The Handbook of Board Governance, 2nd Edition

36Winter Is Coming: The Approaching Human Capital Management Storm

Solange Charas Ph.D

Board Advisor, Senior-Level HR Executive, Entrepreneur, and Adjunct Professor

Michael Young

Partner, Willkie Farr & Gallagher LLP

Introduction

“Winter is coming!” This phrase, originated in the popular series “Game of Thrones,” has become a watchword for constant vigilance. And for boards of directors, winter may be coming—on the topic of human capital management and disclosure. The harbingers of change are several. One is a statement by SEC Chairman Jay Clayton to Congress in December 2018 that “the SEC could do a better job around disclosure, specifically ‘driving disclosure toward human capital.’”¹ Illustrative of momentum behind the subject, three months later the SEC's Investor Advisory Committee approved recommendations that the SEC “recognize the significance of HCM [Human Capital Management]” and incorporate the concept into the SEC's overall review of disclosure effectiveness.²

Another harbinger is the January 2019 release by the International Organization for Standardization (ISO) of a new standard on “Human Capital Management Reporting,”³ which provides guidelines on both internal and external human capital reporting. This is anticipated to impact more than 1 million ISO-certified organizations. Still another harbinger is a call by at least a dozen institutional investors and governance organizations, led by the Human Capital Management Coalition (HCMC),⁴ for increased disclosure ...