Human Capital Reporting for Timeshares: Now Required for Many Organizations
If human capital isn’t the largest operating expense at your timeshare property, it is no doubt, very close to the top of your list. In addition to being a cost, however, most organizations now, at least, entertain the idea that human capital is also an asset. Recent actions by the federal government bring heightened focus on the concept that employees are an organization’s most valuable asset.
In August, the Securities and Exchange Commission (SEC) adopted amendments to Regulation S-K, the directive that defines what a public company must include in its mandatory filings. The new amendments require that publicly traded companies must describe any human capital measures or objectives the company uses in managing its business to the extent that the information is relevant to understanding that business as a whole.
While the human resource leadership of most publicly traded organizations sensed this new direction was coming, many are scrambling to figure out what the guidelines will actually mean for their brands. Even though they are not bound by the requirements of Regulations S-K, privately held companies also face issues. Whether public or private, all organizations will find their human capital valuations scrutinized when they compete for investor dollars, community approvals, and workforce talent.
The SEC Offered Nonspecific Guidance
SEC Chairman Jay Clayton spoke enthusiastically about the new, final rule amending select aspects of Regulation S-K. He observed, “We modernized our public company business disclosure rules for essentially the first time in over 30 years.”
He described the new requirements as building on the existing, “time-tested, principles-based disclosure framework” and added, “The rules we adopt today are rooted in materiality and seek to elicit information that will allow today’s investors to make more informed investment decisions.”
While these comments are altruistic and even inspiring, they fail to spell out any hard-and-fast guidelines for regulatory compliance. Nowhere within the 130-page-plus Final Ruling document does the SEC specifically state what actions should be included or omitted in an organization’s required filings.
Instead, the SEC offers only the following:
“A description of the registrant’s human capital resources, including the number of persons employed by the registrant, and any human capital measures or objectives that the registrant focuses on in managing the business (such as, depending on the nature of the registrant’s business and workforce, measures or objectives that address the development, attraction and retention of personnel).”
Walk Before You Run, But Hurry Up
The fact that trained and responsible employees are an organization’s lifeblood is even truer for timeshares and vacation ownership than it is in many other industries. But getting from where you are now as a company to where you would ideally like to be on issues of human capital can be difficult.
Before you can report on your human capital initiatives, you have to develop and implement your ideas. Your company must start with a plan for “thinking differently.” Moving from being profits driven to being purpose driven calls for trusting that by putting your focus on your timeshare owners, renters, shareholders, employees, the local community and even your vendors, the profitability you seek will follow. Next, you must define which changes you will make now and which ones you will make in the future to achieve your organizational goals.
Finally, you must develop ways to track and measure the results of your human capital initiatives, focusing on data formats that can be effectively communicated to board members, shareholders, the community and investors.
Rushing to comply with the requisite to report, some companies may try to bypass the process of rethinking, planning and launching. As tempting as this shortcut may be, it will never work. Actions you take to develop and reward human capital must be genuine and authentic.
Once you have shifted your corporate thought processes and have your strategic plan in place, consider including some of the following suggestions in your human capital reporting:
- Create an outline of your recruiting and hiring procedures, including pay rates and how you evaluate and measure productivity, performance evaluations and workplace advancement. Define your protocols for promotion and how you communicate this information to your workforce.
- Provide an overview of your on-boarding process. Are you on-boarding and training before your new hires ever engage with your timeshare owners and guests? Although training as you go may require less effort, it can also be disastrous. A seemingly small chink such as this in your process can be a red flag to shareholders and investors that your resort operations are vulnerable to unnecessary risks.
- Show how you support workplace safety and what you do to protect your workers from injuries, illness and fatalities, including how you review the safety protocols of contractors and suppliers.
- Show how you protect the privacy and personal information not only of your guests and timeshare owners but also of your workers.
- Document your offerings for employee enrichment, on-going training, volunteerism opportunities and other meaningful benefits.
Get Out of the Box
As cliché as the phrase “think outside of the box” may be, shifting your company’s human capital perceptions and policies calls for doing exactly that. The SEC intentionally left the documentation of your efforts open ended in order to allow organizations of all sizes and in all industries to customize their response.
More than a year before the SEC implemented its new regulatory amendments, Jay Clayton said this about human capital management, “The SEC does need to lead on disclosure, things companies should be thinking about and engaging with their shareholders … Each industry and even each company within a specific industry have their own human capital circumstances.”
The COVID-19 pandemic has created chaos and hardship for businesses across the country, but it has also given rise to the opportunity for companies to get far outside the boxes in their human capital efforts. McDonald’s partnered with Aldi Grocery during the height of the pandemic lockdowns. Like most grocery stores, Aldi needed an influx of short-term workers to deal with increased demand. With closed or drive-through only service, McDonald’s had employees to spare. The two companies signed an agreement, allowing McDonald’s staffers to work for Aldi, provided they go back to McDonald’s once both businesses had returned to more normal patterns. Through this arrangement, McDonald’s protected their employees from loss of income while retaining their valued workforce for the future when they would need them again. Aldi benefited by skipping the costly and time-consuming process of screening and hiring temporary workers.
The McDonald’s/Aldi talent-sharing partnership was flexible, creative and unique. And because the management of two businesses in different verticals was able to think outside their boxes regarding their human capital, both the businesses and the workers benefited.
The Clock Is Ticking
The High Cost of a Toxic Workplace Culture, a report by Beth Mirza published in 2019 by the Society for Human Resource Management (SHRM), identified that over a five-year period, turnover due to toxic work culture has cost American businesses as much as $223 billion. This significant number alone explains precisely why timeshare developers, hospitality providers, and every other industry in the country should be shifting gears to a fresh, new way of viewing human capital management and reporting.
If the financial implications of not taking action aren’t sufficient motivation to get you moving, for publicly traded companies, there’s also the impending new law. The SEC’s amendments requiring human capital reporting were released publicly on August 26. Within two to four weeks after release, the rule is then published in the Federal Register. Thirty days after publication, the rule officially goes into effect, which means that by the time you read this article, human capital reporting is no longer just desirable… it’s the law.
Linda Parker has been writing professionally since the 1980s. With clients in finance, sports, technology, change enablement, resorts and nonprofit global initiatives, Linda helps organizations communicate their stories in meaningful ways to the people they most want to reach. She has authored, ghostwritten or contributed to more than a dozen nonfiction books. Linda is a member of the Authors Guild and the Golf Writers Association of America. You can connect with her at linda@glindacreative.com
