A short YouTube commentary by Anthony Onesto arguing that analytics—and potentially SEC-mandated human capital reporting—will transform HR. The speaker cites current disclosure rates (e.g., 31% annual-report disclosure; 18% in ESG reports; 15% in DEI reports), notes the EU is already moving toward mandatory human capital metrics, and outlines how standardized reporting would push HR toward data-driven practices, stronger investor scrutiny, and new analytics tools and services.
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What does the future hold for hr? I think you're going to find the future of AI is all about analytics. In fact, I got a glimpse during a fascinating conversation with Dr. Solange Chara, renowned authority on human capital reporting. Everyone, this is Anthony Honesto and this is my quick Burn the box drop for this week. It's the SEC or secret weapon, how analytics are going to shape the future of the AI. But first, let's look at the numbers. 31% of companies disclose workforce metrics in annual reports, 18% in ESG reports, and 15% in diversity, equity and inclusion reports. Among the companies that do disclose human capital metrics, gender diversity is the most commonly reported metric, followed by racial diversity, average employee tenure, voluntary turnover, and safety incidents. A survey of S&P5 100 companies revealed that 97% included disclosures related to diversity, but 61% disclosed quantitative metrics regarding gender and racial diversity effectively. Headcount, essentially. And the review of the first 100 Form 10Ks, followed by companies with at least a billion in market capitalization found that only 15% of organizations have a standard set of human capital metrics. What the heck is going on? Well, in my conversation with Dr. Solange Charis, what we realize is that there needs to be a movement to have more required human capital reporting within SEC reporting. I've talked about this before, but what I loved she talked about were these different metrics. Not about headcount or diversity, but really pushing for more human capital metrics. Now, in my conversation with Dr. Charis, what I found is that the European Union is already leading efforts around these things. So companies that are doing business in the EU are going to have to start complying with these human capital metric requirements. The United States, as always, very far behind. There's also controversy around these things. A lot of practitioners don't necessarily believe in this stuff. I think it will unlock so many things for us. But let's talk about the eu. If you're doing business in the eu, there's going to be a requirement around human capital metrics. So other than just headcount numbers, which are the basics required today even by our own, we're going to see that they're going to mandate more human capital reporting, particularly in that region. So what's the future look like? So let's suppose the SEC mandates human capital reporting for all US Companies. Magic Wand Malcolm Gladwell it happens. Internally. HR systems really need to adapt to handle this new reporting. You want to make sure that it's frictionless for the companies, for the departments where they don't necessarily have to burden the practitioner. Now I will say with all the AI tools out there, it should be fairly easy to be able to put data in and get these reports out. But I'm an optimist around AI. But the idea here is that we need to integrate human capital metrics into regular financial reporting and having the systems to kind of press a button and have it done. I know it's a lot harder than that even for the financial data is the ideal scenario. But what I think this will do is it will necessitate a data focused approach within HR teams. I think businesses will put more focus around human capital metrics and what's being reported. I think analysts out there, investments, whether you're in a PE group, you're a venture capital firm, or you're just generally investing in the market and starting to report some of these human capital metrics as required by the sec, you're now going to see a correlation. All of us in HR believe that there is a connection between human performance and business performance. Now we're going to give you the data to support that. And what's going to happen is it's going to start trickling down, not in the Reagan economic kind of way, but in a way where the interest like hey, if we practice human capital and focus on human capital programs within organizations, we see business results. It's going to trickle down from investors to boards to CEOs to HR departments and HR, where we thought HR has, has evolved to having a seat at the table because of COVID This is going to be an amazing time for human resources as we start thinking about these things. So we really need to embrace this change. We as practitioners need to see that this connection, even though it's going to cause us more work, will ultimately unlock so many things for us. And the conversations are going to change. You're going to start seeing the need for HR focused human capital programs and metrics. What are we doing? The hiring of the CPO and the CHRO is going to be a fundamental board driven effort. The board's going to want to know, investors are going to want to know, the market's going to want to know. What are your human capital practices? And those are the benefits. Now it's not all roses, it's not a nirvana. There are going to be challenges and considerations. So despite the potential benefits, implementing human capital reporting is challenging today. It's disparate systems even now where I'm not required to report on human capital externally. Finding data, getting access to data, having it aggregate in a way through a tool is almost impossible. A lot of These systems or APIs aren't completely open, so you're not getting all of their data. It's not a very easy thing. But if I am an entrepreneur in the HR analytics space, I'm looking at this going, here's our opportunity. This is our opportunity to really help organizations bring human capital reporting to the front and center. So what's my vision for the future, folks? As we look to the future, human capital reporting will absolutely play a pivotal role in shaping the HR landscape. As I said before, as more analysts, you might even find yourself outside of any AI tool, an analyst that's focused on human capital reporting. They're going to be looking at these things and saying, if we invest in companies that do do human capital programs better than others, or have a focus on human capital programs, or level up their human capital departments, that has actually a direct business impact and it's all about making money. You're going to start to see focus, you're going to see integrated analytics, you're going to see tools coming out, you're going to see our profession level up. The expectation of us as a profession will move more towards quantitative than qualitative, where I think I believe it sits today. So hopefully, folks, if you're in hr, you're ready for the future. If you're a business leader, you should be ready for this future. In a year, two years, whenever the SEC decides that they want to expand human capital reporting requirements, we're going to see a major shift in the focus of stronger and better human capital practices. Thanks everyone for listening to me. This is my burn the box drop for this week. See you next time.
