The role of the Board and Management and how HR can lead 

In the current tight labor market, companies continue to face challenges in recruiting and managing an engaged, diverse workforce with the necessary skills to drive business success and enhance investor returns. Investors recognize that how well an organization manages this critical asset - its human capital - can play a significant role in enabling or derailing a company’s business strategy.

In making investment decisions, shareholders are looking for more information on whether a company’s human capital management (HCM) programs and processes create risk or provide a competitive advantage that could enhance a company’s value. To assess this risk (or possible advantage), investors are scrutinizing how the company discloses and measures the effectiveness of its HCM and whether the organization’s management and board are properly engaged in and overseeing this process.

Investors have noted there is significant room for improvement—for both management teams and boards—when it comes to HCM disclosure and oversight, and they have asked regulators to mandate more disclosure. However, companies don’t have to wait for new mandates, they can immediately respond to investor concerns through enhanced disclosure and improved HCM processes and measurement tools. Taking these steps now could be a competitive advantage for the company whose results yield increased returns to shareholders down the road.

This article provides:

• An overview of SEC disclosure requirements related to HCM and companies’ current disclosure practices
• A perspective on what good HCM looks like so companies can assess where they are on their HCM journey
• Action steps management and boards can take to enhance HCM oversight and implement best practices