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This Will Change Everything: Talent Acquisition & HR at the Center of ESG Discussion

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This blog was authored in partnership with George LaRocque, trusted industry analyst and founder of WorkTech.

On August 26, 2020, the Securities and Exchange Commission (SEC) introduced a new mandate regarding Human Capital disclosure requirements for all public companies in the U.S. The order directly responds to increasing requests from investors to evaluate a firm’s Environmental, Social and Governance (ESG) practices.

Companies will be required to have a fact/data-based narrative disclosing “information about their human capital management policies, practices.” The SEC hasn’t provided any specific guidance yet. After reviewing the current memorandum, most industry experts feel that companies will be required to provide a breakdown of their workforces by employment type, demographics, etc. They will need to substantiate claims made in their annual, 5K and 10K reports concerning human capital resources.

This new order puts Talent Acquisition and HR at the center of the ESG discussion, as it lives in both the “S” and “G” of ESG. The impact will extend from recruiting through talent management, compensation, workforce management, pay, benefits, and indeed every facet of the employee experience.

Based on previous experience with mandates like the Dodd-Frank Wall Street Reform and Consumer Protection Act, we might expect there to be one to two years before guidance from the SEC gets explicit. During this time frame, employers would be well served to look at their current ability to deliver a fact/data-based narrative about their Human Capital resources, or lack thereof, and begin to analyze the story. This will drive the selection and adoption of tools that provide data and insights in support of diversity, inclusion, pay equity, and management and hiring practices not only in charts and reports but most notably in the flow of work.

Developments are under way from across the work tech stack:

  • Recruitment advertising solutions like programmatic advertising and CRM solutions that can provide data regarding increasing success in diversity recruiting
  • Hiring platforms that have invested heavily in inclusive hiring capabilities
  • Core HR and payroll providers that will make acquisitions and investments in the product roadmap to support better reporting
  • HCM “ecosystem” players that deliver insights to pay equity, diversity and workforce management and talent analytics players

We expect to see increased investment in these areas from HR/work tech buyers and investors alike.

Leaders in talent acquisition and in the lines of business will be paying much more attention to talent metrics and what it means to the business from a qualitative and quantitative perspective. Leaders in recruiting and HR will increasingly be looking forward with an eye to both business impact and compliance as we continue to emerge from the COVID-19 pandemic. It won’t be enough to have a streamlined process while “ticking the boxes” for compliance reporting on issues like diversity. Candidates will choose where to work and employees will decide where to stay based on the measured progress companies can demonstrate against the commitments made to the market.

This won’t just be an emerging issue for large publicly traded firms under the SEC’s mandate. As larger firms tell their story to the market about their progress and momentum, smaller and privately held firms competing to hire and retain talent will need to have their own narrative. This is analogous to how perks and benefits have been leveraged by companies of all sizes to attract and retain employees.

Trends in Work Tech Investment

During a recent Radancy webinar, where I walked through the three global forces driving significant change in how we recruit and manage employees and the impact of HR and work technology, two questions were asked about trends in work technology growth capital investment:

  • Where will entrepreneurs and investors shift their attention as we exit the COVID-19 crisis?

All eyes are on the impact technology can have on new models in the workforce – how to find, hire and retain employees in a new hybrid work model, and in accelerated existing work trends like freelance and independent work.

  • How would you explain the attention job board marketplaces – like Workrise, jobandtalent, etc. – are getting in the capital markets, to someone in Talent Acquisition? 

Investors love marketplaces. The relationship between having jobs to offer and an audience to engage with those jobs is something that investors relate to. Both of the firms referenced focus on workforce categories or market segments with massive market opportunity. In the case of Workrise, it’s a marketplace serving the skilled labor markets. In the case of jobandtalent, it’s not only serving an independent/temp workforce across the labor market, but also providing value-added services like pay and scheduling that help the employer and the worker.

Traditional job boards focus solely on job advertising and their ability to provide clicks and applies against its job inventory. Emerging modern marketplaces are providing deeper specialization within workforce and market segments while also expanding the value they offer. Interesting models include skill certification, learning/education, coaching, wellness offerings, and for early careers a conduit to internships and apprenticeships as value adds. These value adds offer employers an opportunity to invest in talent development.

Considering the impact that ESG, the post COVID-19 workplace, and emerging models in talent acquisition are having on work and work technology, it may be the most exciting time ever to be involved in the global work tech market.

Radancy’s unified platform, augmented by rich data and deep industry expertise, is revolutionizing how employers attract and hire the talent they need. Want to see what we can achieve together? Connect with us today.

About George LaRocque

George LaRocque, Principal Analyst and Founder of WorkTech (oneworktech.com) has more than 25 years in the HR technology industry. He’s an HR leader and tech executive turned market analyst and advisor focused on users and developers of HR and talent technology. He leads the WorkTech (formerly HRWins) research and reports on workforce trends and HR tech VC investment.

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