 20198 I raced into a jewelry store at Green Hills Mall in Nashville to pick up a gift.
Marshall Goldsmith was doing the same for his loved ones.
You may know Marshall as the best-selling author of “What Got You Here Won’t Get You There” (2007) or “Mojo” (2009) or “Triggers” (2015). Or as one of the most influential executive coaches and leadership consultants of our time. Or as a contributor of CoachSource, the largest global provider of executive coaches, where I serve as an engagement manager.
Or as another person racing around to find meaningful gifts for his loved ones.
We are not alone.
The acronym WYSIATI, or “what you see is all there is” was famously explained by Daniel Kahneman (the only psychologist ever to win a Nobel Prize in economics!) in Thinking Fast and Slow (2019).
The impact of his work on HOW we categorize behaviors is significant and important for ALL managers and consultants.
In this article, I briefly review some of the current models and suggest that my colleagues become familiar with the VIA Classification assessment tools, which offer an alternate vocabulary based on character strengths and new, globally validated research.
You can apply this article published in the Family Firm Practitioner to your consulting, managing or leadership. With any team. Today.
Please share this article, then contact me to discuss how your team or organization can leverage your strengths.
All your best, Doug Gray, PhD, PCC
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
1. You may like this 8-minute interview published on Business Talk Radio on 1.22.20
2. You may also like this 23-minute video interview with Margaret Zivinski from Smartsheet.com recorded on 2.17.20 . See https://coachsource.sharefile.com/d-sac52031262e4021a
3. Recorded in December, 2019, this podcast with Sal Silvester went live in February, 2020. Timeless, practical examples for any manager or leader. Over 92 people downloaded it within 3 weeks.
4. On 4.23.20 I published this short interview on OKR Leadership at https://512solutions.com/category/future-of-leadership-podcast/
5. On 5.31.20 I recorded this podcast interview with Greg Levine, CFO and owner of Action Now CFO.
Business Psychologist Dr. Doug Gray discusses Extreme Racing, Outward Bound Outdoor Leadership Program and Outcome Based (OKR) Leadership!