On November 9, 2020, the new US Securities and Exchange Commissions’ (SEC) rule for human capital disclosure has come into effect, mandating publicly traded US companies to provide material information on human capital management (HCM) in their annual financial statements.
Aside from general requirements to be transparent about human capital measures, objectives, and resources (if material), companies are offered great flexibility. The new rules do not define human capital, and there’s no list of mandatory measures to be publicized. Both qualitative and quantitative disclosures can be tailored according to industry specifics and unique business circumstances.
Truth is, the past year has been nothing but a unique business circumstance on its own. It hoisted HCM to the top of Boards’ agendas, and affected employee well-being on a large scale, starting from an actual health state to onboarding and continuous development.
In this article, we talk about 4 broad employee well-being topics, highly impacted by the coronavirus crisis and potentially subject to materiality assessment. Here, companies preparing for their first filing might find ideas about metrics to disclose, or base their HCM objectives on during the upcoming year.
The coronavirus pandemic isn’t only a physical, but also a mental health issue. Isolated work conditions, struggle to maintain work-life balance when working remotely, and constant sense of uncertainty has taken its toll on employee mental well-being. In the survey conducted by Ginger, 69% of workers admitted this was the most stressful time of their entire career.
Depending on each organization, conclusions about employee mental health can be drawn from factors such as absenteeism, productivity level, job satisfaction, and others. Understanding what influences psychological aspects at your workplace gives a chance to mitigate risks and cut the spend. Despite this, 31% of companies do not use data to inform and drive their corporate health and well-being strategy.
Employee mental health metrics to share:
- Investment to tools for mental health assessment (access to specialized apps, counseling)
- Investment to mental health resources (services and providers)
- Mental well-being awareness initiatives
- Pulse surveys
- Absentee data
Onboarding and retention
The changing nature of a workplace and an ongoing shift from remote to hybrid work has created significant onboarding as well as retention challenges. The HR managers worked to ensure a successful kick-off of new hires, and find ways to help them understand company culture and managers’ expectations, so that uncertainty does not impede value generation.
Meanwhile, the crisis has compromised employee engagement, which strongly correlates with employee retention. The more engaged workers are more likely to perform better and stay in the company longer. For example, CAP study estimates that the price tag on replacing a midrange position is 20% of it’s annual salary. For a $50k manager, that would round up to $10,000. Conscious about these costs, companies choose to innovate and invest in incentives to build strong, family-like workplace communities, even remotely.
Onboarding and retention metrics to share:
- Time and costs to hire
- Positions filled internally
- New employee / hiring manager satisfaction rate
- Time to productivity / value generation
- Employee retention rate (general / per manager / per department)
- Employee engagement / productivity rate
- Benefit programs to boost employee engagement
- Voluntary / Involuntary employee turnover
- Top talent turnover
- Internal onboarding process coverage (score / percentage)
Development and training
The coronavirus pandemic expanded corporate development and training agendas with topics such as crisis management, best hygiene practices, and mindfulness. On the other hand, many companies took the opportunity to encourage upskilling and reskilling among their employees.
Although most training is aimed at growing an individual skill set, the return on development investment can only be calculated looking at the worker’s growth and its impact within the organization. Depending on the type and subject of the tuition (soft / hard skills), the starting points to measure ROI could be sales / customer satisfaction increase (versus pre-training performance), fewer errors, revenue gains, and others.
Development and training metrics to share:
- Investments in training and development
- Number of trained employees
- Progress and completion rates
- Total number / average of yearly tuition hours
- Number / percentage of trained team leads
- Peer/performance reviews
- Return on investment
Diversity and inclusion
As part of corporate social responsibility, diversity and inclusion metrics tell a lot about a company’s values. The pandemic not only elevated the risk of disparities and marginalization, but shed a new light on more subtle forms of diversity, whether someone is a parent or a caregiver. Expressing empathy and compassion through HR processes - from hiring to equal access to remote technology and special work conditions or support programs has become a subject of primary importance.
Diversity and inclusion metrics to share:
- Demographic information (gender, nationality, ethnicity, sexual orientation, veteran status, disability, etc.)
- Investment in inclusion efforts / support programs
- Parental status / caregiver status
- Special work conditions
- Recruiting strategies to hire diverse talent
- Pay equity
- Incidents of exclusion
The new human capital disclosure rules are not only a step to ensure corporate transparency towards investors, stakeholders, and the general public. The filing process is intertwined with reflection on HCM goals and measures in each organization - acknowledging and understanding them eventually leads to creation of a strong workplace well-being culture. Subject to effective controls and procedures, the HCM disclosures become commitments.
Which of the abovementioned HCM have you been already tracking, and which are you planning on following this year?