Reporting to the Board and Investors—Talent Metrics

First came Balanced Scorecards; now boards and investors increasingly demand human capital metrics in the reports they receive. Consultant David Creelman discusses the four new standards and offers examples of human capital reporting.

Creelman, CEO of Creelman Research, offered his tips at a recent BLR® webinar sponsored by Halogen Software. He was joined by Halogen’s Director of Marketing Communications Connie Costigan.

What’s the Goal of the New Reporting?

Creelman posits four characteristics to strive for in reporting:

• Going beyond financial measures
• Being concise
• Being relevant
• Telling an integrated story

Who’s Setting the Standards Guidelines?

There are four primary entities that are offering standards for reporting, says Creelman:

SASB (Sustainability Accounting Standards Board). “The Sustainability Accounting Standards Board (SASB) is a U.S. based, 501(c)3 non-profit organization located in San Francisco, California. SASB was incorporated in July, 2011 for the purpose of establishing industry-based sustainability standards for the recognition and disclosure of material environmental, social, and governance impacts by companies traded on U.S. exchanges.”

IIRC integrated Reporting. “<IR> is a process founded on integrated thinking that results in a periodic integrated report by an organization about value creation over time and related communications regarding aspects of value creation. An integrated report is a concise communication about how an organization’s strategy, governance, performance and prospects, in the context of its external environment, lead to the creation of value in the short, medium and long term.”

GRI (Global Reporting Initiative). “The Global Reporting Initiative (GRI) is a leading organization in the sustainability field. GRI promotes the use of sustainability reporting as a way for organizations to become more sustainable and contribute to sustainable development.”

The B Team. “Our vision of the future is a world in which the purpose of business is to be a driving force for social, environmental and economic benefit.”

Human capital reporting is a part of this whole movement. In the United States and Canada, says Creelman, keep your eye on SASB; globally, more on  IIRC. The GRI is more of a reference document, he says.

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A Simple Example

This simple metric can be interesting, says Creelman. It might point to a demographic crisis. For example, what if it shows that a substantial percentage of your staff is over 60? That could mean you need to take action to preserve legacy knowledge and prepare a succession plan. It might also have implications for your retirement plans and your recruiting methodology.

Some other simple metrics include:

Many human capital metrics are possible, says Creelman. For example:

• Diversity
• By level
• By ethnic group
• By geography
• Employee surveys
• Engagement
• “Proud of what we do”
• “Passionate about customers”
• Health and safety
• Number of lost time injuries
• Career mobility
• Number of internal promotions and transfers
• Labor relations
• Percent unionized
• Number of grievances
• Recruiting
• Number of new hires, by gender, region, etc.
• Reward programs
• Average pay increase for managers

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How to Decide What to Report

Creelman suggests that managers consider the following three factors:

• Do stakeholders expect it? (e.g.,  Data on diversity)
• Do we have the data? (e.g., Investment in training)
• Does it help tell our story of value creation? (e.g., Leadership quality)

To get the board to pay attention, says Creelman, talk about managing risk, as in the example above, where most of your employees are Baby Boomers.

In tomorrow’s Advisor, more of Creelman’s tips, some examples, and an introduction to BLR’s all-things-HR-in-one-place website, HR.BLR.com®.