“I would focus the highest priority in terms of getting more concrete and measurable information around the riskiest parts of the talent strategy. “It creates an excellent opportunity for dialogue between the board and management, including the limitations around access to data and the timeline to build those metrics,” she said. Goode says the challenge of meeting investor requests for disclosure lies in management’s ability to gather the data and calculate the metrics. There’s wide variability, even in something that seems as straightforward as attrition or turnover.”
MANAGEMENT OVERSIGHT HOW TO
We need a standardized definition of how to calculate a metric or explain it in narrative. “It’s very early days in this discussion of reporting to investors,” said Goode, “and I think this will unfold similarly to the CEO pay ratio discussion. Securities and Exchange Commission has proposed an expansion of HCM metrics to be disclosed under Regulation S-K. The Human Capital Management Coalition of institutional investors, representing over $4 trillion in assets, is engaging with boards regarding their oversight of HCM and calling for enhanced disclosure of metrics related to human capital. The questions are grouped under four key areas: Understanding how the financial statement auditor considers cybersecurity risk. It also includes elements of quality assurance, staff supervision, dealing with developing areas of concern in individual cases and facilitating improvements in practice. Investor expectations for disclosure are increasing Cybersecurity Risk Management Oversight: A Tool for Board Members provides key questions board members can use as they discuss cybersecurity risks and disclosures with management and CPA firms. Effective management oversight is much more than countersigning.
This sentiment is indicative of the recent elevation of this issue into boardrooms, and it is likely to be considered even more important by many boards going forward.įollowing are insights discussed during the webcast: In fact, 72 percent of the 292 board directors, C-level executives, and HR officers surveyed during the webcast reported that the time spent by the compensation committee on HCM issues had increased moderately or significantly over the last three years.
Additionally, more directors with HR backgrounds are being considered for board service.
Compensation committee charters (and titles) have been expanding to include oversight related to non-executive employees and broader human resources (HR) topics. On our March 19, 2020, webcast, Carol Goode, director at Science Applications International Corporation (SAIC) and a former chief human resources officer (CHRO), joined KPMG Board Leadership Center Senior Advisor Annalisa Barrett to discuss trends in board oversight of human capital management (HCM), both in light of challenges related to COVID-19 and with respect to broader expectations of companies and boards.Įven prior to the outbreak, the focus on board oversight of HCM had been growing for several years as business strategies shifted to rely more on services and intellectual capital and as investors became more attentive to workplace issues beyond the executive suite, such as gender pay equity, talent development, and workforce diversity.
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