Institutional shareholders have blasted major UK companies for failing to
disclose their HR strategies to investors.
Institutional investment consultancy Pirc reports that despite regularly
referring to staff as their most important asset, companies rarely divulge
personnel policy to shareholders.
The consultancy, which advises pension funds worth £400bn on shareholder
voting and investment strategies, said there is a vast disclosure gap between
what companies are doing and what they are telling shareholders. Pirc research
director Stuart Bell said, "This sends out the short-sighted message that
employment issues are irrelevant to investors. In fact, in today’s
knowledge-based economy, people management policies are increasingly important
driver of corporate success."
Despite the criticism, the Pirc report is a boost for HR’s status, as it
indicates that shareholders recognise the financial value of good people
management. The research found only 24 per cent of FTSE100 companies report a
board-level director with responsibility for personnel issues.
The study lists five employment issues of relevance to shareholders – an HR
representative on the board, union recognition, works councils and joint
consultative committees, Investors in People accreditation and equal
opportunities code of best practice – and shows how many the firms surveyed
covered in their reports. Although none reported on all five, a number achieved
four out of five, and several reported on none.
The National Association of Pension Funds, trade body for company pension
schemes, has also taken an interest in people strategies, and has discussed the
case with the TUC.
NAPF director of corporate governance John Rogers said, "It is a good
thing for some investors to be thinking about."
Investor interest in company’s HR practices will fuel claims that there is a
clear business case for good people management and recognition of its value.
By Tom Powdrill