More than a number: people data missing from annual reports
A CIPD study into human capital reporting in FTSE100 companies calls for greater strategic focus and transparency to address risk, ahead of new EU legislation for large firms being introduced later this year.
Responding to the call for more insight on human capital factors
Edward Houghton, senior research adviser for human capital and governance at the CIPD, said: “Without full transparency there’s a real danger that businesses are painting an overly positive picture of how they manage their people and people risk.“Gender pay gap reporting regulations have shown us that a framework and a common language can improve disclosure and prompt healthy debate on important issues among key stakeholders." As well as presenting decision makers with more accurate data, a shift to a more systemic approach to reporting human capital factors could better support internal strategic, rather than external compliance-based measures.Linking human capital reporting to strategy rather than compliance
Mr Houghton said that it was “positive” human capital reporting overall has increased by 9% between 2015 and 2017, a smaller increase compared with that between 2013 and 2015 (19%).However, the measurement of human resource development, employee welfare, employee equity and workforce risk showed a reduction in the rate of growth. This is a challenge, especially around the quality, consistency and transparency of data being reported.“Organisations seem to focus their efforts on complying with legislation and governance codes and report on very little else voluntarily,” said Mr Houghton. “Reporting is also often subject to trends or pressure from government rather than ongoing strategic imperatives. “We need to see much more consistency in what is being reported, the language used to report it and the measurements being applied so all stakeholders get a complete picture of workforce opportunities and risks.”What are FTSE100 companies commenting on in their annual reports?
Illustrating the CIPD’s concerns, the study shows the key reporting movements in the two years between the professional body’s previous research and this latest report.Using content analysis of the narrative sections of annual reports and human capital reporting assessment, the CIPD identified those areas seeing the biggest changes in reporting between 2015 and 2017.The largest increases are in the areas of:- Employee wellbeing +76%
- Apprenticeships +64%
- Entrepreneurship +28%
- Talent management +26%
- Internships -32%
- Commitment -31%
- Flexibility -30%
- Employee engagement -21%
Human capital reporting recommendations from the CIPD
To support a better understanding of workforce issues and risks, the CIPD has created a new reporting framework which, alongside improved use of workforce analytics, aims to improve transparency and help with the identification and management of workforce and cultural risks. Its People Risk Reporting Framework (PRRF) explores seven dimensions of workforce risk that employers should look to report against:- talent management
- health and safety
- employee ethics
- diversity and equality
- employee relations
- business continuity
- reputational risk.
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