News Analysis: More Voices Call for Investment In Human Capital
Highly respected Barrons magazine publishes a list of the “100 Most Sustainable Companies,” adding more ammunition for investments in human capital; a New York Times op-ed piece argues that companies should use the proceeds from tax cuts to invest in human capital.
What should public companies do with at least some of their tax savings? The pressure grows for greater investment, not just in employee bonuses, but in human capital. In early February, the highly respected Barrons financial weekly published its first “100 Most Sustainable Companies” report showing that organizations that focus on their human capital significantly outperform the stock market in share price performance. This comes on the heels of the release, by its sister financial publication, of the "Wall Street Journal Top 250" in December, compiled by the Drucker Institute based on ratings of customer satisfaction, employee engagement and development, innovation, social responsibility, and financial strength. (See ESM: Drucker Institute and Wall Street Journal Use Similar Methodology as EEA to Score Best Companies).
These are the latest indices to support the numbers generated by the Enterprise Engagement Alliance’s Engaged Company Stock Index (ECSI), produced by human capital analytics firm McBassi & Co. based on its Good Company Index. The ECSI has outperformed the S&P 500 by almost 40% since it was created over five years ago in October of 2012. These indices focus not only on human resources such as employees, but also customers, distribution partners, vendors and communities.
These articles come on the heels of BlackRock CEO Larry Fink’s latest annual letter calling for public companies to “not only deliver financial performance, but also show how [they] make a positive contribution to society…benefit[ing] all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate,” as reported in Barrons.
The Barron’s index, created by Calvert Research and Management, an established “sustainable” investor, rated companies based on over 300 performance indicators, including focus on “shareholders, employees, customers, planet, and community. The shareholders category included items like accounting policies and board structure; employees, workplace diversity and labor relations; customers, business ethics and product safety; planet, greenhouse-gas emissions; and community, human rights along the supply chain.”
The 100 top companies reportedly returned 29% growth to shareholders versus 22% for the S&P 500. Note that the "Wall Street Journal Top 250" selected companies based on customer satisfaction, employee engagement and development, innovation, social responsibility, and financial strength.
In a recent New York Times op-ed piece entitled “How CEO’s Should Spend Tax Cuts,” Richard C. Levin, former President of Yale University and Coursera, an online training program, argues that overlooked in the discussion on how to spend tax cuts is the “large potential benefits for every company and for the nation as a whole [of] investing in human capital. Lost in the noise was Boeing’s announcement that it will spend $100 million on work force development, training and education, and Disney’s investment of $50 million to cover tuition payments for hourly employees.”
Strongly advocating the use of online training to reach what he says are the “99% of employees without access to serious training beyond company policies," Levin insists “The need to invest in people has never been more pressing. Technology is both destroying and creating jobs, and with the advent of artificial intelligence…if the country is to remain competitive it needs to invest in people to ensure that the high-skill jobs remain here.”
These calls for a more strategic investment in people across the organizations come just when ISO, creators of the world’s leading guidelines on quality management, have published standards providing a systematic, balanced and auditable approach to investing in human capital that looks at all of an organization’s audiences, and at all the ways to engage and equip people—not just training. The ISO 9001 and ISO 10018 Quality People Management standards include a clear roadmap to a systematic approach to human capital investment to achieve measurable organizational goals, and the draft ISO 30414 Human Capital Reporting guidelines provide a means to disclose them.
To learn more about ISO 9001 and ISO 10018 Quality People Management Standards, as well as other key areas of engagement, attend EngagementWorld.org, May 7-9, in Galveston, TX.
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