By: Francie Jain, Terawatt and Dr. Steve Long
In the world of learning and development (L&D), there’s a decades-old concept of developing an employer’s most promising workers distinctly from their peers, and it’s known as High Potential Employee Development–HiPo for short. Ironically, the promise of HiPo programs has yet to be realized.
In theory, HiPo programs should work. Social science research supports the following statements:
Yet even though most can agree on HiPo’s parallel benefits to individuals and companies, the programs haven’t provided a competitive advantage or return on investment (ROI) to organizations. The average employer-sponsored HiPo program spends $3mm (source), yet 73% of high-potential programs fail to deliver desired business outcomes or ROI (Gartner, 2016), only 25% of company leaders deem them successful, and 82% HR leaders are dissatisfied with the results (source).
And what about the HiPos themselves? It’s not much better on the individual side. Forty percent of internal job moves made by high potential employees fail, and 46% of high potentials fail to accomplish business results in their new roles (Gartner, 2014). A study by Willis Towers Watson showed that over 70% of “high-retention-risk” employees leave due to a lack of future advancement in their current job (source). Harvard Business Review published a study showing that 75% of HiPos look for another job during their first year of employment and then typically leave the employer after 28 months due to a lack of both career development and access to mentoring and coaching (source).
This article’s authors are professionally focused on creating impactful human development solutions. We’ve both been considered HiPos at various points in our academic and professional careers, and we’ve both benefited and suffered from flawed HiPo processes. As a result, we believe that bringing the most insightful research to bear on HiPo program design will help the programs fulfill their promise as valuable change-makers for individuals and organizations.
Steve holds a PhD in Applied Performance Psychology, is the Founder of Long Training+Research, the developer of the Prosperity Trait(c), and is a consultant to the U.S. Air Force Academy’s pilot program. For the past forty years, Dr. Long has helped leaders reduce the variability between their performance and their potential by using behavioral psychology and scientifically valid psychometrics.
Francie is the Founder of Terawatt, an online marketplace for group coaching. Terawatt works within the Human Capital space, connecting vetted experts to employers looking to solve specific problems and achieve company-level results. The marketplace’s big insight: experts are more affordable when their cost is split by a group.
The first and most famous HiPo program began in 1956 when General Electric (GE), under Chief Executive Officer (CEO) Philip Reed, built the Crotonville Conference Center, a 60-acre employee development campus in Ossining, NY. In the 1980s, GE’s CEO Jack Welch used Crotonville as the centerpiece for his revamp of what had been a bureaucratic conglomerate into a stock market darling. Fast forward forty years later: in 2024 GE sold the Crotonville conference center, citing strategic changes in talent development, and the company split itself into three distinct businesses: GE Aerospace, GE Healthcare, and GE Vernova.
In many ways, the current state of HiPo programs mirrors the lifecycle of Crotonville. The underpinnings have true merit, and several leading 20th century companies, including 3M, Arthur Anderson, Boeing, and Deloitte, used them to achieve company goals. But the HiPo programs that were once the envy of the world are no longer cutting edge.
Why don’t our fathers’ HiPo programs work for us? A few reasons: Technology and its relationship to the economy are part of it, but mostly, we’ve learned so much in the past 40 years about people, teams, and workplaces. The new data, combined with some of the seminal psychological research, disproves much of the conventional wisdom regarding employees and the relationship of employee development to company results.
Steve and Francie, this article’s authors, believe we can realize the promise of HiPo programs by building on Crotonville’s key insights with the best social science insights on people and team dynamics. Let us walk you through our thinking and framework for fair, valuable, and sustainable HiPo programs.
Let’s dig in.
Around 1984 GE’s HiPo program at Crotonville solidified into an annual 3-week course offered only to GE’s highest potential managers, somewhere between 25 and 50 people. The curriculum used case studies based on actual GE problems, and the course covered the themes of excellence, ownership, quality, and facing reality. Crotonville’s rigid admissions process involved sign-off from multiple internal stakeholders, including CEO Jack Welch.
The world cared about Crotonville because of GE’s business success. With Welch as CEO, GE’s market capitalization rose from $13 bn to $600 bn, making GE the most valuable publicly traded company in the world in 2000 and turning Welch into a business superstar.
At the time, and even now, there’s no consensus on Welch’s tenure. Subsequent analysis of Welch’s time as CEO shows that GE’s increase in market capitalization was much higher than the increase in its revenue or profit and that the company’s margin decreased during his tenure (source). This data suggests that some of Welch’s legend can be attributed to the psyche of stock market investors rather than his insights into company management. In addition, many Welch critics charge that his only achievement was deep cost cutting. However you feel about Jack Welch and GE’s heyday, it’s important to understand how Welch connected Crotontonville to GE’s goals and success.
In his book, Jack, Welch enumerates the value Crotonville brought to GE, and the benefits of the HiPo program continue to ring true today. Crotonville’s activities helped GE to:
As we reflect on Crotonville, let’s keep in mind how different our world is today from the 1980s. GE was a leading 20th Century manufacturing company in an era when manufacturing was America’s growth engine. Managers of business units and industrial manufacturing plants were the employees winning the coveted spots at Crotonville. GE’s HiPos faced challenges managing assembly line workers, minimizing waste, and developing high margin industrial products as the lowest cost provider.
As of March 31, 2024, the five largest companies by market capitalization are Microsoft, Apple, Nvidia, Alphabet, and Amazon (source). All are United States-headquartered technology businesses and derive their market value from knowledge workers’ output, otherwise known as human capital, an insight made by the SEC in 2020 (source). This means that today’s stock market places the highest value on companies where innovation and human output thrive.
In order to create a 21st Century HiPo program, we need to draw on the best research regarding human experience. This article relies on data regarding what works best for knowledge workers from the following authors: Karen Arnold, Robert Rosenthal, Lenore Jacobson, Google, McKinsey, Captain, L. David Marquet, and our own proprietary research.
In their book Noise, Daniel Kahneman, Olivier Sibony, and Cass Sunstein report that General Mental Ability (GMA), organizational and industrial psychology’s preferred intelligence measurement, is required for highly complex jobs. The correlations between standardized test scores and job performance are in the .50 range, indicating a strong predictive value by social science standards. There are high-GMA people in lower-level occupations, but almost no people with below-average GMA among lawyers, chemists, or engineers. It should come as no surprise that high mental acuity is necessary for highly complex professions.
Karen Arnold’s Illinois Valedictorian study in 1993 followed 81 high-achieving high school valedictorians for 10 years following their high school graduation, and found that only 25% of the valedictorians were ranked at the top professional levels for their age after ten years. The remaining 75% fell back into the middle of the bell curve and some slid even further behind.
Further, research shows that expectations are just as accurate a predictor of success as ability rating and classification. Robert Rosenthal and Lenore Jacobson’s Pygmalion in the Classroom studied six grades of students that were randomly and secretly assigned to “fast,” “medium,” and “slow” reading ability classifications.
The researchers show that teachers’ perceptions created a Halo Effect where expectations affected student performance on report cards and IQ development.
A few examples:
Arnold’s findings combined, with Rosenthal and Jacobson’s data, teach us that while IQ or GMA matters for performance complexity, high performance isn’t an inherent trait, and expectations also matter a great deal. What would happen if high expectations were applied to everyone? The conclusion is that something other than IQ or GMA must account for “real world” success.
In 2016, Google allowed the New York Times to write about one of its key trade secrets. For years, the $2 trillion market cap company and internet pioneer had been searching for a throughline that connected its “best teams.” The piece does not define the phrase “best teams,” but we see two possible definitions: groups that created Google’s most profitable businesses, AdWords, Gmail, Google Maps, YouTube, and Google Play, and/or teams that demonstrated over time high productivity and low churn.
After four years of researching the connection, Google’s researchers identified a single attribute held by Google’s best teams: “psychological safety.” In other words, the company’s best performing teams didn’t share a physical location, an alma mater, or any of the other conventional wisdom attributes that typically function as short hard for “best.” The best performing teams allowed team members the freedom to explore, experiment, and ultimately fail without repercussions. Failure not only allows HiPos to develop their potential more fully but also activates their curiosity. This leads to further innovations and discoveries.
Google’s discovery is revolutionary because, up to this point, conventional wisdom had been that top performing companies resulted from the smartest people working together. This assumption is rampant within the literature on HiPo programs. It’s also connected to the now-debunked assumption that hiring individual star workers drive company level results (source, source and source).
McKinsey published a March 2023 report called “Performance Through People: Transforming human capital into competitive advantage” showing that of the 1,800 largest global companies, the best performers from the ten year period of 2010-2019 both developed their employees and demanded accountability. This top tier of the best performers achieved the highest return on capital, economic profit, upward mobility for employees, and revenue growth during the Covid pandemic.
McKinsey’s insight is that developing people, in concert with accountability, is linked to company results and financial success. This is important for the earlier generation, as it used to be conventional wisdom that developing people didn’t yield quantifiable company level results.
A Navy nuclear submarine captain, David Marquet, wrote an extraordinary book called Turn the Ship Around, where he discusses his success in flipping the traditional military command structure. In leading the USS Santa Fe for a year, Marquet replaced the typical “leader-follower” leadership structure with his innovation, the “leader-leader” structure.
Marquet found that giving employees closest to the problem more decision-making authority led to long term superior ship performance. Instead of giving orders, he writes at length about giving control. For example, he changed the reporting style so that officers would state their intentions with, “I intend to…” and his affirmative response would be, “Very well.”
Marquet cites the following metrics to demonstrate the Santa Fe’s results after one year of “leader-leader”:
Marquet’s results echo the findings of Google’s Rosenthal and Jacobson’s Pygmalion research: The individual and collective excel when individuals master a subject, become subject matter experts, and gain decision-making authority. The below quote strikes us as an apropos juxtaposition to GE and Crotonville:
“In our modern world, the most important work we do is cognitive; so, it’s not surprising that a structure developed for physical work isn’t optimal for intellectual work. People who are treated as followers have the expectations of followers and act like followers.”
Our key takeaway from Marquet’s book is that the leader-follower method of leadership, even though revered as the pinnacle of military efficiency, isn’t the only way to achieve success, and it wasn’t the winning strategy for the USS Santa Fe submarine in 1999. Combining the above research tells us that long term, quantifiable results do indeed come from trust, respect, expertise, and individual actualization.
Terawatt published a series of surveys comparing and contrasting the opinions of employee development stakeholders regarding professional development. One of the most interesting insights came from the 2022 report. It found that people who identified as Latino viewed their employers’ professional development programs as unfair at a much higher rate than their white peers.
This is valuable because it reminds us that the allocation of professional development still suffers from selection bias. Who gets selected to receive employer-sponsored support, and who is in charge of selecting participants? Anyone running a program to develop employees must actively work to avoid bias. The data also speak to the fact that seniority at a workplace is not necessarily correlated to ambition or drive, reminding us of the aphorism: “Talent is equally distributed, but opportunity is not.”
Dr. Stephen Long’s life’s work has been developing a response to Martin Seligman’s learned helplessness construct. Seligman demonstrated that clinical depression and related mental illnesses are a result of ineffective belief systems relating to the individual’s real or perceived control over situational outcomes. In other words, people with a high degree of learned helplessness don’t believe that change and growth are achievable for them, and that leads them to waste their inherent potential (Source). Curious about how athletes like basketball’s Michael Jordan and football’s Tom Brady, who had a notable lack of athletic success in high school, but improbably went on to be considered the greatest of all time in their respective sports, Steve sought to explain and re-create human performance.
Steve discovered how individuals can acquire a belief system to create consistent outcomes and prosperity. Building on Maslow’s Hierarchy of Needs and Walter Mischel’s Marshmallow Study, Steve created a psychological test called the Prosperity Trait Index© (PTi) that led to the discovery of a character trait found to be the human attribute responsible for value creation – The Prosperity Trait®. The PTi measures people’s belief systems that either lead to variability or consistency between their performance and their inherent potential, and it serves as an objective measurement for individuals to quantify their thinking. The lower the variability an individual can achieve, the greater the change in behavior and results.
Another way to understand the PTi is to think about Growth Mindsets and Fixed Mindsets (source). People who hold fixed mindsets are threatened by the Unknown Unknowns (also known as Inattentional Blindness), dismiss feedback, and are subsequently destined to continue to stagnate and exhibit variable performance. These people exhibit the same Learned Helplessness characteristics that Seligman described, wasting much of their potential.
Francie took Steve’s PTi assessment and received a score of 9 out of a possible 100 points. After working with Steve on her thinking patterns for six months, Francie scored a 99. Six months later, she scored a 97. Francie felt the PTi helped her seek out detailed feedback on her process, accept what she couldn’t control, focus on what she could control, and enjoy the reward of a job well done rather than look for outside validation.
PTi’s insight is that excellence can be taught, and the adoption of a growth-oriented mindset is available to everyone. All people, regardless of their starting point, can grow beyond what they and others believe is their limit.
Is it ethical to rank employees or offer some employees what others don’t get? Yes, as long as the differentiation is quantifiable and auditable. In other words, pattern-matching for candidates that fit the culture and other gut-driven criteria isn’t appropriate for NextGen HiPo.
Employees who work with their hands to produce physical items are typically referred to as “blue collar,” and employees who work with their minds to produce ideas or new products are typically referred to as “white collar” or “knowledge workers.”
In this article, we’re focused on HiPo programs for knowledge workers. We define knowledge workers as employees whose job requires them to spend at least 25% of their time using a computer and whose work product is not something that can be weighed on a scale. HiPo programs may be employed for a subset or all of an organization’s workers.
The authors believe there is an interesting case for blue collar HiPo programs, but that’s not the focus of this article.
Combining all of the above, we’ve developed a template to create an ROI-generating Nextgen HiPo program.
Steve holds a PhD in Applied Performance Psychology, is the Founder of Long Training+Research, the developer of the Prosperity Trait(c), and a consultant to the U.S. Air Force Academy’s pilot program. For the past forty years, Dr. Long has helped leaders reduce the variability between their performance and their potential by using behavioral psychology and scientifically valid psychometrics.
Francie is the Founder of Terawatt, an online marketplace for group coaching. Terawatt connects vetted experts to companies looking to solve specific problems and achieve company-level results. The marketplace’s big insight: experts are more affordable when their cost is split by a group.
By: Francie Jain, Terawatt & Eduardo Villegas, PCC
Less than a month from now, in April 2024, we’re expecting the U.S. Securities and Exchange Commission (SEC) to announce new human capital disclosure requirements. We’ll be curious to learn how the SEC views key workforce risks for publicly-traded companies. But more importantly, the very fact that these regulations now exist marks the beginning of a shift for anyone who works in, with, or adjacent to Human Resources (HR).
This article’s authors, Eduardo Villegas and Francie Jain, haven’t seen much commentary about the impending SEC Human Capital disclosures in HR-specific, popular, or even social media, but they believe it should be easy for all people, not just accountants, to understand the new disclosures and their possible ripple effects.
If we can envision so much change, why is no one talking about the impact of the human capital disclosures? Maybe we’re the ones we’re waiting for! Eduardo and Francie decided to write this article to inform business people everywhere about the short and long-term implications of the new SEC Human Capital disclosures.
Eduardo is a former CFO who worked for a multinational pharmaceutical company for over 25 years in Latin America, South Asia, and the U.S. He transitioned to executive coaching to help leaders expand their perspectives in order to amplify their influence.
Francie is the Founder of Terawatt, an online marketplace for Human Capital solutions. Terawatt connects vetted experts to companies who’re looking to solve specific problems and achieve top-tier company-level results.
We’ve arranged this article into three sections. Let’s dig in.
At the bottom of the article, we provide a summary of our discussion as well as links to resources mentioned throughout the article.
What are the new Human Capital SEC disclosures and why are they important?
Within accounting, there’s a concept of intangible assets, defined as non-physical assets with a monetary value. This is in contrast to physical assets with a value, such as an office building or an investment security like a bond. Examples of intangible assets include copyrights held, goodwill (the difference between the book and sell-value of your company), or patents, and U.S. exchange-traded companies must disclose and value them. Over the years, a lesser-known intangible asset, Human Capital, has seen increased U.S. and international interest from regulatory bodies, academics, pensions, think tanks, and unions.
In 2020 the SEC announced their first disclosure requirements for material Human Capital risks. (In this context “materiality” is defined as 1-10% of a company’s value.) Human Capital disclosures are intended to make it easier for outsiders to understand company relationships with their employees, whether the relationships lead to value-creation or destruction, and how these relationships position a company relative to its peers. Before the human capital disclosure rule was announced, there was no requirement. Publicly-traded companies were able to decide for themselves whether human capital should be reported in its company filings.
In our minds, the SEC’s Human Capital disclosure rules are exciting because we expect them to ultimately lead to best practices sharing and insight into company values. Once companies report on human capital, meaning when they discuss in paragraph form, via a line item on their income statement, or via financial metrics, we’ll better understand that company’s priorities and values. Instead of just saying, “employees are our greatest asset,” companies will show us their values through how they spend money, hire and retain employees, etc.
The other reason this change is noteworthy is that it’s likely to trickle down to private companies. Take the precedent of Sustainability & Environmental reports. Many groups have long argued about the importance of understanding publicly traded companies’ relationship to the environment and the related risks. Because of the broad stakeholder interest, 90% of the companies on the S&P 500 publish voluntary sustainability reports, source here. And in Terawatt’s polling, we’re seeing similar numbers among private companies. We contend that, similar to Environmental & Sustainability, Human Capital will become commonly reported.
Some observers note that while there is indeed near universal environment reporting, but the content of the reports varies widely, and for many companies the reports are more akin to marketing without any quantification of risk. Just now (early March 2024), the SEC announced Sustainability disclosure requirements, creating more structure and uniformity in how companies disclose environmental risks.
The Oxford Dictionary defines Human Capital as: “The skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country.”
The SEC defines Human Capital as: “Human capital can be considered the collective knowledge, skills, and experiences of the workforce that powers economic growth.”
Since 2017, the SEC has been collecting public comments and recommendations on how publicly traded companies should disclose Human Capital management policies and performance. A range of stakeholders, investors, unions, academics, and more, have been making the case for years that publicly traded companies should be more transparent about their relationship with their employees. You can read all of the public comments here.
“It’s just time to acknowledge that people are not widgets.”
– Former SEC Chairman Jay Cayton (8/26/2020)
In 2020, the SEC announced the requirement of human capital disclosures for the first time. Former SEC Chairman Jay Clayton, mandated that publicly-traded companies must describe all material Human Capital resources, measures and objectives.
In the August 2020 announcement, the SEC didn’t specify how companies must report these resources, measures and objectives, but rather it gave companies broad discretion to convey what they considered material and important for investors to know. So for the past four years, companies have enjoyed a lot of discretion as they met this requirement.
We’re seeing the SEC get more specific about the kind of disclosures that are required. In September 2023, the SEC’s Investor Advisory Committee (IAC) voted to support a recommendation that publicly-traded companies disclose specific information related to their human capital management practices in their annual 10-K filings. We’ll be interested to see how the final disclosure requirements relate to the IAS recommendations.
The IAC recommended the following Human Capital disclosures:
In John Deere’s 2023 Annual Report, known as the 10-K, the company’s Income Statement line item of Sales, General & Administrative (SG&A) did not break out Human Capital as a separate line item.
In John Deere’s Business Section, written in paragraph form, the company devoted 17 paragraphs to Human Capital and noted its corporate motto of, “We run so life can leap forward” inspires its workers. It went on to speak about training employees on this code of conduct, having employees certify their code of conduct training, and the use of a scorecard to measure and innovate on worker safety. The company also noted that it supports 13 Employee Resource Groups (ERGS) and recruits employees from a diverse set of colleges, universities, and associations.
Very few risks were mentioned nor was there much mention of non-risk items beyond the ERGs and recruiting. The one risk that caught our attention was John Deere’s reporting of a lack of guarantee to renew collective bargaining agreements. 34% of its U.S. employees are covered in collective bargaining agreements, so this is surely material.
The two metrics discussed in the Human Capital business section are related to worker safety and injuries. The company noted A) a total recordable incident rate of 2.08 and B) a lost time frequency rate of 0.65.
For all of our excitement about what could be in the Human Capital discussion section, John Deere’s Human Capital discussion left us wanting more.
Questions we had:
When former Chairman Jay Clayton announced the new Human Capital disclosure rule, he cited a 300% increase in human capital over the past 30 years. Modern companies acknowledge that their successes and failures are due not only to strategy and market conditions, but also to their employees’ contributions.
To put this statistic into greater relief, Ocean Tomo published research (below chart) showing 90% of the S&P 500’s market value of S&P 500 comes from intangible assets, which for most companies is Human Capital. In other words, in the 1980s and before, the majority of a company’s value was derived from physical assets like real estate and machinery. But in the information age, company value is derived from employee contribution.
Ocean Tomo's Intangible Asset Value Market Value Study (2022)
“The proposed rules would require disclosure about a registrant’s workforce and compensation policies, practices, and workforce stability.” – Gary Gensler (April, 2021)
We believe the following people will find the SEC’s Human Capital reporting valuable and may experience a meaningful change in their work:
Additionally, we can imagine that work will change as a result of the new SEC Human Capital disclosures. As these standards mature, we anticipate the following internal changes:
The new SEC Human Capital disclosures obviously impact the Finance and Human Resource departments, but they less obviously affect all of the other company departments. As a result, we expect to see changes in the way that HR makes decisions and how many stakeholders are involved in those decisions. Plus, we contend that most medium and large-sized private companies will begin reporting on Human Capital topics in the coming years.
How can we effectively measure the value of an organization’s Human Capital?
For many private companies, Human Capital will be treated the same way as the environment and sustainability–a chance to discuss and put metrics to a company’s values and priorities. Plus, any privately-held company preparing for an IPO will start to test metrics and a narrative message that aligns with company strategy.
Intuitively we can agree that engaged employees are more efficient than disengaged employees, we want resilient rather than feeble teams, resourceful rather than unresourceful, inspired versus apathetic, and solution-oriented employees are more effective than task-oriented employees.
The good news is that in the past twenty-five years there’s been ample research proving what we suspect about company outcomes for those that support professional development. Below is a list of some of our favorite data relating to the business impact of Human Capital investment.
When we discuss “Human Capital” in this article, also sometimes referred to as “Human Asset Accounting” or “Human Resource Accounting,” we are referring to an organization’s workforce. We are not discussing the value or measurement of a human. Rather, “Human Capital” refers to the value employees and their work bring to their employer’s operations, profitability, and innovation. In our minds, the best rule of thumb for understanding Human Capital is the collective impact an organization’s employees have on the company.
Within finance, metrics are a commonly-used tool to simplify and standardize information and report on relationships. Right now Human Capital metrics are not part of SEC’s recurrent disclosure requirement, but it does appear there’s growing consensus on the most appropriate financial metrics that companies should use. As of this writing, we don’t know if the below metrics will ultimately gain a consensus view, but it’s worth noting which financial relationships one large asset manager thinks are the most important for understanding human capital risks.
Schroders Asset Management published a set of key Human Capital Metrics via a publicly available report called, Schroders Human Capital Management Research Summary, link here. Below are their four key metrics, along with definitions. To delve deeper into the calculations, please refer to the report.
HCCF- Human Capital Cash Flow “Provides the cost of Human Capital, both immediately and over the long run on a fully-loaded basis. This gives us an understanding of the total investment cost of a firm’s Human Capital.”
HCROI – Human Capital Return on Investment “Explains the fully costed return on monies spent investing in people. This represents the leverage on pay and benefits used to identify the benefits of Human Capital management.”
EEVA – Employee Economic Value Added “Estimates the value employees derive from working at a given organization, adjusted for approximate corporation tax. Used to compare against economic value added to proxy gain-sharing between labor and capital.”
ROPACE – Return on People Adjusted Capital Employed “Allows for the adjustment of Balance Sheet, Profit & Loss (P&L) and Cash Flows to reflect Human Capital as an asset. Allows us to see a fully-loaded return on all types of Human Capital cost, including carving out employee “expense” versus “investment.”
Chief Executive Officers (CEO) determine broad company goals, and HR leaders translate those goals into processes and budgets. This is typically how People-related work has flowed inside companies. Now that Human Capital resources must be reported, it strikes us that there are two decision-makers involved in Human Resources: Finance and the HR Departments.
We can imagine a world in which the Finance Department will be a participant in translating company goals into HR action. In fact, we can’t imagine a scenario where Finance won’t want to be involved in some of the HR decisions.
No matter how exactly the responsibilities shake out, it’s clear to us that going forward HR and Finance will work together to determine the most impactful Human Capital processes. HR leaders are steeped in the research of supporting people, and they can translate goals into action. Some of the more statistically-gifted HR leaders may already have information on the relationship of inputs, effects and interventions they can bring to conversations with the Finance Department.
Do CFOs agree with our ideas? Terawatt is currently conducting a survey on how CFOs view Human Capital, and one of the questions we ask them is how they believe Human Capital operations should be handled. Once we have the CFO perspective on the best way forward, we’ll share with you.
As we move from traditional shareholder capitalism (focused solely on profits and dividends) to stakeholder capitalism (focused on serving all shareholders and society), we see this responsibility spreading to more internal leaders with an emphasis on a new actor: the CFO.
We can envision a host of related articles:
2020 G&A Institute Flash Report
https://www.ga-institute.com/russell-1000.html
Since 2017, the list of comments regarding human capital submitted to SEC
https://www.sec.gov/comments/4-711/4-711.htm
2020 SEC announcement on Human Capital
https://www.sec.gov/news/public-statement/clayton-regulation-s-k-2020-08-26
2024 SEC press release on Climate Related Disclosures
https://www.sec.gov/news/press-release/2024-31
John Deere 2023 10-K
https://www.sec.gov/ixviewer/ix.html?doc=/Archives/edgar/data/0000315189/000155837023019812/de-20231029x10k.htm
Ocean Tomo chart of human capital as a percentage of market value
https://oceantomo.com/intangible-asset-market-value-study/
Introduction to Sustainability Reporting What is Sustainability Reporting? – ESG | The Report
https://www.esgthereport.com
Shroders Human Capital Management Research Summary’s human capital metrics
https://www.schroders.com/en-us/us/institutional/insights/human-capital-management-research-how-people-are-our-greatest-asset/
The McKinsey Global Institute Research on the company effects of employee professional development
https://www.mckinsey.com/mgi/our-research/performance-through-people-transforming-human-capital-into-competitive-advantage#/
Conference Board research on Human Capital investment
https://www.conference-board.org/topics/human-capital-benchmarking/accelerating-value-by-using-HCA
Jack J. Phillips, published in Handbook of Training Evaluation, (1994) cited by Anne Bartel in 2000
https://www0.gsb.columbia.edu/faculty/abartel/papers/measuring_employer.pdf
Dr. Lauri Bassi, Training return on investment
https://www.mcbassi.com/documents/HCMPredictsStockPrices.pdf and https://hbr.org/2004/03/hows-your-return-on-people
SEC’s expected clarification on Human Capital, April 2024. Exact date TBA
Eduardo Villegas, PCC
Mission – Eduardo Villegas Oficial
Eduardo’s vision is expanding the perspective of leaders, from first-time managers to C-suite executives, to amplify their positive impact. After 25+ years of international corporate exposure leading finance teams, he transitioned to a full coaching practice focused on leadership.
Eduardo was born in Caracas and has an accounting degree from Universidad Nacional Abierta in Venezuela, a master’s degree in Economics from Universidad Francisco Marroquin in Guatemala, and finance and leadership executive training at Harvard, Tulane, and Boston University Schools of Business. Eduardo is a Professional Certified Coach by the ICF.
Francie Jain, Terawatt
Francie believes supporting people to achieve their potential creates a ripple effect in every community. After a career in alternative asset marketing, she became obsessed with professional development for individuals. She founded Terawatt to make it easy to be great.
Francie earned an AB from Princeton University and an MBA from The University of Chicago Booth School of Business.