If people are an organisation’s greatest asset, then workforce data needs to clearly and consistently show the risks and opportunities associated with people.
However, according to an analysis of annual reports, the quality of workforce reporting in the FTSE 100 remains inadequate. For example, only one-third (33%) reported recruitment data, just 6% reported the cost of hiring contingent workers and a mere nine companies reported their ethnicity pay gap.
The research – conducted in partnership with the PLSA and Railpen – shows that, while there have been some improvements in disclosure, the quality of this reporting remains low in many cases, making it challenging for stakeholders such as investors to assess the working practices and culture of an organisation. We continue to see instances of poor employment practice, an overall decline in employer investment in workplace training and plateauing productivity. The current UK labour shortage also clearly illustrates why organisations need to focus on pay and conditions.
Workforce reporting is key to responsible business practice. Improved reporting, showing how organisations manage and develop their people, not only proves the value they place in their workforce but also provides crucial information on how effectively they are addressing other ESG issues.
We suggest that the Financial Reporting Council (FRC) works with other stakeholders – including investors, companies and people professionals – to establish a framework for workforce reporting that sets out a baseline of minimum standards. This would enable leaders and investors to make informed decisions that will help build more responsible, productive and sustainable businesses – and a fairer world of work.
In addition, this report makes recommendations for policy-makers, investors, boards and people professionals around how to establish better quality reporting practices, which are critical for building a people-centric business. These evidence-based insights will ultimately lead to better employment practices and business success.
While these findings and recommendations are based on the UK context, the broader implications should be of interest wherever you are based.
To improve workforce reporting practices, organisations should:
- Report equally on workers under all contract types, rather than just direct employees, to ensure that contingent workers are included.
- Build on the success of gender pay reporting and introduce mandatory ethnicity pay reporting to help tackle racial inequality and discrimination at work.
- Invest in information systems that allow HR to collect the right information, in the right way, at the right time, to facilitate effective disclosure.
- Provide data analytical training and development for people professionals to ensure they can interpret and act on what the data shows.
- Ensure workforce engagement mechanisms are designed to give voice to employees, rather than being a one-way form of communication.
- Ask HR leaders to facilitate discussions with internal and external stakeholders about the information that they would find useful, either for decision-making and/or reporting purposes.
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