Businesses failing to report on workforces, says NAPF

Nick Elvin

Most companies are failing to report on how they manage their workforces, according to the National Association of Pension Funds (NAPF).

Its new report, ‘Where’s the workforce in corporate reporting?’, says that despite a familiar corporate mantra of “our people are our greatest asset”, and a widely accepted view that human capital is one of the four pillars of capital which underpin corporate and economic growth (the others being physical, social and intellectual capital), most companies still fail to report on it in any meaningful way.

The report underlines the role of pension funds in the UK economy as long-term investors with a clear interest in promoting the long-term success of the companies in which they invest; but points out that NAPF members still often struggle to find any clear or consistent reporting with respect to an investee company’s workforce.

While there has been significant evolution in recent years of corporate reporting on governance and environmental matters, the workforce remains notable by absence in company reports, it notes.

Joanne Segars, chief executive of the NAPF, said: “We often hear much talk of the ‘productivity puzzle’ and how this can be solved to bolster the economic recovery, yet one of the key factors in driving growth – both corporate and economic – does not appear to be deemed sufficiently material for companies to measure or report. That factor is the people who constitute a company’s workforce, sometimes called its human capital.

“Companies often tell us they would report on this if investors asked them to – and too few investors make that request. But on the other hand, investors say they would place greater emphasis on this issue if more meaningful information were available.”

The NAPF suggests four areas to be developed in corporate reporting: the composition of the workforce; the stability of the workforce; the skills and capability of the workforce; and the motivation and engagement of the workforce.

Julia Kermode, chief executive of the Freelancer and Contractor Services Association (FCSA), welcomed the report, saying she was “delighted to hear that the NAPF is putting human capital at the centre of its agenda” and that she hoped this would be a positive thing for non-permanent workers.

“We agree with NAPF’s view that ‘what gets measured get managed’ and how important it is for an organisation to understand its workforce,” she added.

“Our research tells us that contingent workers – freelancers, contractors, temporary workers, zero hours contract employees – make up around 20% of the UK workforce and in the US 35% of the workforce; however, such workers are sometimes overlooked when considering the total human resources within a business. It was concerning to see that only 11% of the FTSE companies sampled measure the number of temporary staff they take on.”