United Kingdom

Investors want detailed workforce metrics to assess business performance

October 2015

 

Human capital metrics, that is, metrics which provide measurable data about the workforce including sickness absence, workplace injury and health and wellness, are playing increasingly important roles for company investors.

It’s no longer enough for companies to report on what’s legally required, like KPIs and business losses due to staff injury, investors now want to see a much more detailed picture.

Speaking recently to HR Magazine, Tim Goodman, associate director at Hermes Fund Manager said: “Companies will report on things like lost time injury rates, but aren’t sickness rates, wellness rates, and mental health absence far more powerful indicators of how well a company is being managed?”

He adds: “Companies often do what’s legally required, but if they are serious about this agenda they should think about internal KPIs for measuring performance. Don’t just lob out engagement statistics. Wellness and mental health stats tell us more.”

All too often, the focus on reporting is about executive pay and remuneration, rather than issues which are affecting the whole workforce, staff wellness being a key part, but also issues such as succession planning and the board members diversity are important, too.

According to HR Magazine, providing metrics which add value both internally and externally will give investors a much clearer picture of the business they are interested in.

NAPF’s workforce report as cited by HR Magazine, Where is the workforce in corporate reporting? recommends four key areas for HR directors to focus on: workforce composition, including proportion of full and part time workers, diversity, ages and gender, workforce stability, including so-called regrettable turnover, skills shortages and post-parental leave retention rates, Workforce skills, including training and development investment, time spent on L&D and proportion of professionally hired staff members and finally, employee satisfaction including employee engagement data, staff absence rates, numbers of workplace injuries and occupational disease rates.

But according to Jeff Fox, Senior Benefits Consultant at Aon Employee Benefits, whilst organisations are just waking up to the need to report more fully on workforce metrics, many companies just don’t have the capabilities to report on them:

“The internal mechanisms to capture this data simply does not exist for the majority of organisations,” he said. “And so whilst the business case to provide investors (potential or current) with broader metrics is clear, many organisations will need to invest in the appropriate internal systems to reliably produce this data. That will be a big job for the majority of UK organisations.”

 

 

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