Missing workforce data in annual reports hinders understanding of company value and risk, new research finds

A new report, Future of Workforce Reporting, warns that inconsistent and incomplete workforce disclosures by FTSE 100 companies are preventing investors and other stakeholders from fully assessing the people-related risks and opportunities that underpin sustainable growth.

The research from the CIPD and Railpen — based on an evaluation of FTSE 100 annual reports, desk research and focus groups with investors and HR leaders — shows how stronger workforce data can drive better business performance and accountability.

While disclosures have improved in some areas since 2022, such as mental health and aspects of diversity, the level and quality of reporting on other material workforce issues have seen little progress or declined in some cases.

It shows that many organisations still fail to provide key information needed to understand how they create value and manage workforce risks. In response, the report urges companies, investors and policymakers to prioritise clearer, more consistent workforce reporting to give a fuller picture of organisational health and long-term value.

Key findings include:

• Recruitment: 38% of organisations provided information on their turnover rate; just one company provided information on their recruitment costs.
• Employee skills and capabilities: Just 10% of firms disclosed information on total training costs; 33% provided information on apprenticeships; 41% provided information on hours of training per employee.
• AI adoption: 13% of FTSE firms referenced AI skills training for staff; 14% reported they have an AI governance policy or strategy.
• Health and safety: 15% of organisations provide information on their absence rate; 39% provide information relating to the mental health of their workforce.
• Employment relations/ bullying or harassment: 27% of organisations provided information on the number of disciplinary, grievance or whistleblowing cases; just 10% provided information on the reasons.

Peter Cheese, chief executive of the CIPD, the professional body for HR and people development said:

“The old adage of ‘what gets measured gets done’ has never been truer, but our analysis shows current workforce reporting practices too often aren’t providing internal or external stakeholders with sufficient evidence they need to make informed decisions. For instance, less than a fifth of firms provide any information on their contingent workforce, even though it often represents a very considerable cost and potential risk to the business.

“Organisations need to place greater emphasis on workforce matters when they’re considering their key performance indicators and risks to reflect that people issues, just as much as financial considerations, will decide whether a business is successful over the long-term.

“Greater standardisation of key people management metrics are being increasingly encouraged by standards bodies, investors and regulators, and the people profession needs them to show value and impact of people and organisational investments and initiatives.”

Caroline Escott, head of investment stewardship and co-head of sustainable ownership at Railpen, said:

“Effective workforce management is a highly material factor for investors to consider. A motivated, fulfilled and content workforce is integral to generating sustainable financial returns, while clearly being a desirable goal in its own right.

“It is essential that companies improve their workforce reporting practices to be able to show their successes where they are happening, and to confidently address concerns where workforce challenges arise. For our part, investors want to support companies that effectively manage their people, and without more accurate and standardised reporting, it can be difficult to understand how a company is working to do this.

“Our longstanding partnership with the CIPD combines the company and the investor perspective, demonstrating strong alignment across the value chain on the worth of the workforce. This latest report provides practical and clear recommendations for both companies and policymakers so that they can improve workforce reporting standards and achieve an approach to the workforce that supports long-term value creation.”

To improve workforce reporting practices the report contains clear recommendations to policy-makers, companies and investors, including:

1. The need for annual reports to include a standalone section on the workforce: Only 53% of firms analysed had a dedicated people section in their annual report. By consolidating all people-related information in one place with a clear narrative, stakeholders will have improved visibility, clarity and understanding of workforce metrics and measures and how they fit together.
2. Setting minimum reporting standards: To show a holistic picture of workforce treatment, organisations should consistently report on workforce composition, wellbeing, reward, employee voice and skills. Metrics should be clear and comparable with disclosures linked to how they support business strategy and outcomes. The report notes that the International Sustainability Standards Board’s (ISSB) work on baseline workforce disclosures could serve as a future framework and standard.
3. FRC to [consider] providing additional guidance on workforce reporting: The lack of consistent, comparable reporting on workforce data and boilerplate disclosures can make it harder for investors and others to understand and compare different companies’ reporting. To support progress in the area, the Financial Reporting Council (FRC) should consider inviting companies, investors and wider stakeholder groups to explore ways in which to improve workforce reporting, such as through improved guidance for companies that comply with the UK Corporate Governance Code.

Read the report