Under Pressure: Public Companies and Disclosures About Their Employees
There is growing pressure on public companies to disclose information about their employees. At the end of March, for example, the SEC’s Investor Advisory Committee recommended that the SEC recognize the significance of human capital management and incorporate disclosures about employees in the SEC’s standard disclosure requirements. The recommended disclosures would include the number and types of employees as well as information about career goals, employee safety, compliance with employment regulations and laws, and productivity. The recommendation also includes a requirement for reporting on executive compensation related to compliance and sustainability in terms of setting compensation and determining promotions.
While it is unlikely the SEC will adopt rules on human capital management disclosures any time soon, given the pressure from shareholders and private investors for the same information about employees and executives, this is a topic that needs to be addressed by the board and top management of all public companies. Both the timing of such disclosures and their level of detail can subject a public company to criticism from its shareholders and from the SEC itself.
In January 2019, the International Organization for Standardization published a standard that establishes guidelines on human capital, measurement, analysis and reporting. These guidelines may be something to consider when thinking about the level of disclosure in this area. In fact, thinking about recruitment success, turnover, productivity and even the effectiveness of leadership is a useful exercise for any company. It may be best to engage in these types of considerations now to get their full benefit in advance of any need to disclose information related to these topics either due to investor pressure or future SEC rules.
Subscribe to Managing the Modern Workplace to receive weekly email updates.