SEC Acknowledges Contribution of Human Capital On Business Value

Public Reporting Companies Will Need to Disclose Human Capital Metrics Moving Forward

PHILADELPHIA, PA / ACCESSWIRE / June 18, 2021 / The Securities and Exchange Commission (SEC) recently recognized the importance of an organization’s most valuable asset: its people. New disclosure requirements for public registrants are now designed to provide stakeholders insight into human capital – from the organization’s operating model to talent planning, learning and innovation, employee experience, and work environments.

Valuation expert, Dave Bookbinder, Senior Director at CFGI, applauds the SEC for taking this groundbreaking step. Bookbinder has been a long-time advocate for the recognition of the impact of human capital assets on business performance and business valuation and says that the new disclosure requirements – while long overdue – are a good start. His hope is that every CEO who says that their people are their most valuable assets will mean it sincerely and understand it intellectually.

While the new disclosure requirements were designed around what investors might deem to be valuable investment considerations, it should not be ignored that these disclosure requirements were implemented during a global pandemic when it’s never been clearer that people are an organization’s most valuable asset.

“The connection between an engaged workforce and business valuation is demonstrated in a variety of empirical studies that track the stock prices of ‘best workplaces’ companies versus their peers,” says Bookbinder. “By requiring companies to disclose certain people-related metrics, investors will be able to make better decisions about where they want to allocate their capital – and perhaps one day soon, human capital will appear on the balance sheet.”

All companies, both public and private, on every continent, learned critical lessons during the COVID-19 pandemic. As a result, employees will likely benefit from these disclosure requirements as well. For instance, companies will be focused on highlighting and improving their programs around things like diversity, equity, and inclusion (DEI) and environmental, social, and governance (ESG) – each of which impacts the metrics around employee engagement and turnover. Concern for the health and safety of employees may have been forever changed, as has the ‘where and how’ employees work.

Bookbinder thinks that these employee-centric considerations will also trickle down to private companies as well, as these companies observe the connection between human capital reporting and business valuation (stock prices) of their publicly traded counterparts. “The underpinnings of each disclosure item will be rigorous policies,” he adds, “And procedures that formalize such programs which will serve to embed them into the fabric of the organization.” Authoring The New ROI: Return on Individuals was Bookbinder’s purposeful step in helping to measure the impact, and to shine a bright light on the subject.

These SEC regulations make it clear that human capital is the primary driver of an organization’s value, which is a radically different perspective than corporate balance sheets in years gone by where an organization’s people were largely overlooked. With this new age of transparency upon us, employees nationwide can hope to be regarded as the massive value-add that they have, in fact, been all along.

About The New ROI and CFGI
Founded in 2000 by former Big 4 professionals, CFGI is an established industry leader with the resources to successfully navigate today’s complex accounting, reporting, tax, and compliance landscape. An assemblage of top-flight professionals with in-depth public accounting expertise, CFGI is able to fulfill a variety of client needs without the restrictions of auditor independence and helps clients with the valuation of businesses and intellectual property. Dave Bookbinder is an Accredited Senior Appraiser (ASA) in Business Valuation with the American Society of Appraisers, Senior Director at CFGI, (where he helps clients with the valuation of businesses and intellectual property), and holds the designation of CEIV (Certified in Entity and Intangible Valuations). He is also the author of a #1 best-selling book about the impact of human capital assets (people!) on the valuation of a business enterprise, titled The NEW ROI: Return On Individuals. For more information, visit or

Dave Bookbinder
Phone: 267.253.9844


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