Is people reporting the gateway to delivering truly strategic HR?

It’s a common belief that large organisations are swimming in people data, and that management in these organisations are ‘data-driven’. The story goes that as HR systems improve more data is captured which is then used by business leaders to make decisions. Assumptions about the quality of the data aside, the crux of this story is that people analytics (the processing and analysis of people data) is for the purpose of internal management, and as such business users get the most attention. But often we neglect some of the most powerful users of people data: those outside of the organisation, like investors, regulators and future employees. In fact, it seems we are missing out on one of the most compelling arguments for capturing and using people data: for influencing external stakeholders.

People reporting (sometimes termed ‘workforce reporting’) describes the way by which people data is shared with key external stakeholders to help them to make better decisions. For publicly listed organisations, people reporting has risen quickly up the agenda. In the UK, there is now growing demand on the part of investors and regulators for people data in various forms. New research by the Financial Reporting Council Lab (FRC) released in January 2020, describes the growing appetite among investors for workforce data. Investors want information about workforce skills, training and development, board and business culture, and even information on the ‘strategic value of the workforce’.

And whilst the FRC Lab report focuses mainly on large listed firms, we know that people reporting isn’t only relevant to large organisations. In the UK gender pay gap reporting has shown how organisations of 250 or more employees can be compelled to report on specific types of people data. And whilst there’s lot of debate about the quality and impact of gender pay gap reporting, one thing is clear: workforce data can be reported to external stakeholders. Firms are now actively collecting and reporting key data, and importantly, there is an appetite for this information. Business leaders and people professionals should therefore expect that reporting requirements may grow as interest in workforce issues continues to rise.

The role of standards

Whilst interest in people data is on the up, it’s becoming clear that the information sought is often hugely complex and hard to capture. Many concepts in HR are by their very nature difficult to define let alone measure. Without clarity on terminology (e.g. employee engagement) there is little hope of being able to use data to make good decisions – yet this is what is being attempted by investors. Some are actively seeking, assessing and using workforce data in their valuation models. CIPD research shows that this data is being sought even though some question its quality and applicability. What investors struggle to do is compare data between organisations or even industries, because unfortunately no clear measures have been defined.

People reporting has generated several important developments in the world of measurement and standards. Many workforce measures are not clearly defined; however movements have started globally to define standards and enable the effective application of workforce data. The CIPD is playing a central role in defining these standards, working with the British Standards Institution, and the International Organization for Standardization (ISO) to try and encourage the adoption of reporting standards. If you want to find out more check out the factsheet here.

The fact that people data is being sought should act as a prompt to senior people professionals to consider if and how their functions can provide relevant information to those internal stakeholders who have a responsibility to report externally. In finance/risk terms, investors want to understand which workforce issues “material” to business success and business risk. Therefore, people reporting offers an exciting opportunity for people professionals and their teams to play a central role in defining some of the key challenges and opportunities facing business today by leaning on their own unique professional knowledge and expertise.

People reporting: leading businesses towards transparency and sustainability

The FRC Lab study highlights the growing interest in workforce information but notes a clear gap between what investors and regulators want, and what they currently receive through traditional reporting methods. CIPD research shows that basic data is often missing, or poorly reported, and strategic information is often not even disclosed. When it is, the narratives that are used to outline the workforce to value creation is often confused and not well articulated. Often poor reporting is characterised by ‘boiler plate’ reports which are overly glossy and lack transparency. The FRC report highlights many useful takeaways for practitioners, including some key steps they can take. These include:

  • Describe clearly the measures they use to understand the size and quality of the workforce.
  • Define the key measures that the business is using to deliver its strategy and report these clearly.
  • Demonstrate how the key measures defined are being used to drive decision making.

It’s clear that there is a growing interest from regulators and investors in people data, and that organisations, public and private, should expect greater calls for transparency in their annual reports. People professionals are well positioned to be able to help drive decision-making using people data, and critically, to provide internal stakeholders with the information and insights they need to work with investors and regulators. Influencing and shaping business decisions at this level is a core element of strategic HR, and as such the people profession should take the opportunity that is being presented to it and run with it.

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