SEC Human Capital Reporting: A Good Starting Place, But Where Do We Go From Here?

A company’s success relies on the strength of its employees. In support of this idea, the International Organization for Standardization (ISO) recently created guidelines for companies to report on Human Capital (HC). Going forward, visibility into HC metrics will be a requirement for all public companies to report to the U.S. Securities and Exchange Commission (SEC). This adds a critical dimension for investors to gain visibility into how companies manage and retain employees to better predict the health and future of the company. But, what HC metrics should companies report on? Historically, HR reporting has largely focused on survey responses and workforce metrics like attrition, hiring, diversity, and inclusion. All extremely valuable and important, but is this enough? And, How can we connect these metrics to other business KPIs like financial performance and productivity?

Today’s workplace is all about flexibility and adjusting to rapid changes affected by the world around us. HC reporting is critical in understanding the effects of flexibility and rapid change on an organization. In the more immediate future, the effects of the COVID-19 pandemic will continue to impact the workplace. Companies will need to make critical decisions that impact the success of their business and their employees. A prime example of this are decisions around the return to the physical office and whether continuing to work remotely, returning to the physical office, or a hybrid of the two is best for any organization. Understanding how any of these scenarios impact employees will help companies assess whether their strategy is negatively impacting their people and ultimately the bottom line. By expanding HC reporting to include more information outside of the number of employees, attrition metrics, etc, HR can play a more central role, helping make strategic decisions that improve the employee experience and positively impact business outcomes.

Going Beyond Surveys and Human Capital Management Software Reports

Most companies leverage survey results and human capital management (HCM) software to help them with the SEC reporting basics. These reports largely describe the profile of its workforce (employees age, tenure, domestic vs. foreign, gender, ethnicity, etc.), recruiting and retention, and compensation and benefits. What this technology does not cover is more detailed information around how the company is functioning – or not. They don’t consider work-life balance, productivity, engagement, information flow, focus time, impacts of meetings, and alignment – information that is readily available to the company.

The ultimate goal of HC reporting is to understand how a company attracts, retains and motivates its employees. To do this organizations need to report on data that shows the organizational structure and employees’ communications and collaboration practices. This is where looking beyond basic workforce data becomes imperative. While surveys provide insights into employee’s feelings or opinions at a particular point in time, anonymized objective data from collaboration tools like email, chat, and calendar allow companies to get a macro, continuous understanding of how work happens on a daily basis. Even more powerful together, the merging of HCM reports, survey data, and objective data from collaboration tools allows for a deeper understanding on how trends in collaboration, after hours and weekend work, and alignment are impacting employee’s attrition, burnout, work-life balance, and engagement.With this in mind the question then becomes, “Where do we go from here?”

Leveraging the Humanyze Organizational Health Platform™

The Humanyze Organizational Health Platform™ (OHP) helps companies go beyond HCM software capabilities to both understand their workforce behavioral data and make better decisions that ultimately lead to greater long-term success, and increases retention and engagement rates. Through Humanyze’s OHP, companies can measure and report on specific data that directly impacts the following:

  • Engagement: Data on work-life balance, including the span of employees’ workdays, how they spread out their day and if many employees are working over-hours or on weekends can be critical to understanding if employees are engaged or over-tasked. Furthermore, analyzing whether employees have access to other core parts of the organization is important in understanding opportunities or barriers to upward growth.
  • Productivity: Understanding whether employees have the opportunity to focus on their work or are constantly interrupted by meetings is an important predictor of the capacity teams have to be productive. Additionally, measuring alignment helps organizational leaders understand if employees are collaborating and communicating across levels. This is particularly beneficial to know if younger or more junior employees are alienated from upper level managers or staff because it impacts things like training and development, but also innovation and fresh creativity.
  • Adaptability: Behavioral diversity is crucial to an organization’s flexibility. Understanding this can indicate variations among employees on communication and collaboration behavior. This may cause leaders to take a critical look and question if they have encouraged a culture that allows employees to choose their own style of working, networking and collaboration.

Dive deeper into the metrics that help understand impacts to engagement, productivity, and adaptability by reading our latest white paper “Measuring Organizational Effectiveness with the Latest in Workplace Analytics.”

Making the connection between HC and business KPIs is important. Below are some examples on how HC metrics, and a deeper understanding of the data can impact business outcomes:

  • Attrition Rates: Attrition is highly affected by changes in network structure and overall by engagement metrics. Low engagement leads to attrition. Similarly, increases in weekend work and longer workdays increase stress, which if kept up for a period of time, may contribute to the chance that a person will leave.
  • Team Performance: Humanyze productivity metrics help organization leaders understand whether teams have the right tools and connections to achieve their work. For example, if employees aren’t able to focus or collaborate closely with their team, their output will suffer. On top of this, if teams fail to communicate across formal boundaries, the long term innovation of the organization could drop.

The Future of HC Reporting

While some companies voluntarily report human capital information to their employees and the broader business world, others are now grappling to determine what information they should share and how to do it most efficiently. Ultimately, the goal should not be to only report human capital numbers alone, but to use your critical data to drive initiatives that make the company more successful and improve the employee experience. While HR systems can collect and share basic data like attrition, they often do too little and too late for it to be purposeful. With Humanyze’s OHP, companies can go above the call of reporting to harness their data and make informed, impactful decisions. How is your organization leveraging its human capital data for long-term good?

Last Updated 30 April 2021