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People: Where Are They in Corporate Reporting ?

Posted on June 11, 2015 at 9:05 AM

How often have you heard the phrase 'people are our greatest asset?' Yet they are strangely absent in corporate reporting. The National Association of Pension Funds (NAPF) is onto it.

As long-term investors, pension funds have a clear interest in promoting the long-term success of the companies in which they invest. But the NAPF says its members still often struggle to find any clear or consistent reporting with respect to an investee company’s workforce.

This morning it has published a new discussion paper, 'Workforce-sized hole' in corporate reporting. highlighting the lack of reporting by companies on how they manage their workforces.

Joanne Segars, NAPF CEO

“We often hear much talk of the ‘productivity puzzle’ and how this can be solved to bolster the economic recovery, yet one of the key factors in driving growth – both corporate and economic – does not appear to be deemed sufficiently material for companies to measure or report. That factor is the people who constitute a company’s workforce, sometimes called its human capital" says Joanne Segars, CEO of the NAPF.

“Companies often tell us they would report on this if investors asked them to – and too few investors make that request. But on the other hand, investors say they would place greater emphasis on this issue if more meaningful information were available" she adds.

With this report the NAPF intends to kick start a discussion to resolve this conundrum.

It is in the spirit of 'what gets measured....(eventually) gets done'.  As Professor Mervyn King, Chairman of the International Integrated Reporting Council (IIRC) has also said, a company's behaviour is reflected in the way in which it reports.

It wouldn't hurt businesses to better get to know their workforce: strengths and weaknesses, engagement and apathy. It would also do a great deal for succession planning.

On a personal note, I once worked with a FTSE 100 company on internal communications and discovered that it measured its entire workforce on a grid-like system. With a young and international workforce, it deemed it critical for engagement - and to measure willingness on geographical mobility, as well as internal progression. I decided to invest - and it was a good decision.

NAPF has identified four areas where it there should be better disclosure about the people in any business. They include the composition  of the workforce, its stability, the skills and capability and last but far from least, its motivation and engagement. 

It will be encouraging investors, analysts, companies and policy makers to explore this agenda further, with a series of roundtable  events held in the second half of the year. The conclusions of these discussions will also be incorporated into the NAPF’s Corporate Governance Policy & Voting Guidelines.










Categories: Investors, Measurement, Scrutiny