Improve workforce reporting, investors tell FTSE CEOs
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Railpen, the Pensions and Lifetime Savings Association and the Chartered Institute of Personnel and Development have written to the chief executives of FTSE350 companies demanding better workforce reporting, having previously called for a baseline framework for workforce reporting.
Against the backdrop of the new government planning an employment bill that will strengthen workers’ rights, estimated to cost UK businesses £5bn, the organisations are calling for better workforce reporting.
"Following several commitments from the new government in relation to the UK labour market, and the likely future public policy focus on workforce reforms, there is a greater need for more consistency and transparency in workforce reporting,” Railpen, PLSA and the CIPD said.
They are calling on FTSE350 companies to review and update disclosures in relation to:
- workforce composition;
- employee relations and wellbeing;
- reward and recognition; and
- skills and capabilities.
Their letters to FTSE350 CEOs build on suggestion for a baseline framework for workforce reporting in March 2022 produced by Railpen, the High Pay Centre, the CIPD, the PLSA and Board Intelligence. The framework included practical guidance, saying best practice workforce reporting should:
- be linked to a company’s strategy and performance;
- include an appropriate mix of data and narrative;
- be balanced and self-critical;
- focus on targets;
- use consistent data points over time;
- include both directly employed and contingent;
- be disaggregated (where appropriate); and
- have received some kind of external, independent assurance.
While companies often state that their workforce ‘is their greatest asset’, this is not always accompanied by evidence of how employment practices relate to the firm’s wider strategy, said senior investment manager at Railpen, Caroline Escott
“Investors want to support and invest in companies that are well positioned in terms of how they manage their people, and in turn, look to issuers to provide access to clear, comparable information on material and decision-useful workforce factors,” Escott said.
CIPD chief executive Peter Cheese said quality and consistent workforce reporting can help provide transparency over how companies recruit, train and manage their employees, and the extent they are engaged in responsible and sustainable business practices that can improve both firm performance and job quality.
“Improvements in this area can therefore also encourage business leaders in focussing on developing their workforces and help investors better understand differences in the quality of management at different companies to inform their investment decisions,” Cheese added.
Good workforce reporting benefits asset owners, the company making the reports, and employees, argued Justin Wray, who heads up defined benefit, Local Government Pension Scheme and investment at the PLSA.
“We support this call on FTSE 350 companies to give more attention and consistency to workforce reporting. Focus on this area will only increase,” he added.
Do you agree that workforce reporting needs to become more transparent?
