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 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 health, safety, and well-being
Recruitment, mobility, and turnover
Skills and capabilities
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.
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.
At a recent meeting I asked, “What is your leadership succession plan?” After a blank stare from several business owners I heard:
“We don’t have one. What is it, exactly?”
“You’re looking at it. I’m all we’ve got.”
Family-owned business leaders are not alone. Business owners are not alone. As most FFI members know, family business leaders represent about 70% of the U.S. economy, and about 70% of new job creation. My experience is that 100% of family business leaders worry about succession planning. What about your clients?
This short article explains what succession planning is, and how OKR leadership can help your clients be more proactive than reactive. You have probably read that only 1/3 of family businesses survive from the first generation to the second. But the reason for that low success rate is because they are not well advised by FFI members. You, and your clients, can practice succession planning using OKR leadership. Think of this article as one more tool in your toolbox.
Succession Planning is defined as a process for identifying and developing your next generation of key leaders. The goal of succession planning in family-owned businesses is to perpetuate your legacy and assets over generations.
Succession planning requires OKR Leadership. Let me explain. Objectives describe what to do (e.g., transition ownership and management to the next generation). Key Results (KRs)describe how you measure that objective (e.g., assess the strengths and weaknesses of each family member and director within the next 30 days).
OKR leadership is the process for managers and leaders to practice what matters. For example, if your business needs to develop a succession plan, then you may need to increase accountability and transparency using OKRs. At many of my client companies, OKRs are written by each director and each family leader. Those OKRs are reviewed monthly at family business meetings. You may know that OKRs have driven the largest migration of financial assets and technological innovation ever recorded in human history to Silicon Valley, California since the 1970s. OKR leadership is a radical process for top-down hierarchical organizations to implement, but it is attractive to many family-owned business leaders because it works.
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.
Then write a review in your favorite social media platform. Mention my title: Objectives + Key Results (OKR) Leadership; How to apply Silicon Valley’s secret sauce to your career, team or organization.
Please share these testimonials with your team or organization:
“Doug Gray makes the complex understandable. More important, he makes it doable.”
Craig E. Aronoff, Ph.D., author, Chairman and co-founder, The Family Business Consulting Group, Inc.
“Doug builds on the OKR approach with practical and valuable guidance for individuals, teams and organizations. If you plan on implementing OKRs for your organization, you need this book.”
John Mattox, PhD, author, Head of Talent Research, Metrics that Matter, Explorance
“Introducing the OKR framework has not only allowed us to align our company goals throughout the organization, but it has also provided an easy mechanism to give visibility into how we drive operational accountability.”
Justin Jude, Acting President, LKQ Corp, North America
“Finally, a much needed leadership focus on the importance of clear objectives and specific, measurable results. This book will be useful not just for the present but throughout a practitioner’s career.“
Dave Vance, PhD, author, Executive Director, Center for Talent Reporting