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SEC’s ‘Human Capital Disclosures’ Update Elevates Importance of Employee Experience

SEC’s ‘Human Capital Disclosures’ Update Elevates Importance of Employee Experience

For the first time in more than 30 years, the U.S. Securities and Exchange Commission (SEC) has significantly revised its business disclosure rules for public companies. As part of the updated human capital disclosures, organizations will now need to provide any “material” workforce measures or objectives they’re focused on in managing their business.

With this change, the SEC is elevating the importance of employee experience to the level it deserves. As SEC Chair Jay Clayton explained, employees can be “an important driver of long-term value.” 

Organizations now have an opportunity to highlight the quality of their employee experience and use that as a competitive differentiator that can increase long-term value. Outcomes from employee surveys and other metrics indicating employees’ perceptions of their experience can be an important signal of a company’s culture and ability to attract and retain talent. 

What Are the Updated SEC Rules Regarding Human Capital Disclosures?

Before this most recent update, public companies only had to disclose their number of employees. Now, the SEC is encouraging businesses to go even further, sharing any information that is “material” to helping investors better understand business operations. 

Though lengthy, the SEC’s nearly 130-page report outlining the new changes doesn’t specifically spell out what else companies must now file. Instead, they’ve put forth general guidelines that state that businesses should provide a description of their “human capital resources” — that is, your workforce — and include details about any steps your organization is taking to invest in your staff. For instance, these could include efforts to:

  • Attract or recruit new talent
  • Develop, train, or educate your workforce
  • Retain your employees

These items have been provided only as examples, not mandates, leaving these requirements open for businesses to interpret on an individual basis. In other words, your company’s reporting should be tailored to your unique business model and workforce.

4 Employee Experience Areas To Focus On

Employee experience is having more than just a moment. The importance of employee experience has now arrived at the highest levels of leadership, as signaled by these new SEC rules.

Any company can keep track of simple measures like headcount, hiring statistics, and churn. To understand employees organically — and not just from the company’s point of view — there are four key areas companies can focus on to better understand employee experience.

#1: Employee experience survey data

Your company can offer a more complete picture of what your organization is doing to attract, develop, and retain talent by running employee surveys. And not just on an annual basis, but on an ongoing basis, to get a pulse of employees at key moments across their lifecycle from onboarding and training and beyond.

#2: Broader experience signals

To get the full picture of employee behavior and activity and demonstrate a true understanding of the employee experience, employers should capture and track non-survey data points from HR systems, help-desk tickets, job posting and review sites and more.

#3: How often data is captured 

As mentioned above, annual surveys are not enough. To truly demonstrate they’re engaging in the moments that matter, from hire to retire, companies are now investing in always-on channels — employee portals, company mobile apps, company-wide emails, and internal Slack communities — and quick pulses that can be administered at a frequent cadence to better understand employee sentiment and engagement.

#4: What, if any, actions are taken

It’s not enough to simply track employee experience data. Businesses must also take actions on these learnings that can impact employee acquisition, development, and retention.

Not only will tapping into these broad organizational signals help your company drive shareholder value and meet (and exceed) these latest SEC standards, by doing so you can also help drive other key business outcomes, including retention, customer experience, and revenue.

The Importance of Employee Experience: Drive Business Outcomes and Value

Gaining a better understanding of the heart of your organization — your employees and their overall experience — can be a differentiator. And if you’re able to keep a pulse on these crucial areas, you’ll have a more accurate measure of your corporation’s health.

As the SEC wrote when it released these latest guidelines, employees have a crucial impact on overall company performance. 

And that’s why investors are increasingly taking note, especially amidst the COVID-19 pandemic, as more employees are working from home and businesses are making great efforts to take care of their people.

Schedule a strategy session with Melissa Arronte or any of our Medallia Employee Experience Experts on Demand to help prepare for the SEC’s human capital disclosures update.
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