EEA Releases First Draft Ratings on Human Capital Reporting
As part of its commitment to promoting more meaningful human capital reporting, the Enterprise Engagement Alliance recently announced a rating system for summarizing and evaluating the reports of any type of organization. The EEA is providing the reporting service both for investors and organizations seeking to enhance the value of their human capital reporting. To test the ratings process, the EEA randomly selected the reports from Macy’s and Micron Technology, which were recently brought to our attention. These were created to gather input from ESM readers and the Enterprise Engagement Alliance’s advisory board.
- Basis for Evaluation
- Ratings Criteria
- Scoring Methodology
- Micron Human Capital Report
- Macy’s Human Capital Report
Many organizations with good intentions have begun to publish Corporate Sustainability or Responsibility Reports that include human capital reporting. The challenge is that there is no consistency from organization to organization either in the topics covered; the way information is disclosed, or the metrics used. To help organizations create reports of greater meaning to investors and other stakeholders, the EEA recently announced a Corporate Sustainability Report grading process to help organizations and their stakeholders gain actual value from these reports. See ESM: EEA to Launch Ratings on Human Capital Reports.
The Human Capital Reports of Macy’s and Micron were chosen randomly to test the framework. The EEA plans to have an award program to highlight the most comprehensive reports. Individuals who would like to make suggestions or organizations seeking to have their Corporate Sustainability Reports rated can submit them to Bruce Bolger at Bolger@TheICEE.org.
Using the topic framework of already existing ISO 30414 Human Capital Management and ISO 10018 People Engagement standards, and whichever metrics an organization selects to use for reporting purposes, the EEA Human Capital Reporting rating seeks to promote consistency in organization, presentation, content, and accountability in Human Capital Reporting to make them more useful for stakeholders and to reduce the amount of work for organizations involved with responding to requests from multiple stakeholders for human capital information.
Basis for Evaluation
For a small fee, organizations can submit their human capital reports for evaluation based on the methodologies and metrics used to manage human capital, including employees, customers, supply chains, and communities; the critical human capital issues covered in their reports, metrics used, and who is accountable. Reports are evaluated and rated based on the human capital topics addressed in the reports; specificity of strategies and methodologies disclosed to achieve articulated goals and objectives, the metrics used to measure progress, and who is accountable. Organizations with qualifying reports will receive a logo they can post on their reports and will be featured in a searchable database on a web site of TheEEA.org. (Those whose reports fail to achieve a positive will not be published until the organization has addressed the gaps and wishes to receive a formal rating.)
Topics covered in the evaluation include:
1. Leadership
2. Compliance
3. Costs
4. Diversity Inclusion
5. Occupational Health and Safety
6. Organizational Culture
7. Productivity
7. Productivity
8. Recruitment, Mobility and Turnover
9. Employee Bench Strength
10. Skills and Capabilities
11. Workforce Availability
12. Customer Engagement
13. Supply Chain Engagement
14. Community Engagement
Ratings Criteria
Each Corporate Sustainability or Human Capital Report is rated based on:
• The clarity of organizational purpose and definition of stakeholders.
• The percentage of topics covered in a thorough manner.
• The specificity and comparability of metrics reporting, i.e. ISO, GRI, SASB, UN, IFRS Foundation, etc. or an internal process that can be succinctly explained and is auditable. (The EEA ratings do not dictate the use of one reporting framework over another.)
• The explanation of tactical methodology to encourage stakeholder engagement consistent with the topic categories of the ISO 30414 Human Capital reporting and ISO 10018 People Engagement standard, which together include all stakeholders, customer, supply chain, and community engagement, as well as employees, volunteers, or others.
• Accountability—who oversees the process and how are processes baked into the culture?
Scoring Methodology
• Methodology Point Score—0 points are assigned for no methodology information provided for a topic; 1 point is assigned for a basic summary information of specific programs or methods; 2 points for explaining how these methodologies support overall organizational goals.
• Metrics Point Score--0 points are assigned for no metrics provided; 1 point is assigned for a basic metrics (input data related to costs or basic demographic or related information); 2 points for advanced metrics related to outcomes or alignment with organizational objectives.
A perfect score is 56. Because Human Capital Reporting is in its infancy and different and because different stakeholders have different priorities, the EEA is not providing “grades” during 2021 at least. In 2021, companies that score at least 30 points earn a positive rating.
Micron Human Capital Report
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Click here for the report and to access the PDF of the report referenced in the score sheet below.
Micron Technology provides many details in the human capital portion of its overall Corporate Sustainability Report covering nine of the 14 recommended disclosure topics. The report is detailed on methodologies but provides much less in terms of actual metrics disclosed or associated with results or organizational objectives.
• The report lacks information on costs; productivity; recruitment, mobility, and turnover; employee bench strength; workforce availability, and customer engagement.
• The report could provide more metrics related to the level of diversity and inclusion (participation of different demographics in organizational initiatives) as well as mobility.
Metrics Reporting
• Micron provides the following information and metrics on its people practices; 2019–2020 FTSE 4 Good Index Constituent (FTSE Russell); 2019–2020 Certified Great Place to Work; 2020: Best Employers for Diversity (Forbes); 2020: America’s Most Responsible Companies (Newsweek); 2020: Top 100 Global Innovators.
• It uses the SASB and GRI reporting frameworks.
Micron Technology 2020 Corporate Sustainability Report—EEA Score: 28
| Category | Methodologies | Metrics | |
|---|---|---|---|
|
1. Leadership
|
Yes |
The report provides a clear vision for the organization; largely links activities to organizational vision and addresses current risks. See page 59. Score: 2 |
It provides metrics in conformance with both GRI and SASB.
See page 69.
Score: 2 |
|
2. Compliance
|
Yes |
The report provides extensive information addressing compliance issues.
Score: 2
|
Uses GRI and SASB disclosures.
See page 81.
Score: 2
|
|
3. Costs
|
No |
There is no information related to human capital costs.
Score: 0
|
No specific metrics related to costs.
Score: 0
|
|
4. Diversity Inclusion
|
Yes |
Micron provides extensive information on its DEI practices as it relates to employees and the supply chain. See page 62 for employee diversity and page 56 for supplier diversity.
Score: 2
|
Basic diversity metrics are provided by ethnicity, gender, and region.
See page 63.
Score: 1
|
|
5. Occupational Health and Safety
|
Yes |
Micron provides details on its safety and wellness methodologies. See page 65.
Score: 2
|
Some basic metrics are provided on accident rates. See page 65 and 66.
Score: 1
|
|
6. Organizational Culture
|
Yes |
The report defines the culture and the methods used to support it, with employee engagement information also provided.
Score: 2
|
Some basic metrics are provided on employee engagement.
See page 61.
Score: 1
|
|
7. Productivity
|
No |
The report provides no analytics or references as to how the company manages people costs or measures the results of people management activities.
Score: 0
|
There are no metrics Human Capital ROI or Human Capital Value Add, other or key metrics.
Score: 0
|
|
8. Recruitment, Mobility and Turnover Recruitment, etc.
|
No |
The report providers little information on recruitment.
Score: 0
|
No metrics are provided on mobility and turnover.
Score: 0
|
|
9. Employee Bench Strength
|
No |
The company provides information on its training and development activities for talent.
Score: 1
|
No metrics are provided relative to bench strength.
Score: 0
|
|
10. Skills and Capabilities Skills, cont.
|
Yes |
The report provides details on its variety of professional and development efforts and objectives. See page 69.
Score: 2
|
Basic information is provided on training hours.
See pages 69 and 70.
Score: 1
|
|
11. Workforce Availability
|
No |
The report does not provide information on this issue.
Score: 0
|
No metrics are provided.
Score: 0
|
|
12. Customer Engagement
|
Yes |
The report addresses customer issues in its Products and Services section but does not provide metrics.
Score: 1
|
No metrics are provided.
Score: 0
|
|
13. Supply Chain Engagement
|
Yes |
The report provides extensive information on supply chain management practices. See page 42 and page 56 for supplier diversity. Score: 2 |
Some information is provided on supply chain diversity and inclusion efforts and metrics.
See page 41.
Score: 1
|
| 14. Community Engagement | Yes |
The report provides extensive information on community engagement activities aligned with organizational purpose and needs.
See page 73.
Score: 2
|
The report provides metrics on expenditures on different types of charitable and community support programs.
Score: 1
|
Macy’s Human Capital Report
Click here to access the Macy’s Human Capital Report.
Macy’s EEA Score -- 22
Macy’s provides detailed reporting on some methodologies related to its human capital practices. The report provides good information on DEI issues based on SASB reporting metrics, as well as employee engagement survey data, but it does not provide much metrics on other workplace issues, including accidents, productivity, turnover, or lawsuits, or issues related to store closings and layoffs. The report does not include information on customer engagement practices, nor information related to compliance issues, workforce productivity, or costs.
Areas for improvement:
• Include more candid discussion of current affairs related to layoffs and store closings.
• Include more information on customer engagement, workforce productivity, costs, and compliance.
• Provide more data on key human capital analytics related to productivity, willingness to refer, as well as relative levels of engagement by gender, race, ethnicity, and age.
• Provide more explanation of metrics as well as more results-oriented metrics.
Metrics Reporting
Macy’s uses some SASB metrics but otherwise does not provide fully transparent metrics.
Macy’s 2020 Corporate Sustainability Report—EEA Score: 22
| Category | Methodologies | Metrics | |
|---|---|---|---|
| 1. Leadership | Yes |
The report provides details on the Macy’s culture, values, and the methods by which it develops talent. It does not specify who is specifically accountable. The report addresses issues related to Covid but makes no mention of its store closings and layoffs.
Score: 1
|
Measures include results of employee engagement surveys.
Score: 1
|
| 2. Compliance | No |
No information is provided.
Score: 0
|
Score: 0 |
| 3. Costs | No |
No information is provided.
Score: 0
|
Score: 0 |
| 4. Diversity Inclusion | Yes |
The report includes information on the methods by which it includes DEI into stakeholder engagement processes, including employees, customers, supply chain, and communities.
Click here for information.
Macy’s also publishes a separate report on supplier diversity with detailed information on practices and statistics.
Click here for the report.
Score: 2
|
The report provides basic information on workforce composition based on SASB standards. The supplier diversity report provides more extensive information.
Score: 1
|
| 5. Occupational Health and Safety | Yes |
Provides detailed information on safety processes for customers and employees.
Click here for information.
Score: 1
|
No clear metrics are provided on outcomes.
Score: 0
|
| 6. Organizational Culture | Yes |
The report provides extensive information on the organization’s culture and values. It provides information on how it connects culture and values to performance. Provides measures on employee engagement based on SASB framework.
Click here for information.
Score: 2
|
Some basic metrics are provided related to engagement in the organizational culture.
Score: 1
|
| 7. Productivity | No |
The report contains no information on productivity or related measures of workforce efficiency.
Score: 0
|
No metrics provided.
Score: 0
|
| 8. Recruitment, Mobility and Turnover Recruitment, etc. | No |
The report provides details on recruitment and total rewards strategy.
Score: 1
|
No metrics provided.
Score: 0
|
| 9. Employee Bench Strength | Yes |
The report provides methodologies related to workforce structure and design.
Score: 1
|
No metrics provided.
Score: 0
|
| 10. Skills and Capabilities Skills, cont. | Yes |
The report provides information on its learning and development programs at all levels of the organization.
Click here for more information.
Score: 2
|
Some metrics provided in workforce engagement in these programs.
Score: 1
|
| 11. Workforce Availability | Yes |
The report provides basic information on skills and leadership training.
Score: 1
|
No metrics.
Score: 0
|
| 12. Customer Engagement | No |
There is no substantive information on customer engagement.
Score: 0
|
No metrics provided.
Score: 0
|
| 13. Supply Chain Engagement | No |
A separate report provides details on its supply chain management principles, including DEI.
Click here for information on overall supplier policies.
Click here for information on supplier diversity.
Score: 2
|
Macy’s provides basic information on supply chain compliance and more detailed information on supplier diversity and economic impact.
Score: 1
|
| 14. Community Engagement | Yes |
In a separate report, Macy’s provides details on its community development efforts.
Click here for information.
Score: 2
|
Macy’s provides details on the value of its contributions and time and money donated.
Score: 2
|
For More Information
Bruce Bolger
Founder, CEO of the Enterprise Engagement Alliance
914-591-7600, ext. 230
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