A System for Analyzing Human Capability at Scale Using AI

Over 80% of corporate value is now comprised of intangibles, of which a large component is human capability (HC). Reflecting this, the SEC has recently mandated HC reporting requirements (SEC, Q4 2020). We use machine learning to build a prototype system to analyze HC using SEC filings and applied it to 5,760 companies. The approach algorithmically generates lexicons for HC concepts, and then applies machine learning to extract the relevant text on HC and business outcomes from annual reports, to create a dashboard for each firm on the quantity of reporting over four dimensions of HC: talent, leadership, organization, and human resources operations. This system links HC reporting to measurable business outcomes such as revenue per employee, earnings, Tobin's Q, and social citizenship. This will enable companies to improve the quality of reporting and governance of HC as well as guide investments in specific areas of HC.