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HC Insights

The single greatest risk of not measuring performance is the
lack of informed decision-making.

Human Capital and Analytics

Human Capital and Analytics

June 9, 2023

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Running the Numbers on Human Capital ROI with Dr. Solange Charas

Running the Numbers on Human Capital ROI with Dr. Solange Charas

June 9, 2023

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Human Capital and Predictive Analytics – Part 4: Prescriptive Analytics

Human Capital and Predictive Analytics – Part 4: Prescriptive Analytics

June 9, 2023

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THE QUOTE " WHAT GETS MEASURED, GETS MANAGED " FROM PETER DRUCKER EMPHASIZES THE IMPORTANCE OF MEASUREMENT IN EFFECTIVE ... MANAGEMENT. IN THE CONTEXT OF HUMAN CAPITAL (HC), THE FOCUS IS OFTEN ON MEASURING HC GOALS, AND OVERLOOK THE EFFECTIVENESS AND EFFICIENCY OF HUMAN CAPITAL PROGRAMS AS A DRIVER OF SUSTAINABLE FINANCIAL PERFORMANCE.

RECOGNIZING HUMAN CAPITAL AS A BUSINESS CASE IS A RELATIVELY RECENT DEVELOPMENT. THE ABILITY TO QUANTIFY THE IMPACT OF HUMAN ... CAPITAL PROGRAMS IS CRUCIAL IN ESTABLISHING A BUSINESS CASE AND DEMONSTRATING THE SIGNIFICANCE OF HUMAN CAPITAL IN DRIVING ECONOMIC VALUE CREATION FOR THE ORGANIZATION

THE PROCESS OF CREATING A FOUNDATION FOR UNDERSTANDING THIS RELATIONSHIP BEGINS WITH FORMING A HYPOTHESIS. ... IN THE CASE OF HUMAN CAPITAL, THE FUNDAMENTAL HYPOTHESIS IS THAT THERE IS A CONNECTION BETWEEN EMPLOYEE EXPERIENCE, PERFORMANCE, AND SUSTAINABLE FINANCIAL OUTCOMES. THE BELIEF IS THAT ENGAGED, HAPPY, SKILLED, AND EXPERIENCED EMPLOYEES CONTRIBUTE POSITIVELY TO THE ORGANIZATION.

TO QUANTIFY THE BENEFITS OF HUMAN CAPITAL, VARIOUS FACTORS SUCH AS EMPLOYEE POPULATION, DIVERSITY, ENGAGEMENT, PRODUCTIVITY, ... TURNOVER, CAREER DEVELOPMENT, TRAINING, ACQUISITION, AND INDUSTRY PERFORMANCE ARE CONSIDERED. METRICS LIKE EMPLOYEE NET PROMOTER SCORE ARE ALSO UTILIZED TO GAIN INSIGHTS INTO HUMAN CAPITAL RETURN ON INVESTMENT..

THE ARGUMENT IS THAT EMPLOYEE ENGAGEMENT AND EXPERIENCE NOT ONLY ENHANCE REVENUES BUT ALSO REDUCE EXPENSES, ULTIMATELY ... IMPROVING HUMAN CAPITAL RETURN ON INVESTMENT. COLLABORATION BETWEEN HC AND FINANCIAL MANAGEMENT IS ESSENTIAL TO QUANTIFYING THE UTILITY OR COST-BENEFIT OF HUMAN CAPITAL INVESTMENT. THIS DATA-DRIVEN APPROACH AIMS TO MAXIMIZE THE POSITIVE IMPACT OF INFORMED DECISIONS FOR THE BENEFIT OF ALL STAKEHOLDERS.

Human Capital Disclosure Timeline–2015-present

2015
The United Nations Sustainable Development Summit adopts the 2030 Agenda for Sustainable Development, which includes a set of Sustainable Development Goals (SDGs), including human capital development and wellbeing
2017
The Human Capital Management Coalition (HCMC), submits a letter to the SEC urging the adoption of standardized human capital disclosures to provide investors information about how companies manage their workforce.
2018
Larry Fink, CEO of BlackRock, releases his annual letter to CEOs emphasizing the importance of a company's social purpose and its responsibilities to stakeholders beyond just shareholders. This letter signals the increasing interest in considering human capital and other ESG factors in corporate strategies.
2019
The Business Roundtable updates its Statement on the Purpose of a Corporation to emphasize a commitment to all stakeholders, including customers, employees, suppliers, and communities—not just shareholders recruitment. World Economic Forum releases its "Stakeholder Capitalism Metrics" report, which includes a set of universal metrics and disclosures to measure progress toward stakeholder capitalism, including metrics related to human capital investment and development.
2020
The U.S. Securities and Exchange Commission (SEC) amends Regulation S-K to include new disclosure requirements related to human capital resources, such as workforce numbers, turnover rates, and workforce development initiatives.The World Economic Forum launches the "Common Metrics and Disclosures for Sustainable Value Creation" initiative, which aims to standardize ESG reporting, including human capital-related metrics, across industries and companies
2021
The European Union introduces the Corporate Sustainability Reporting Directive (CSRD), proposing expanded sustainability reporting requirements for companies, including aspects related to human capital and employee- related metrics.
2022
The International Financial Reporting Standards (IFRS) Foundation announces its intention to establish a new global sustainability standards board to develop consistent sustainability reporting standards, including those related to human capital.
2023
Compliance with ESRS- Social. Anticipated trends for human capital reporting: standardized ESG metrics, comprehensive disclosures, stakeholder engagement, technology integration, societal shifts, and potential regulatory changes to reflect long-term value and sustainability.

The ROI of Working with Us

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Collaborating with our team results in improvements in returns on human capital investments for organizations.
For many clients, a mere 5% improvement in HCROI drives a 10%-30% improvement in profitability performance.
Our clients surpass industry peers in terms of profitability, productivity, and market value growth. CEOs gain concrete evidence supporting the role of people in driving shareholder value, which can be disclosed to stakeholders and governance-monitoring bodies such as SEC, EFRAG, etc.“
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