New ISO Reporting Standards Could Include Engagement

An ISO standard on Human Capital Reporting under development will likely include standards for the disclosure of Employee Engagement. Dr. Stefanie Becker, ISO convener for Working Group 7, known as Human Capital Reporting for Internal and External Stakeholders, says that, “Yes, of course, the standards will include engagement as well as disclosure of metrics on engagement. Whether you use the word commitment, motivation, or engagement, it’s a very important factor in human capital.”

Becker is Associate Professor at Saarland University Department of Business Administration, focusing on Human Resource Management, Organizational Behavior and Information Management (see previous ESM interview with Becker).

Designed to Benefit All Organizational Sectors

According to Becker, the objective of the standards is “to consider and to make transparent the human capital contribution to results. Human capital reporting strengthens the sustainability of the workforce for business continuity. It will establish a common understanding of how to benchmark human capital information (intangibles) at a global level across relevant peer groups.” She says the standards will apply both to public and private companies, large and small, as well as to any other type of organization for which human capital can affect results.

This ISO standard is planned as an “educational guideline” and is voluntary, Becker explains. In the end, the national standardization institutes of each country will decide if they wish to adopt it. For Germany, Becker hopes that the international standard will be accepted and that all types of organizations will report about their human capital investment and outcomes in a standardized way. She also believes it will be useful to those public investors seeking a consistent way to compare organizations in specific industries, regions, or by size. She says that the topic is not only relevant to investors, but also to all stakeholders in any organization, including employees, customers and the surrounding community: “We try to look at the impact for all stakeholders, not only investors. There are many other stakeholders who can benefit, especially when applied to the government sector.”

Engagement Critical to HCM

Becker notes that engagement is a critical factor in the arena of human capital management. “It’s important to connect engagement activities such as leadership training and development, communications, learning and more so that there is a tangible benefit to the organization," she says. When asked about the role of customers or other organizational partners, such as distributors or vendors, Becker admits that these factors are important, but that the focus of the standards were specifically related to human capital management, defined as an organization’s employees.

Although the standards are still in the works, Becker says they address the following key areas, meaning that organizations seeking to adhere to ISO best practices will demonstrate activities and metrics related to:

Availability: This refers to information about the total resource pool available, including fulltime equivalents, head count, any external workforce and contingent employees, who have a direct influence on the outcomes of an organization.
Compliance: Consistent compliance with laws and internal policies is a major challenge for all types of organizations.
Costs: Costs of employees are one of the most critical factors for human capital management, with a direct influence of the earnings or value proposition of an organization. For investors, for instance, it is useful to correlate costs-per-employee with profitability.
Diversity: This provides information about the number of employees and their demographics, including ethnicity, age and gender.
Leadership: The quality and sustainability of executive leadership has a strong impact on the results of an organization. Metrics within this area track the process of identifying and developing leaders.
Occupational health and safety: The standards will include disclosure of investments in health and safety issues for an organization’s people.
Organizational culture: The area of organizational culture concentrates on the working environment. A bad working environment has consequences on the retention, the commitment, the engagement, the absenteeism rate, and therefore an (indirect) influence on corporate performance. These standards will include engagement survey results.
Productivity: This is evaluated on the basis of indicators such as turnover per employee, earnings per employee and human resources-related return on investment.
Recruitment, mobility, turnover: This category describes the ability to maintain or support an activity or process with an adequate workforce over the long-term.
Skills and capabilities: The level of relevant knowledge and the correct use of this knowledge is a very important competitive advantage of each organization. Therefore, information about skills and capabilities of an organization’s people is crucial for performance.