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Human Capital’s Big Reveal

Source | www.cfo.com | David McCann

A climate ripe for extensive disclosure of human capital data is blanketing the corporate world, with European companies taking the initial lead. The United States has been lagging well behind, but in August the Securities and Exchange Commission proposed that companies be required to report on human capital “to the extent such disclosures would be material to an understanding of the registrant’s business.”

Over the past two years, a litany of events has combined to create a groundswell of momentum for such disclosure. (See “It’s About Time” below.)

Propelling the idea is the ever-broadening consensus among stakeholders that effective assessments of a company’s performance and prospects require solid information on workforce costs, productivity, and how employees are hired, developed, and managed.

Most notably, disclosure guidelines issued last December by the International Organization for Standardization are expected to have a powerful impact. (See “What ISO 30414 Calls For.”)

Companies in Europe generally take standard-setting organizations more seriously than do U.S. companies. “Given that many [European] companies are talking about implementing the standard as soon as possible, it will soon be possible to incorporate human capital issues into fair value analysis,” noted a recent research report by Deutsche Bank. (See “Bank On It.”)

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