Surprise! HRExecutive Magazine recently reported that the SEC has begun requiring talent metrics reporting for disclosure staring in 2021. Public companies are scrambling to determine what to report and how to report it.
And this just in…investors hate surprises.
Disclosing talent metrics makes sense. Over the last several decades, the U.S. economy has evolved from primarily manufacturing-based to primarily service/information based. As a result, determining proper valuations for companies that are increasingly more people based/information/technology based and less asset based becomes difficult without understanding the talent dynamics within an organization.
To this end the SEC has issued a new rule requiring organizations to report any material HCM metrics regarding employee attraction, development, retention, diversity and inclusion, engagement, employee satisfaction, and health and safety.
It’s the first time in over 30 years the commission has made such a disclosure change and it represents a clear acknowledgement that human capital management impacts business valuations.
What Talent Metrics Reporting is Required?
Well, that’s the $64,000 question. While the SEC is clear that material HCM metrics must be disclosed, they are less clear on exactly what should be included. This is left to the organization to determine.
The article recommends focusing on ISO 30414:2018 Human resource management — Guidelines for internal and external human capital reporting as a jumping off point. The list is fairly comprehensive and includes:
- Organizational culture
- Organizational health, safety and well-being
- Recruitment, mobility and turnover
- Skills and capabilities
- Succession planning
- Workforce availability
A good HRMS can get you many of these types of metrics. Performance and learning systems can fill in voids as well.
That said, Lisa Buckingham, executive vice president and chief people, place and brand officer at Lincoln Financial Group astutely recommends that organizations present the data as a story about what your talent makeup is. How your talent and how it impacts the organization. How the organization gives back to employees and to the community
What’s Your Talent Story?
The broad talent story may be the tough part for many organizations. Sure you’ve got one. But what data do you have to back up that it’s the right story? Remember, this is investor relations and compliance. Proof is required.
You need to map your culture, employer brand, and productivity outcomes to experientially validate the connections between culture, experience and outcomes.
Some organizations have already made significant moves into integrating experiential data from their internal and external talent pools into operational data surrounding talent acquisition and talent management.
Most have not and this and it could be the missing piece of the SEC’s talent metrics reporting puzzle.
For example, what’s your organizational culture and how well is it understood and accepted by your workforce? ISO recommends you report on it, but if it’s just words on a page, that’s not very useful.
However, if you understand what your culture is and can clearly show how it ripples through your organizations and affects your ability to acquire and retain talent, that’s something your investor relations team can work with!
Same with diversity. If you can report how your organizational culture improves your ability to acquire and retain diverse talent pools, that’s a great story.
It All Starts with Talent Feedback Data
Regularly capturing candidate and employee feedback throughout the talent lifecycle gives you the basis for telling your talent story to investors (and to your talent!). When you recruit, find out what candidates think about your employer brand and culture. Follow through during onboarding and throughout year one to gather and understand performance and quality of hire data from both the employee and the manager.
Then, make sure you are continually pulsing employees for feedback about their day in day out experiences. Preferably, after key milestones, transactions and events, like broad company meetings, etc. This way, you get a steady stream of qualitative feedback to focus in on what’s working for your talent and what isn’t.
When you are continuously gathering feedback you can begin to map experiential data like quality of hire to retention. Or employee Net Promoter Score to manager satisfaction. Or benefits satisfaction to retention. You can understand what makes a good fit. What might be driving talent away or suppressing performance. You can truly understand what parts of your company, culture and programs are useful to which employee groups (and of course, you’ll want to compare general experience data to diverse population experience data to understand how well you are serving all your employees).
You can use this data to optimize your talent facing programs for retention and productivity AND confirm or create the best talent story for the investment market and for your employees. It’s a win-win strategy.