How SEC’s Human Capital Disclosure Rules Change Reviews

Recent updates to the SEC’s human capital disclosure requirements have raised the bar for how public companies report on the people-related factors driving business performance.

Since going into effect in late 2020, these rules have required organizations to go well beyond headcount and share material insights into how they attract, develop, engage, and retain talent—along with details on diversity, culture, training, and other workforce measures.

The shift reflects a simple reality: human capital is now viewed as a core driver of enterprise value.

As investors and stakeholders demand clearer visibility into how companies manage their people, internal processes that shape the employee experience—especially performance reviews—are facing greater scrutiny.

Organizations must now demonstrate not only that their performance management systems support business outcomes, but also that they generate credible data and narratives for public reporting.

In this new environment, performance reviews can no longer function as a once-a-year administrative exercise. They are becoming a strategic mechanism for showing effective human capital stewardship, ensuring fairness and development across the workforce, and supplying the metrics investors expect.

The sections that follow outline how the SEC’s requirements are reshaping performance reviews—and what organizations should do to adapt.

Performance Reviews and Diversity, Equity, & Inclusion (DEI)

The SEC’s rules emphasize workforce diversity and inclusion, prompting companies to describe their DEI commitments and outcomes in public filings. Most large public companies now include qualitative DEI statements and often share workforce demographic metrics. This external accountability increases pressure to ensure performance reviews are fair and unbiased, since biased evaluations can undermine stated diversity goals. Research shows evaluation bias hurts DEI progress by driving higher attrition and lower engagement among underrepresented groups. To align performance management with DEI disclosures, organizations should:

• Ensure Bias-Free Evaluations - Train managers on bias reduction and use structured, evidence-based criteria. Clear competencies and objective feedback requirements lead to fairer, more consistent evaluations and help ensure equal opportunities for advancement.

• Integrate DEI Objectives - Embed DEI expectations into performance criteria, especially for leaders. Managers can be evaluated on hiring, developing, and promoting diverse talent or fostering inclusive team cultures. Linking outcomes to DEI reinforces that inclusion is a core accountability aligned with public disclosures.

• Use Analytics & Transparency - Track ratings, promotion outcomes, and pay patterns by demographic group. Monitoring these metrics helps identify disparities early and enables corrective actions, such as bias interrupter programs. Sharing progress in HCM disclosures demonstrates that performance reviews support DEI not only in intent but in measurable outcomes.

Performance Reviews and Employee Training & Development

Employee development and training have become major human capital topics under the SEC’s principles-based rules. More than half of public companies now describe how they train, upskill, and develop employees in their HCM disclosures. Performance review systems are central to this narrative because they connect evaluation with growth opportunities. Some companies explicitly state in filings–such as National Fuel Gas–that annual reviews support discussions about career interests and cross-training. To align with these expectations, organizations should strengthen the developmental focus of their review process:

• Embed Development Plans - Make development planning a required outcome of each review. Every employee should leave the process with a personalized growth plan outlining skills to build, training to pursue, or stretch projects to take on. This supports employee advancement and creates quantifiable data–such as the percentage of employees with development plans or training hours completed–that can be used in disclosures.

• Link Feedback to Training - Use performance feedback to guide employees toward targeted training or upskilling programs. Document recommended courses or resources when skill gaps are identified. Companies can then report how many employees participated in training or improved capabilities due to the review process, reinforcing a culture of continuous learning. Many public firms already highlight metrics like total training hours or leadership program participation.

• Career Pathing and Succession - Encourage discussions about long-term career goals and potential future roles during reviews. These conversations reinforce the company’s investment in employee growth and support succession planning–another area frequently addressed in disclosures. By maintaining a development-focused review system, public companies can demonstrate how they “attract and develop” talent in concrete, reportable ways aligned with SEC expectations.

Performance Reviews and Talent Retention

Investor attention to talent retention has increased, reflected in the SEC’s inclusion of retention within human capital disclosures. Companies often describe their retention efforts qualitatively–such as offering advancement opportunities or competitive benefits–even if few report detailed turnover metrics. Still, the expectation is clear: organizations must actively manage retention risks, especially for high performers and critical talent. Performance review systems play a major role by influencing employee satisfaction and providing data to act on emerging retention issues. Some companies now track high-performer turnover as a formal metric, linking review outcomes directly to retention outcomes. To align with this focus, organizations should use performance reviews as a proactive retention tool:

• Recognize and Reward High Performers - Use review results to identify top talent and take steps to retain them. After evaluations, compile your list of high performers and ensure they receive appropriate raises, bonuses, and development opportunities. This can be referenced in disclosures to demonstrate a commitment to retaining key talent and managing voluntary turnover among top performers.

• Address Performance Issues Fairly - A transparent, supportive review process–one that includes constructive feedback and clear improvement plans–strengthens trust and increases retention. Employees are more likely to stay when they feel the company invests in their growth. Documenting improvement outcomes (e.g., the percentage of lower performers who improved after coaching) can support HCM statements about developing talent.

• Conduct “Stay” Conversations - Incorporate retention-focused conversations into reviews or one-on-ones. Managers should discuss career goals, engagement, and potential risk factors confidentially. These insights enable targeted actions–such as new projects, role changes, or mentorship–to keep valued employees. Companies can spotlight initiatives like internal mobility or mentorship in disclosures, supported by insights gathered through the review process. By systematically linking evaluations to retention actions, organizations reinforce the message that retaining talent is a strategic priority for both investors and employees.

Performance Reviews and Employee Engagement

The SEC’s human capital rules highlight the importance of employee engagement and satisfaction, recognizing that engaged employees drive stronger performance. Many companies now reference engagement surveys or culture initiatives in their disclosures, though few report quantitative engagement metrics. Performance management has a direct influence: regular feedback and transparency boost engagement, while infrequent or unclear reviews can erode it. Reviews can also reinforce cultural values–some companies now incorporate culture- or values-based feedback to strengthen behaviors like collaboration or customer focus. In light of SEC expectations, organizations should adapt their review systems to actively foster and measure engagement:

• Frequent Feedback & Check-Ins - Shift from annual reviews to a continuous feedback model. Regular check-ins provide timely recognition, coaching, and alignment, improving both engagement and productivity. Companies can also report on implementing these cycles as part of their human capital strategy and use pulse surveys tied to check-ins to generate actionable engagement insights for disclosures.

• Two-Way Feedback and Employee Voice - Make reviews a two-way dialogue by inviting employees to share upward feedback about management, culture, and workplace issues. This strengthens engagement by helping employees feel heard and gives leaders valuable information to improve. Integrating employee voice with engagement surveys or other feedback channels demonstrates a cohesive approach to understanding employee sentiment.

• Manager Accountability for Engagement - Hold managers accountable for their team’s engagement levels by incorporating survey participation rates, manager-effectiveness scores, or related indicators into their evaluations. This incentivizes leaders to actively manage morale and culture. Companies can reference these practices in disclosures to show they monitor and improve culture and engagement through structured management expectations. By embedding engagement into performance management, organizations demonstrate to investors that they are systematically improving employee experience–not just stating it, but operationalizing it.

Performance Reviews and Workforce Composition

Workforce composition–such as role types, employment arrangements, geography, and tenure–is increasingly highlighted in SEC human capital disclosures. Many companies now break down their workforce beyond simple headcount to give investors a clearer view of their talent base. This trend requires accurate data across all employee segments and consistent people processes. Performance review systems must therefore work effectively for diverse groups (e.g., hourly staff, remote workers, contractors) and ensure fairness across the organization. To align with disclosures and demonstrate strong workforce management, companies should adapt their review processes in the following ways:

• Standardized Core Process With Flexibility - Create a unified evaluation framework that applies to all employees while allowing customization by role or employment type. For instance, full-time and part-time employees should both participate in goal-setting and feedback, even if expectations differ in scope. Covering most or all of the workforce enables companies to state confidently in disclosures that all employees receive regular performance reviews–signaling comprehensive talent oversight.

• Consistent Criteria Across Locations and Teams - When reporting workforce composition by geography or division, companies should calibrate performance criteria across units. This may include cross-department calibration sessions or manager training to align expectations. Consistent standards make aggregated data–such as the percentage of high performers or promotion-eligible employees–more accurate and meaningful to investors.

• Workforce Analytics for Planning - Combine performance data with workforce composition insights to inform workforce planning. For example, identify segments with persistent low performance or elevated turnover and implement targeted actions such as training, talent upgrades, or managerial support. Companies can reference these efforts in disclosures to demonstrate proactive management of human capital risks. Segmenting outcomes (e.g., promotion rates by region or diversity in leadership pipelines) shows that leadership understands workforce dynamics across the organization. By adapting performance reviews to reflect the full complexity of workforce composition, companies demonstrate that their HCM efforts are both comprehensive and inclusive of all employee groups.

Strategic Recommendations and Conclusion

Adhering to the SEC’s human capital disclosure rules is more than a compliance task–it’s an opportunity to strengthen performance management in ways that benefit both employees and the organization. Across industries, companies should take strategic steps to ensure their review systems support the human capital dimensions now under heightened scrutiny. Key actions include:

• Invest in Data and Analytics - Enhance HR systems to capture relevant performance and workforce data–such as rating distributions, high-performer turnover, training participation, and engagement scores. Strong data infrastructure enables easy extraction of metrics for SEC reporting and equips leaders with real-time insights. Companies with robust analytics can substantiate their human capital narrative, while those without may struggle to provide credible evidence.

• Integrate HCM Metrics into Performance Goals - Tie individual and managerial goals directly to human capital priorities. If safety, learning, innovation, or well-being are key metrics, embed them into evaluations. Aligning internal goals with externally reported HCM metrics creates a clear connection between performance outcomes and the story told to investors, increasing transparency and credibility.

• Continuous Improvement and Transparency - Regularly refine the performance review process and communicate improvements. Companies may disclose enhancements such as adopting 360-degree feedback or implementing bias mitigation strategies, demonstrating responsiveness and a commitment to best practices. Internally, gathering employee feedback on fairness and usefulness leads to better engagement and retention–impacting human capital metrics over time.

Moving Forward

The SEC’s disclosure requirements are prompting companies to connect how they manage people with how they perform. As a core talent management tool, performance reviews now serve a dual purpose: improving employee outcomes and providing evidence of effective human capital management. By integrating DEI, development, retention, engagement, and comprehensive workforce coverage into reviews, organizations strengthen both their workplace and their public disclosures. Ultimately, aligning performance management with human capital reporting positions companies for long-term value creation–and signals to the market that investing in people is a strategic, measurable priority.