Summit on Workforce Valuation and Performance

May 11-12, 2023

Welcome!

WiFi: Mguest (open)

Thank you to our magical staff

• Annaliese Fowler

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• Haley Phillips

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• Ruedee Vance

Our planning committee

• Cambria Allen Ratzlaff (Human Capital Management Coalition)
• Jerry Davis (Michigan Ross, Management)
• Diane Burton (Cornell ILR, Human Resource Management)
• Colleen Honigsberg (Stanford Law)
• Heidi Packard (Michigan Ross, Accounting)
• Ethan Rouen (Harvard Business School, Accounting)

Note: Chatham House Rule applies! (What happens at Ross stays at Ross!)

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When a meeting, or part thereof, is held under the Chatham House Rule, participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed.

Our aspiration: “How might we improve the accuracy and usefulness of our workforce data to better support decision-making and good jobs?”

Aug 2020

SEC Final Reg S-K Rule Release

The Human Capital Management Coalition (HCMC or Coalition) is a cooperative effort among a diverse group of asset owners representing $9TT+ in assets to assess how workforce management drives company valuation and performance.

It is the only group run exclusively for the owners and providers of capital to engage the investment community, companies, and other market participants to understand and improve how human capital management contributes to the creation and protection of long-term shareholder value.

Where it went…

The rise of the human capital firm

The increasing prevalence of loss-making firms among public companies

Proposed grid disclosure for workforce investments

Why? Cf. Apple’s highly informative “Human Capital” disclosures for 2022

What could we do if we had better data?

Challenging times in the labor market

Challenging times in the labor market

Challenging times in the labor market

Challenging times in the labor market

Challenging times in the labor market

Challenging times in the labor market

Challenging times in the labor market

This Afternoon’s Agenda

Where are we now? What workforce data are available from corporate disclosures, government mandates, private vendors?

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What are our aspirations? Who are the stakeholders for this conversation? What do they need?

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What can new tools and new methods of analysis reveal? How should this shape future data?

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Curated conversation with economists, lawyers, accountants, data analysts, HR gurus: �“How might we improve the accuracy and usefulness of our workforce data to better support decision-making and good jobs?”

CONGRATULATIONS

WORKFORCE DISCLOSURE RESEARCH GRANT AWARDEES!

• Shiva Rajgopal and Steve O’ Byrne will expand their research on calculating employee value-add and publish such estimates for S&P 1500 companies based on their past article titled “Employee Value Added: A New Measure of Gain-Sharing between Labor and Capital”
• Ellen Frank-Miller, the Founder and CEO of WORC, will measure the effect of frontline workers’ job quality on the financial and human capital management outcomes of private equity-owned companies
• Alex Edmans, Caroline Flammer, and Simon Glossner will study the effect of diversity, equity, and inclusion and its links with firm performance
• Boshuo Li and Wei Shi will research the costs and benefits of human capital management transparency, using job compensation postings
• Professor George Georgiev will expand research on his article, “Human Capital as a Mission-Critical ESG Factor: New Evidence & Legal Implications,” and analyze new evidence from firms’ disclosure of information under the SEC’s 2020 HCM disclosure requirement
• Ifeoma Ike, the Founder of Pink Cornrows, will study how diversity announcements within companies impact performance, satisfaction, morale and health outcomes
• Professor Lenore Palladino will examine the impact of corporate policies and behaviors towards employee freedom of association as part of their approach to human capital management

Where are we now?

• Chair: Ethan Rouen (HBS Accounting)
• What are current requirements for listed companies? (Ethan Rouen)
• What government-mandated data collection efforts around firms and employment are in place? (Matthew Shapiro, Director of ISR Survey Research Center)
• What are private alternatives, and what can the tell us? (Gad Levanon, Burning Glass Institute)

Limitations and aspirations

• Chair: Diane Burton (Cornell ILR)
• Can we get 21st century data for workforce valuation and performance management? (Erica Groshen, Cornell ILR)
• How do CHROs and HR professionals think about data mandates? (Ani Huang, Center On Executive Compensation)
• What do alternative data collection regimes look like around the world? (Mario Abela, Senior Advisor, Value Balancing Alliance)
• How can data practice be more responsible? (Forest Gregg, DataMade)

New tools, new methods

• Chair: Joe Fuller (Management, Harvard Business School)
• The data collector's view (Kelley-Frances Fenelon & Matthew Nestler, JUST Capital)
• What can new tools tell us using old data? (David Ulrich, University of Michigan)
• ChatGPT, Neo-Bing, and the current wave of innovation (Scott Page, Management, University of Michigan)

Design Charrette

How might we improve the accuracy and usefulness of our workforce data to better support decision-making and good jobs?

How might we improve the accuracy and usefulness of our workforce data to better support decision-making and good jobs?

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• Team introductions
• Map the landscape of workforce data (context map)
• Surface barriers (“what’s stopping us?”)
• Imagine ideas for transformation and identity a favorite (ideation)
• Report out via “your idea as a tweet” and move into an interactive gallery walk with one another and new folks arriving at 6pm (gallery walk)

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Design Charrette Agenda

Share your name, role, and what brings you here

Introductions

1. Stakeholders: List 3-4 most critical stakeholders for workforce data. What does each need (in one sentence)?
2. Economic & political climate: what trends make better workforce data more compelling now? What political trends, regulations, legislation, etc. are most important?
3. Technology factors: what new tools enable new approaches to workforce data?

Landscape

What are the biggest barriers to change that exist in this landscape?

Barriers

Transformation

What are ideas to make progress on improving the accuracy and usefulness of our workforce data? What are levers for change?

Lever: an area of focus, trend, element of a system, or actor that has the potential to deliver wide-ranging positive change if specific action is taken to unlock its potential. (disclosures, AI, govt collection, new regulation, private actors)

Next, discuss your ideas. Combine and refine them, and identify your top idea.

Report out

1. What is your team’s top idea for improving the accuracy and usefulness of our workforce data?
2. What is your team’s one burning question?

Your team’s tweet: “Our one best idea about getting better workforce data is…”

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And: your team’s one burning question

Gallery Walk:

Visit Teams and Share Thoughts via Sticky Notes

Summit on Workforce Valuation and Performance

May 11-12, 2023

Welcome!

Introducing Peter Cappelli

Summit on Workforce Valuation and Performance

May 12, 2023

Thank you to our sponsors

A New Frontier for Applied Research: Workforce Valuation Accounting

What happens if you assemble elite accountants, economists, lawyers, HR experts, data scientists, and investors to talk about workforce valuation?

What we learned

• Where we are now
• SEC-mandated disclosures about the workforce are (still) lite and not necessarily as informative as we might like
• Government-collected data (CPS, CES, UI, others) are useful in the aggregate but have anomalies and don’t tell us much about individual firms
• Data aggregated from online sources (LinkedIn, GlassDoor, online job listings) can “name names” (people, firms) but are not fully reliable

What we learned

• Where we aspire
• The US statistical system WRT employment is a messy amalgamation of many state and federal agencies that query employers and workers with many, many overlapping and uncoordinated data requests
• The US Chamber of Commerce’s proposed Jobs and Employment Data Exchange (JEDx) could be a more centralized and less burdensome solution

What we learned

• Where we aspire
• The EU has shifted farther in the direction of workforce reporting, in the belief that human capital is essential to understanding contemporary business models
• HR professionals do not love responding to overlapping and uncoordinated data requests that may provide little value to investors and leave the firm open to gotchas
• The risks of harms to individuals from reporting requirements are small; the potential harms to classes of workers are potentially larger but not too scary

What we learned

• New tools, new ways of thinking
• Data are most useful as part of a “theory of the organization”
• Scraped data from 10Ks, calls with analysts, etc., properly analyzed, can be enlightening
• Outside evaluators (e.g., JUST Capital) can fill in and systematically analyze data and support employers to answer questions like “Does providing good jobs pay off?”
• Our economy is changing in ways that make traditional categories (like “industry” or “occupation”) and units (like “firms”) increasingly problematic

Ideas proposed by dream teams

• Transformation requires new data-driven insights to drive action by changing incentives
• Aggregate human-centered data acquired from radically transparent individuals
• To get better data, ISSB/SEC engagement; threaten to vote out directors at firms with poor disclosure
• Select a few HCM metrics to require in some way – other than government mandate
• Work with industry groups to estimate baseline HCM metric by sector; effective regulation
• Start piloting data and technology standards for enhanced employer records along with a forum for governing the standards with representation from public sector, worker, employer, and investor stakeholders

Today’s Agenda

• Investor Demand for Human Capital Data: A View from the Capital Markets
• Workforce Management and Analytics in Practice: A View from Inside the Firm
• The Legal and Regulatory Landscape: What's Next?
• Lunch
• Advancements in Workforce Valuation and Analytics
• Breakout Sessions: What are the most pressing needs and where are the gaps?
• Conclusion

Investor Demand for Human Capital Data: A View from the Capital Markets

• SARAH BRATTON HUGHES, Head of Sustainable Investing, American Century Investments
• MICHAEL GARLAND, Assistant Comptroller - Corporate Governance and Responsible Investment, Office of the New York City Comptroller
• KIMBERLY STOKES, Executive Director & Corporate Engagement Strategist, Calvert Research and Management
• MODERATOR: HOLLY FETTER, Vice President, Asset Stewardship, State Street Global Advisors

Workforce Management and Analytics in Practice: A View from Inside the Firm

• ANNALISA BARRETT, Senior Advisor, KPMG Board Leadership Center
• M. DIANE BURTON, Joseph R. Rich ’80 Professor, Human Resource Studies and Academic Director, Institute for Compensation Studies, Cornell ILR
• CHARLES G. THARP, Professor of the Practice, Management & Organizations Department, Boston University Questrom School of Business
• MODERATOR: TRACY STEWART, Senior Director, Investor Strategies and Shareholder Governance, JUST Capital

The Legal and Regulatory Landscape: �What's Next?

• JEFFREY HALES, Board Member, International Sustainability Standards Board & Charles T. Zlatkovich Centennial Professor of Accounting, University of Texas at Austin
• COLLEEN HONIGSBERG, Professor of Law & Bernard Bergreen Faculty Scholar, Stanford Law School
• ROBERT J. JACKSON, JR., Pierrepont Family Professor of Law, New York University School of Law & former Commissioner, U.S. Securities and Exchange Commission
• MODERATOR: CAMBRIA ALLEN RATZLAFF, Co-Chair, Human Capital Management Coalition & Managing Director and Head of Investor Strategies, JUST Capital

Advancements in Workforce Valuation and Analytics

• ANGUS BAUER, Head of Sustainable Research, Schroders
• JEFF HIGGINS, Founder and CEO, Human Capital Management Institute
• MONA PATNI, Director of Quantitative Research & Analytics, JUST Capital
• KAVYA VAGHUL, Co-Founder, Translational Research Service
• MODERATOR: ETHAN ROUEN, Associate Professor of Business Administration & Co-Chair, Impact-Weighted Accounts Project, Harvard Business School

Breakout discussions

• Strategies for upgrading workforce data for investment and capital allocation purposes (Erica) 4020�
• Could we create a data and/or disclosure architecture to create better jobs? (Peter) 5020�
• How will AI transform jobs and how we value them? (Scott) Boardroom

Accounting for a Modern Economy: A Call to Action

Thank you!��And to everyone taking a rideshare to the airport: Why not all meet in the lobby downstairs and share rides?

[Note: terminals are “Delta” or “Other”]