ISO Near Release of Human Capital Reporting Standard

Human Capital Reporting
Day trader screen with graphs and charts in dark, Vienna Austria, 17.01.2018

The International Organization for Standardization should be releasing its guidelines on human capital reporting any day. Meanwhile, workforce analytics software and services company HCMI is ready with a new, focused online community.

According to CFO, the ISO was expected to issue its guidelines at some point over the last two weeks. As of this morning, however, no announcement has been released and the ISO’s website still marks the document as “under development.”

Investors in particular have been waiting for human capital reporting standards, which will help them determine a company’s sustainability. Click To Tweet

Investors in particular have been waiting for the standards, observers said, which will help them determine a company’s sustainability. “Depending on the extent to which companies voluntarily adopt the new standards, stakeholders … would have a new category of data with which to assess organizational value and the prospects for financial and non-financial returns from investments in human capital,” CFO said.

Jeff Higgins, a member of the standard’s ISO task force and CEO of HCMI—known formally as the Human Capital Management Institute—told CFO the guidelines’ release will be a “watershed moment.”

“Some countries are going to adopt this as a regulation for public companies,” Higgins said. “In the United States, I’ve talked to more than a few companies that want to be in compliance ahead of others in order to demonstrate ethical and social credibility.”

An Investor Push for Human Capital Reporting

Investors have been paying more attention to workforce-related numbers lately. In 2017, a group of institutional investors petitioned the Securities and Exchange Commission to require that public companies disclose information on human capital management policies, practices and performance. The petition is under review.

The group, the Human Capital Management Coalition, said it wanted “consistent and comprehensive standards that would allow investors to better understand and assess how well the companies they own are managing their talent.”

While the HCMC didn’t say which metrics should be reported, CFO observed that the ISO standard would give the SEC a good starting point if it decides to draft regulations.

The standard includes 23 metrics organized into 10 categories, CFO reported. These include ethics (which would track grievances filed and disciplinary actions, among other things), diversity, productivity, skills and workforce availability.

The magazine also noted that the corporate approach to workforce reporting has been shifting. “Rather than being seen as primarily a means to measure corporate value, such reporting is also considered a response to the public’s increasing desire for corporations to act as good citizens,” it said.

HCMI Seeks to Build a Community

Separately, HCMI launched the Human Capital Value and Reporting online community, which is dedicated to executive-level discussion of workforce reporting issues.

“While CEOs state, ‘Our people are our most valuable asset,’ organizations have typically measured and managed people as a short-term cost to be minimized instead of as an investment to grow for competitive advantage and business value,” Higgins said.

HCMI envisions HCVR as a destination where corporate leaders and investors can share insights into the most effective ways of measuring, quantifying, evaluating and reporting on a company’s workforce. Membership is free, but limited to HR and business executives, board members and investment professionals.

Higgins has seen “tremendous” response to HCVR. “It’s exciting to see so much interest in the measurement of human capital,” he said. “We look forward to building a valuable and supportive community where business leaders, HR practitioners and investors can come together.”

You can learn more about, or join, HCVR here.

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