Companies paint an ‘overly positive’ picture of people management risks, warns CIPD

25 Jul 2018 By Maggie Baska

Study finds Britain’s biggest businesses fail to share important HR data in their annual reports

Many FTSE 100 companies are “painting an overly positive picture” of important workforce issues in their annual reports, according to research published today by the CIPD.

The report, Hidden Figures: How workforce data is missing from corporate reports, analysed the coverage of key people management figures across FTSE 100 companies. 

In particular, the research discovered the number of companies reporting on their use of interns dropped by almost a third (32 per cent) between 2015 and 2017. During the same time period, the proportion of companies reporting on employee engagement and employee relations fell by 21 per cent and 14 per cent respectively. 

Only one in ten (12 per cent) companies reported on the problems they faced with skills shortages, and just over one in five (21 per cent) mentioned their skills gap in their annual report. 

However, bucking the trend, the CIPD also found reporting on apprenticeships increased by 64 per cent across businesses, which it attributed to April 2017’s introduction of the apprenticeship levy.

The majority of company reports also included information on employee wellbeing (76 per cent) as well as skills investment and development (69 per cent). 

Edward Houghton, the CIPD’s senior researcher for human capital and governance, said that organisations were focusing their efforts on complying with legislation and governance codes while reporting on “very little else voluntarily”.  

“We need to see much more consistency in what is being reported, the language used to report it and the measurements being applied so all stakeholders get a complete picture of workforce opportunities and risks,” Houghton said. “Without full transparency, there’s a real danger that businesses are painting an overly positive picture of how they manage their people and people risk.”

The CIPD called on the UK’s biggest companies to improve reporting and transparency on their human capital figures, warning that failure to disclose such information keeps investors, employees and other parties “in the dark on key business indicators”. 

But Norman Pickavance, chief executive of independent think tank Tomorrow’s Company, told People Management that he had witnessed a “sense of distrust” when businesses report on people management figures. 

“There are a lot of businesses that project what they think people want to hear, but society at large doesn’t really trust what businesses are trying to say,” the former group HR and communications director at Morrisons said, adding the lack of a definitive set of standards on how people issues should be reported also created issues when including such data in company accounts. 

Meanwhile, Dr Judie Gannon, senior lecturer in HR management, coaching and mentoring at Oxford Brookes University, argued that “forcing companies’ hands to be more transparent” with human capital figures is only part of the story. 

“I think [reporting] is really important, but we need to think about what is happening in organisations that they don’t want to engage in these reports,” Gannon told People Management

Andrew Kakabadse, professor of governance and leadership at Henley Business School, also warned creating rules for reporting could lead to companies disclosing information because they have to, and not because they are truly engaging with the issues at hand. 

“If you create rules for reporting, they will be followed, but I doubt they will do much for the company unless you have a gifted CEO who really cares about how this is reported and what it means for the company,” Kakabadse said. 

The CIPD’s People Risk Reporting Framework, which was published alongside the report, highlights seven dimensions of workforce risk, such as talent management and employee ethics, that employers should look to explore in their annual reports. 

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