Prepare HR and Boards for
New Rules Ahead:
A Solid Collaboration is Key
While human capital management has been the duty of HR teams in most businesses, board committees have expanded from Compensation Committees to Human Capital Management ones, as SEC requirements have expanded reporting on topics and data required in disclosure filings.
Per the agenda for the SEC Commission, a proposal by the Commission's Investor Advisory Committee (IAC) is under review to add more reporting on human capital management measures used to manage a business.
The recommended changes would require disclosure on such metrics as:
- Headcount Metrics,e.g., number of employees, classified by full-time, part-time, contingent status and assessment of all persons whose work contributes at a material level to revenue or income.
- Turnover Metrics: Disclosure or comparable workforce stability metrics.
- Compensation Components: Disclosure of the total cost of the workforce, broken into major elements of labor costs by salary, equity, etc.
- Human Capital Measures and Objectives:This will differ based on industry, including an array of topics, e.g., health and safety, culture and engagement initiatives, investments in communities, culture assessments. talent development, attraction and retention, quantitative statistic regarding diversity targets and results in hiring and promotions, supplier diversity, succession planing, compensation and benefits and quantitative pay gaps analysis,
- Board Diversity: A rule proposal on corporate board diversity disclosures is also on the SEC’s regulatory agenda for consideration by October 2024.
More are still under consideration, as the IAC is evaluating how disclosures with these rules have informed investors to date and if there are enhancements to be added for transparency about total dollars spend on the workfoce and turnover.
Strategic Business Partnership is The Answer
HR and the board must come together for strategic thinking about human capital and its value and needs for the business. It will then work jointly to decide what are the best policies, processes and programs to initiate and oversee.
Both directors and HR leaders will need to deepen skill for the future, such as:
- Holistic and Creative Problem-Solving
- Leading Balanced, High Diversity Group Discussions
- Asking Smart Questions to Uncover Facts and Insights for Enlighted Decisions
- Shaping Futuristic Scenarios, their Potential Impact and Viability
- Strategic Thinking and Planning
Leaders who collaborate on these skills create high performing organizations that succeed.
Shaping the Future
Executives and Directors who embrace this collaboration with HR leaders are well positioned to foster a culture of innovation, engagement, strategic growth and wise outcomes from prudent problem-solving with management and the Human Capital Management committees of the boards,
Note this requires a commitment to investing in HR capabilities for analysis and operations..
For help in planning and support, contact us at boardwise.biz.
Sources:
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