Edward Houghton: Hidden Figures – Why Are Organisations still not Reporting on their Workforce?

In this follow-up analysis of the CIPD’s Hidden Figures report published last month, Edward Houghton, Senior Research Advisor for Human Capital and Governance at the CIPD, expands on the key findings of the report and points out ways for organisations to improve their reporting.

This year has been a significant year for workforce reporting. In the spring, the UK press was awash with stories covering gender pay gap reporting as organisations with over 250 employees were required to share their pay data to demonstrate how gender pay differences looked in their organisation. The conversations which followed, in the media, at breakfast tables and in boardrooms across the country was one about issues and action. People were suddenly using workforce analytics, to discuss an important workplace and societal issue. No matter where you stand on the quality of the gender pay gap measures themselves, the act of reporting was an important milestone in highlighting the crucial role of workforce data.

Now, as organisations start to prepare for the second round of reporting in April 2019, there are debates already happening about where reporting will go next. Gender pay gap reporting is likely to widen to require further narrative information about actions against key measures – a key criticism of reporting in 2018 was that the numbers did not give a full picture of what was going on in organisations, nor did they account for systemic issues that create gender-pay differences. There are also discussions about what more should be reported on, with ethnicity and disability pay gaps the most commonly raised.

To overcome this barrier and help organisations start to prepare for future reporting requirements, the CIPD has been investigating how to better report workforce information as a whole. In our new report, Hidden figures: how workforce data is missing from corporate reports, we look into how people data is reported by organisations in the FTSE 100, with a view to understanding if and how reporting might have improved so that those externally, such as investors, regulators and even prospective employees, can get a sense of how an organisation considers and treats its workforce. With people data and analytics a growing agenda, there is a growing wealth of information that could be of significant value to external stakeholders.

Although people data reporting is growing, key data is not being reported

The report found that people data is being reported more often, growing by 19% between 2013 and 2017. And between 2015 and 2017: employee well-being reporting by the FTSE 100 grew by 76% and talent management by 26%. However, employee engagement dropped by 21% and reporting on employee commitment also dropped by 31%. Part of the reason for this is likely changing trends in the workplace that are being reflected in reporting; organisations are adapting the content of their reports to meet investor interests, as opposed to reporting on information that is strategically valuable. This is potentially highly risky as key issues might be overlooked because they are not deemed ‘current’.

Key messages are being lost

Although the ‘gig economy’ is now a recognised term for atypical work, the report found that no organisations in the FTSE 100 used this language to talk about workers on atypical contracts. Instead, 4% of FTSE 100 firms reported on their ‘contingent workforce’ and 2% on their ‘freelance workforce’. It was far more common for FTSE 100 firms to use ‘contractors’ to refer to these workers, with 67% of reports using this language.

The research also investigated the language that is used to describe skills and apprenticeships, key areas that we expect organisations to report on as skills development is connected both to improvements in productivity and innovation. The data shows that in 2017, only 12% of FTSE 100 firms reported on skills shortages (positively or negatively) and just 21% reported on skills gaps. This was interesting given the current Brexit context – many expect the UK’s exit from the European Union to have negative impacts on the availability of skills. However, this information is not often cited in annual reports.

What can organisations do to improve reporting?

There are a number of things that organisations should do to improve reporting, many of which can be actioned by HR professionals with the support of the wider business:

  • Adopt voluntary approaches to reporting: there are many areas of people management that would benefit from being externally reported to key stakeholders. The impact of learning and development training, for example, is one area that may demonstrate the approach the organisation takes to investing and developing its workforce, and key in high-skill, high-knowledge industries. Gender pay gap reporting has demonstrated that mandatory reporting can drive important debate; more now needs to be done to improve voluntary disclosure by organisations.
  • Use a risk management approach to disclosing workforce data: the report included a new People Risk Reporting Framework (PRRF) to help organisations to articulate the full extent of the risk and opportunity attached to key workforce and HR issues. Using the PRRF can help HR fully understand the types of people data they use, and the ways they can be better shared with external stakeholders.
  • Build relationships with key stakeholders in the reporting process: finally, HR is a key part of a reporting process and should take the lead in owning and articulating people data through the annual report. This is particularly important in FTSE 100 firms where reporting quality is of mixed quality but businesses of all sizes can benefit from taking a more transparent approach to people data reporting.

Workforce reporting is a huge opportunity for HR to influence a key aspect of corporate governance and stakeholder engagement. Gender pay gap reporting has proven that workforce data has a clear purpose and can help to effect real change in organisations. The challenge now is to broaden out that work to a much wider set of workforce data – that’s when we will really shift the dial on understanding workplace performance and potential.

Edward Houghton is the CIPD’s Senior Research Advisor for Human Capital and Governance. Since joining the institute in 2013 he has been responsible for leading the organisation’s human capital research work stream exploring various aspects of human capital management, theory and practice; including the measurement and evaluation of the skills and knowledge of the workforce. He has a particular interest in the role of human capital in driving economic productivity, innovation and corporate social responsibility, and the value of human capital to corporate governance. Recent publications have included “A duty to care? Evidence of the importance of organisational culture to effective governance and leadership” for the Financial Reporting Council’s Culture Coalition, and “A new approach to line manager mental well-being training in banks” an independent evaluation of the Bank Workers Charity and Mind partnership to deliver mental health awareness training in the UK financial services sector.

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