A big transformation is brewing in HR, mostly affecting publicly traded companies. The issues, however, are worthy of attention to small business as well, even if it’s not entirely feasible to make these changes. First, a little history: investors research companies to assess the long-term health of the business and decide whether to invest in it. In the past, 83% of a company’s value centered around the org’s physical assets, and the only human capital metric was number of employees, which wasn’t that important to investment decisions. The SEC, however, has changed its disclosure rules and is now requiring that companies disclose a great deal more about their human capital. It seems that, according to this article, in 2015, the valuation perspective changed and now 84% of a publicly-traded company’s value has been mapped to human capital. The prevailing opinion is, after all, it’s the people who make business work.
This means that HR gurus need to not only measure their performance on different metrics and benchmark against other orgs, but use these figures to make organizational changes that move the needle. As the author states, keep in mind that “billions of dollars will be traded on the metrics you report.”
The SEC is now asking public companies to report metrics on employee attraction, development and retention. Because this generation of workers values growth, learning and experience, businesses need a talent development plan that provides meaningful opportunities for employee growth. One way to improve the employee experience is through mentoring. When employees feel there are “constant opportunities available to them,” you will recruit and retain good workers, or so the story goes. Quite the tall order!
The article also suggested using artificial intelligence to make a few changes. For example, if your company needs to address diversity, certain AI methods can help you perform blind hiring to remove any bias in the selection process. AI can also help you identify untapped and valuable skills among your workforce, for example, by analyzing their LinkedIn profiles and other social networking footprints.
Many of us are focused on the more “low-hanging fruit” of HR to attract and retain workers: compensation, benefits, etc. However, data indicates that workers consider these a given and are focused on other factors when they decide to accept a job offer or stay in your organization. While this is necessary for public companies, the lessons are not lost on smaller concerns that compete for talent with the ‘big guys.’ HR will need to move quickly to assess where their companies are on the continuum and develop/implement strategies to move them where they need to go.