As the pandemic ushered in myriad shifts for employees, many leaders responded by leaning heavily on one skill: empathy.
In fact, according to a recent Businessolver report, employees this year rated both leadership and their organizations higher on an empathy scale than they did before the pandemic. Now, as organizations strategize for what the post-pandemic workplace will look like, many are striving to embed a more “human” approach—an effort that experts say can be elevated by a new federal regulation.
Last summer, the Securities and Exchange Commission adopted new regulations for employer disclosures on human capital information. In a webinar hosted by HRE last week, industry analyst Josh Bersin explored the impact of the regulations on HR and highlighted best practices in human capital metrics reporting with insights from James Webb, vice president of global people development, engagement and communications at Fossil Group Inc., and Sarah Waltman, vice president of global talent enablement at Dentsply Sirona.
The panelists agreed that the SEC regulations are relatively broad, allowing employers to essentially report the human capital metrics most relevant to their stakeholders.
“It’s fairly simple: an open invitation to do whatever you want,” Bersin said. “Companies are selecting what they want to do. In my personal opinion, this is an opportunity for you to put together the story you want stakeholders to hear.”
Josh Bersin
The SEC disclosure filings, Bersin noted, are widely read by financial and industry analysts, investors, even employees and potential job candidates. Over the last year, employers have developed and reported metrics around culture, the governance of the human capital function, DE&I, total rewards, talent development, and health and safety, among other areas.
As employers generate metrics in each of these areas, Bersin said, it yields a number of long-term business results. For instance, human capital challenges connected to new hybrid or remote arrangements can’t always be solved by the HR function itself—they often come under the purview of legal, compliance, IT or other departments. As soon as the employer starts building robust metrics around human capital, Bersin said, leadership can see where more connectivity needs to be forged across teams.
And, as soon as the numbers are put on paper—especially in a public disclosure like those regulated by the SEC—it can prompt leadership to examine “how to use human capital metrics for decision-making, design, improvement—not just reporting,” Bersin said.
Throughout the process of gathering data, employers—especially those concerned about leading empathetically—also have an opportunity to incorporate employee feedback.
Kathi Enderes, vice president of research at the Josh Bersin Academy, noted that the organization’s recent research on employee experience identified more than 80 possible factors that fuel a positive EX. Ranking at the very top was the organization’s culture—particularly bolstered, she said, if leadership is transparent and inclusive. By inviting employee input into the SEC regulations, and reporting transparently on the metrics most relevant to the workforce, employers can take a big step toward enhancing EX.
“What’s the story you want to tell?” Enderes asked. “What you pick as your metrics really matters. The message we send in these disclosures can make a big difference in how employees see the organization.”
Tesla, for instance, submitted one paragraph as its disclosure, while Ford published three pages, including information on turnover rates, spending, internal mobility and more.
At Fossil, the team working on the SEC disclosure created a list of 70 parent topics the organization could report, with anywhere from three to six metrics in each, Webb said. To narrow the data, they “backed into” the project, first identifying what stakeholders would most need to know to make important decisions. Ultimately, they chose to focus on DE&I, employee experience, health and wellbeing—with a particular highlight of the upskilling benefits the organization offers—values and purpose, and ESG.
See also: The SEC’s disclosure rules are changing HR forever; are you ready?
Dentsply Sirona took a similar approach, with particular emphasis on employee experience and culture.
Waltman noted that it may take some legwork developing new systems or processes to generate the data you need, so it’s important to determine up front what metrics you’ll report.
“There are aspirations and then reality of what you can get and get reliably,” Enderes said. The information has to be both discoverable and defendable, she said, and the larger the company, the larger the challenge in finding the data needed.
It’s also important to document each step of the discovery process, Webb said, so that it can be easily repeated next year—for Fossil, that included defining terms like retention and diversity and inclusion to ensure data is comparable year to year.
“We tried to simplify the process as much as we could to make it repeatable,” he said.
Apart from allowing employers to report straight numbers, SEC disclosures also give them an opportunity to interpret the data’s impact with real stories. Dentsply Sirona did so through anecdotes from employees about how policies or programs “affected someone personally, how they’ve grown with the organization, how they feel included because of the ERGs—it brings [the data] to life.”
Ultimately, the SEC filings can lead to “richer dialogue” among both leadership and employees, including about the value of investing in the people strategy, Webb said.
Leaders may say, “ ‘All of this work, effort and money that we’re putting into this important part of the business, what are we getting from it and how can we better position ourselves in the marketplace for the long-term and against competitors?’ This is the first step to start unlocking that [information],” he said, “and looking at it from a business perspective, both internally and externally.”
Click here to register for the HR Tech Conference to keep up to date on the technologies employers are using to remain compliant with the SEC regulations.