On August 9, the US Security and Exchange Commission (SEC) adopted new rule amendments which, among other things, now require all publicly trade corporations to report on human capital metrics and objectives “as far as they are material to the success of the business.”
The interesting aspect of the new regulations is that the disclosures are not prescriptive and do not follow a framework. Rather the regulations take a “principle-approach” to what must be disclosed. What this means is that the company is required to disclose and human capital measures that will reflect the impact that human capital impacts the organization’s ability to generate profit or enables growth. This approach acknowledges that appropriate measurements may vary based on any number of variables including type of business, regionality, seasonality, etc.
These regulations have been officially under discussion for well over a year in the US. But the International Office of Standardization issued voluntary standards in 2018, which companies have been utilizing. While I haven’t yet seen the metrics the SEC suggests as part of the amendments to Item 101(c), the IOS guidelines prescribe 10 human capital measures of which 2 are L&D related: percentage of employees who have completed training on compliance and ethics and development and training costs. In an article in CLO Magazine in April of this year, Dave Vance argues that these regulatory changes are the catalyst that is going to ignite greater and greater demand for and scrutiny of learning metrics and reporting.
While the SEC’s principles-based approach leaves much room for interpretation, especially in early implementation, I think Vance is right that it will lead to an expectation of a culture of measurement in workplace learning and the standard will be what is the financial impact on the business. Sound familiar?
But this time, Wall Street will be watching. That’s the Big League. Are you ready to play ball?
PLEASE SHARE YOUR THOUGHTS IN COMMENTS BELOW
Do you think these regulations will change anything? Will they drive greater support for data collection in learning? Motivate more collaboration between the business units and L&D?