If it feels like HR has been in the board’s crosshairs of late, it isn’t imagined.
After continued calls in the 2010s for more transparency in the wake of various crises, such as the Harvey Weinstein revelations, boards want more people data, Molly Doran, director of advisory services for Labrador US, told HR Dive. Incoming SEC pressure has only upped the ante.
Stakeholders expect accountability and responsibility from the top down, Doran said — and HR is the source of much of that desired data.
“What HR has been responsible for historically is changing,” she said. What was once a siloed branch of the company that largely only concerned compensation in the eyes of investors is now assisting in key investor disclosures that range from diversity to skills training to, yes, compensation and pay equity.
In short: now may be the time for HR to take advantage of the fact that investors’ eyes are currently locked on them.
What data is needed?
Much of the expected data requirements are around diversity and inclusion efforts.
The 10-K report is the annual report filed by publicly traded companies about their performance in a given year, and it’s where employers are increasingly disclosing gender, race and ethnicity breakdowns of their people data.
Some employers break the data down further, including specific gender breakdowns of management as well as the global employee population, Doran said. Disclosure on employee race is seeing slower uptake since that information is more difficult for HR to gather because it is self-reported, she added, but it is also growing more common.
Race and gender information are also required on the EEO-1 report that certain employers must create annually. That means some employers simply refer back to the EEO-1 report in the 10-K filing, essentially directing investors to look at a completely different form for that information, Doran said.
For HR to really be part of company strategy, however, that may not cut it.
Step up to tell the story
One challenge for HR is that it doesn’t own the 10-K report. But HR pros can make their contributions to the report more digestible, Doran said — especially important now that 10-Ks and proxy statements have a lot more visibility due to ongoing ESG pressure from the SEC. Think bar graphs, pie charts and other visualizations of key data.
While the SEC requires “human capital resources” disclosures if they are “material to an understanding of the registrant’s business,” that definition is purposefully kept broad. As more employers publish separate but related ESG reports, however, HR has another opportunity to shine. Almost all of the Fortune 100 publish an ESG report right now, Doran said.
“The spotlight is shining on them,” Doran said of HR. “They need to be raising their hand and tooting their horn when it comes to speaking to the different parties that are gathering this info and not be afraid to disclose this information.”
To keep HR data top of mind for the organization, HR pros can continue to “contribute behind the scenes,” Doran said, by giving their programs a platform where possible. Doran noted social media as a great example of where HR can flex, showcasing videos of training programs or incentives to return to the office, for example.
A recession likely won’t change this pressure, Doran said. “COVID has changed a lot when it comes to recruiting and retaining talent. We’re seeing a completely different world,” she said, but stakeholders care about DEI data, human capital management and the stories companies tell about their employee programs.
HR is “not just the keeper” of that information, Doran said, but it’s also “setting the table and making a stand.”