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Predicting Financial Performance with Human Capital Metrics

Updated: Apr 12, 2021

Organizations state that employees are their most valuable asset,and, for most organizations, the workforce is also their single largest expense. Today however, organizations provide little or no human capital information to investors or the public. While the SEC require extensive disclosure regarding traditional major assets such as financial, physical, and technological and intellectual property, no clear disclosure of human capital disclosure is required.

This creates two significant issues: First, and perhaps most alarmingly, there is a transparency issue when publicly traded organizations fail to adequately disclose human capital information. Second, this lack of disclosure obscures a company’s talent management effectiveness, making it more difficult for investors to identify long-term sustainability risks.

Today, when it comes to evaluating an organization’s human capital, organizations are free to make unsubstantiated talent claims regarding productivity, training and innovation. They are not required to substantiate those statements with facts or data. See HCMI’s whitepaper, “Power from the People”, for more information.

However, these times may be changing fast. HCMI has identified a handful of human capital metrics that actually predict financial and stock performance better than traditional financial metrics. These results remain consistent across industries and over multiple periods of economic change. Unbelievable? It is actually more shocking that these metrics are not leveraged by the investment community, and companies are not required to report them.


Presentation Slide Deck

View the Predicting Financial Performance with Human Capital Metrics webinar slides HERE.


Grant Cooperstein - VP of Analytics, HCMI


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