The methods used to measure and report on the people side of a business fundamentally shape how an organization manages and develops its people (as well as its business results). For publicly-traded firms, people are treated purely as costs for reporting purposes, which often has the kind of effect you might imagine.
For many years, McBassi has advocated more comprehensive reporting on human capital, especially for publicly-traded firms. We view this as a critical step toward improving business results through more effective management and development of people. In particular, our expectation is that improved reporting would help correct a chronic tendency to under-invest in people, and the related over-reliance on layoffs, downsizing and outsourcing. In the extreme, these become a form of "corporate anorexia" that undermines both long-run performance and the competitiveness of our economy.
We are delighted to report that SHRM (Society for Human Resource Management) is now seeking to address this issue. As a standards developing organization for the American National Standards Institute, SHRM oversees the development of HR standards. One of their first working groups is focused on the task of improving human capital reporting on Form 10-K (the required annual report for all US publicly-traded firms).
Our CEO, Dr. Laurie Bassi, has been appointed as the leader of that working group. The group's goal is to get a standard approved by ANSI, which will then be submitted to the Financial Accounting Standards Board (FASB) for consideration. We expect this to be a demanding, but highly worthwhile, effort.
The group's work will be guided by the following questions:
1. What does the existing knowledge/research base tell us?
2. What can we learn from other groups working on this?
3. How do we make the standards stick by understanding the perspective of the parties that will be impacted?
4. What specific human capital information should be included in Form 10-K?
If you have perspectives or advice to share on any of these questions, we'd be delighted to hear from you. Please send them to Laurie at info@mcbassi.com.
