Corporate Human Capital Reporting Aaron Bernstein Fellow Harvard Law - PowerPoint PPT Presentation

CII Master Class on Human Capital New York Oct 23, 2018 Corporate Human Capital Reporting Aaron Bernstein Fellow Harvard Law School Labor and Worklife Program

HCM Coalition SEC Petition Quantitative and qualitative disclosures • Demographics (full ‐ time, part ‐ time, contingent, policies on subcontracting and outsourcing) • Stability (voluntary and involuntary turnover, internal hire rate) • Composition (diversity, pay equity policies/audits/ratios) • Skills and capabilities (training, alignment with business strategy, skills gaps) • Culture and empowerment (employee engagement, union representation, work ‐ life initiatives) • Health and safety (work ‐ related injuries and fatalities, lost day rate) • Productivity (return on cost of workforce, profit/revenue per full ‐ time employee) • Human rights commitments and implementation • Compensation and incentives (bonus metrics, measures to counterbalance incentives risks) •

UK Investment Association Long Term Reporting Guidance Narrative and metric ‐ based explanation of HCM and how it creates value • Headcount, full ‐ time and part ‐ time employees, gender, and diversity • Turnover, planned and regrettable • Investment in training and skills, including progression and promotion rates • Employee engagement score • Major workforce productivity investments and outcomes • Major HCM opportunities and risks and board response • Workforce incentives •

UK Pensions and Lifetime Savings Association Stewardship Toolkit Narrative on how workers employed, engaged, managed and contributed to performance • How HCM strategy relates to corporate purpose and business model, anticipated risks and • opportunities Gender diversity • Employment type, full time, part time, agency • Turnover • Accidents, injuries and workplace illnesses • Training and development investment • Pay ratios across highest, media and lowest quartiles • Employee engagement •

International Corporate Governance Network Viewpoint • Narrative discussion of how HCM approach relates to corporate purpose and business model • Workforce ‐ related risks and opportunities • How workforce employed, engaged and managed • How HCM contributed to corporate performance • Impact on costs, productivity, quality and revenue

ICGN Viewpoint KPIs tailored to HCM strategy Employee engagement, union representation, work ‐ life initiatives • Investment in training and development • Lost ‐ time injury and fatality rates • Pay ratios across highest, media and lowest quartiles • Turnover voluntary and involuntary, internal hire rate • Compensation and incentive plans • Demographics full time, part time, agency • Diversity •

UK ShareAction Workforce Disclosure Initiative Comprehensive survey to set global HCM disclosure benchmark Covers direct and supply ‐ chain employees, labor and human rights Surveyed 76 global firms in 2017, 34 responses. Surveying 500 this year 40 ‐ plus metrics: Headcount, gender composition, contract types, wage levels, pay ratios, gender pay gap • Turnover, supplier turnover, recruitment practices • Training, progression, capacity building • Health and safety, mental health, grievance mechanisms, discrimination and harassment, whistleblowing, • freedom of association, engagement surveys

Social and Human Capital Coalition Protocol Founded by World Business Council for Sustainable Development Consultation ended in June, final next year 1. Identify material issues (stakeholder perspective) • Impacts Job creation, hazardous work environment, women’s • empowerment, economic growth, wages and benefits Dependencies Worker well ‐ being, rule of law, talent pipeline, • engaged workforce, diversity 2. Determine audience and scope • 3. Select KPIs • 4. Apply to decisions and processes •

2017 Study Reporting Prevalence 100% 90% 80% Oh 70% 60% 50% 40% 30% 20% 10% 0%

Reporting Study Detail 100% 90% 80% Survey 70% Respondents 60% 50% 40% 30% 20% 10% Non ‐ Respondents 0%

Study Takeaways • Majorities or large minorities of firms already report many HCM metrics • More firms collect metrics than report them • European and UK firms report and collect more than Asia Pacific and US ones