Research: Hidden Talent: What do companies annual reports tell us about their workers?

Researchers from Lancaster University Management School have examined the annual reports of FTSE 100 companies to see how they explain their employment models and working practices in relation to company strategy, and what performance measures they use to underpin the narrative reporting.

The study was undertaken on behalf of the Pensions and Lifetime Savings Association to consider corporate reporting of workforce-related issues, based on the framework set out in its stewardship toolkit.

Key findings:

• 64 per cent of companies provided some meaningful narrative commentary on the composition of their workforce.
• All companies detailed their CEO’s pay relative to the other executive directors, but only seven per cent provided the pay ratio between the CEO and the average or median worker.
• 34 per cent of companies provided a meaningful narrative discussion of ways in which they foster and measure employee engagement. This is less than the 42 per cent who provided the results of an employee engagement survey.
• In addition to the 18 per cent of companies that provided details on staff turnover, five per cent provided figures for sickness absence rates. Just one per cent provided details on retention rates post-parental leave.

This information is important for pension funds because the composition, stability, skills and capabilities, and engagement levels of their investee companies’ workforce is a critical determinant of their long-term performance.