Increasing expectations about human capital management (HCM) from regulators, investors, consumers, and employees—as well as fundamental changes in business strategy and the way people work—are causing boards and C-suites to focus more on their HCM strategy and story.
A new report from The Conference Board recommends businesses meet these growing demands by creating a compelling HCM strategy and narrative supported by data-driven, evidence-based analytics.
While sharing that story with stakeholders brings potential risk, it also brings potential rewards. Where organizations meet increasing demand for transparency from various stakeholders, they often experience higher employee retention and engagement, greater customer loyalty, and more investor interest. They will not only be better prepared for external and internal attention to human capital matters but will be more capable of taking needed action.
The report, created in partnership with Seyfarth Shaw, Edelman, and HCMoneyball, explores the current and evolving regulatory environment as it relates to HCM, offers guidance on the development of an HCM strategy and narrative, and looks at how to communicate and tailor that narrative to a variety of stakeholders. The insights are based on four working group sessions held in 2022 with approximately 200 corporate leaders—including C-suite executives and board directors, as well as outside experts.
Key findings and recommendations include:
Prepare for the external and internal forces that are likely to drive increased attention to human capital matters from the board and C-suite.
Develop a compelling human capital strategy and narrative that goes beyond mandated reporting requirements to connect HCM strategy to business and financial outcomes.
Quantify the impact of human capital performance to demonstrate how the firm’s HCM is driving financial performance and effectively and efficiently deploying the organization’s workforce.
“It’s nice to say we’ve got a human capital management strategy that aligns with our business strategy, but we’ve got to make it specific, concrete, and compelling,” said Paul Washington, Executive Director, The Conference Board ESG Center. “A strategy leveraged on analytics can demonstrate the returns on each dollar invested in talent acquisition, learning, mobility, remuneration, and engagement.”
Expect greater scrutiny of human capital strategy, its execution, and its linkage to business impact.
Communicating HCM information beyond mandated disclosure involves risk. Leaders should calculate the risk/reward ratio carefully.
Frame the narrative for each stakeholder with an emphasis on building trust.
“Both workers and candidates want to know how effective a firm’s policies and programs are on issues such as workplace culture, pay equity, business ethics, and the like,” said Rebecca Ray, Executive Vice President for Human Capital, The Conference Board. “By developing and communicating a compelling narrative around these issues, you send a powerful signal to employees that these issues matter to the business. Speaking to the concerns, benefits, and opportunities of your HCM strategy conveys purpose, establishes trust, and drives engagement and retention.”
About The Conference Board
The Conference Board is the member-driven think tank that delivers trusted insights for what’s ahead. Founded in 1916, we are a non-partisan, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States. www.conference-board.org
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