Blog Post on Corporate Governance Highlights Challenges in Human Capital

In a recent blog post on the Harvard Law School Forum on Corporate Governance, the authors touch on the challenges boards have in the human capital space, particularly in the post-Covid recovery period. The post notes that boards are hearing more about work-force related matters such as “culture, purpose, hybrid work, the future of work, well-being, skills gaps, automation, and shifting societal expectations, as well as diversity, equity, and inclusion (DEI).” Additionally, the post states “Regulatory drivers and investor expectations are also contributing to increased board engagement on this subject.” SEC Chair Gary Gensler commented recently that requirements on human capital disclosure are likely on the way. As the post notes, aside from the regulatory scrutiny “institutional investors continue to advocate for corporate actions ahead of regulatory requirements.” The post states that boards may want to consider the risk posed by talent retention and workforce management, and have an apparatus in place to examine these issues whether that involves an existing committee or a newly-formed committee. The post posses several questions for boards to consider, including:

• How does management present and discuss the workforce strategy as aligned to the company strategy with the full board?
• How is the board responding to increasing stakeholder expectations for action, transparency, and accountability with respect to human capital issues?
• What information does the board receive from management on each of its key human capital risks? What is the quality of the information, and how frequently is it presented?

Click here to read the Harvard Corporate Governance blog post on human capital challenges.