‘Third of FTSE 100 businesses failing to disclose key metrics’

The study founf that larger businesses are failing to take the lead on people metrics, and employers are neglecting to disclose vital workforce-related information in their annual reports.

One third (30 per cent) of FTSE 100 firms are withholding relevant health and safety incidents, data breaches, skills challenges and employee turnover, the Reporting Human Capital: Illustrating your company’s true value report found.

There were three cases of workplace strikes among FTSE 100 companies in 2015, according to media reports, but only two of the businesses involved even mentioned this in their annual reports. Four employees from different firms were also reported to have been involved in insider trading cases, but none of these were recorded in reports.

The CIPD argued that omitting this information – as well as a broader lack of attention to people metrics – creates a risk to investors and others who rely on annual reports, painting an “incomplete picture” of how people are treated and accounted for by a business.

The report, which assessed firms’ level of human capital reporting between 2013 and 2015, revealed that the quality and quantity of reporting on human capital issues had generally improved. Over this period, there was a 22 per cent increase in the reporting of ethics, and diversity reporting grew by 39 per cent since 2012, while the reporting of human rights issues saw a significant rise – up 127 per cent.

Companies in the property sector saw the biggest increase in reporting on human capital, a 41 per cent improvement since 2012.

The space in reports dedicated to workforce welfare reduced significantly over the two years, with two in five firms (40 per cent) scaling back the amount they reported on.

However, the banking sector has increased its transparency following the recent financial crisis and PPI scandals, according to the report.

The Valuing your Talent initiative – a partnership between the CIPD, the UK Commission for Employment and Skills, the Chartered Institute of Management Accountants, the Chartered Management Institute and Investors in People – aims to help employers dive deeper into workforce analytics and develop an open framework to measure human capital, to make good management and HR practices more visible.

At the launch of the report, the former secretary of state for business, innovation and skills, Sir Vince Cable, said successfully measuring human capital creates long-term, sustainable value for businesses.

“By failing to properly account for the impact and value of people, there is a huge discrepancy between a company’s balance sheet and its market valuation. This report shows a poor understanding of the significance of people-related data and the need for greater transparency,” he said.

“Having a clearer view of workforces can only be a good thing; it could lift the lid on productivity issues and skills challenges preventing so many businesses from reaching their potential.

“But unless there is more attention brought to metrics, people will shrug their shoulders and say it’s too difficult.”

CIPD chief executive Peter Cheese called for “more common definitions of key people and organisational metrics, and for businesses to better articulate how they are using these measures to provide consistent insight for all stakeholders.

“We need to take a multi-stakeholder view of the world and organisational value beyond the financial.

“ is now vital in building trust, in understanding the real drivers of productivity, in understanding critical risks and in helping to create better work and working environments for all.”

Chartered Institute of Management Accountants chief executive, Charles Tilley, said: “This report shows just how big a shift is needed.”