A third of human capital risk incidents not reported
Bek Frith, May 24, 2016
Out of 47 incidents involving employee ethics only 20 were mentioned in FTSE 100 firms' annual reports
Up to 30% of risk incidents are not being addressed in FTSE 100 annual company reports, according to research from the Valuing Your Talent partnership.
The Valuing Your Talent partnership, which brings together the CIMA, CIPD and CMI, found that many organisations aren't including vital workforce-related information – including health and safety incidents, data breaches, skills challenges and employee turnover – in their annual reports. This could be creating a risk to users of these reports, such as investors, who base their decisions on the information contained in annual reports.
Illustrating your company's true value used the media to assess whether FTSE 100 firms are providing a thorough and honest overview of the risks they encounter or are merely fulfilling the minimum reporting requirements. A media search was undertaken using online news outlets (including the BBC, the Financial Times and The Economist) which were then compared with annual company reports to see how the business handled the incident.
Out of 47 incidents involving employee ethics only 20 were reported, 10 were partially reported, and 17 were not commented on at all in annual company reports. Out of 21 employee health and safety concerns seven were not reported on.
However, Valuing Your Talent found that on the whole human capital reporting is on the rise in the FTSE 100. The number of sentences written about human capital subjects in annual reports rose by 18% between 2013 and 2015, despite the amount of incidents that were not discussed.
The research says although there has been an overall increase in reporting "it is debatable whether investors and other stakeholders will be able to make informed decisions based on what are generally positive reports on a variety of human capital issues".
Peter Cheese, chief executive of the CIPD, called for increased clarity around risk incidents. “With many more questions being raised about corporate cultures, diversity, engagement and wellbeing, as well as the changing nature of the workforce and how these impact productivity and risk, we need greater transparency and consistency of human capital reporting,” he said. “We need 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.”
Ann Francke, chief executive of the Chartered Management Institute, warned that by not reporting on incidents companies could be creating a “huge blind spot".
“The number one driver of productivity and business growth is the quality of management and leadership, because that’s critical to how far organisations get the best from their people,” she said. “But if managers don’t have sight of good people measures they have a huge blind spot about performance and can’t make the best decisions about their business.”