The PLSA is stepping up efforts to make firms disclose more about their workforces to investors, explains Luke Hildyard
Many company bosses will tell you that their workforce is their strongest asset. Yet failures of working cultures and the ways in which workers are managed and incentivised have led to major corporate crises across a number of sectors.
Major banks have accumulated billions of pounds worth of fines as a result of LIBOR manipulation and PPI mis-selling.
Such is the scale of the problem at Sports Direct that the firm fell out of the FTSE 100
Corporate scandals such as Volkswagen, News International and BP have, in part, been caused by failures of boards and management to properly understand or manage what was going on at shop floor level. Such is the scale of the problem at Sports Direct that the firm fell out of the FTSE 100 amid revelations about the treatment of its workers.
UK pension schemes invest hundreds of billions of pounds worth of savers’ money in listed companies across the world, and how these companies perform has major implications for their pension scheme investment. It’s therefore essential that pension funds know more about how the companies in which they invest manage and engage their employees.
Only 11% break down total staff by full-time, part-time or temporary status
At present most annual reports fail to fully inform possible investors of the role played by a company’s workers in achieving past or future performance. In fact fewer than half of FTSE 100 companies detail their level of staff turnover in their annual report. Only 11% break down their total staff by full-time, part-time or temporary status.
With the support of the pensions minister, Richard Harrington, the Pensions and Lifetime Savings Association recently wrote to the chair of every FTSE 350 company. In the letter, the PLSA asks companies to share fuller information with investors about the culture and working practices of their workforce. The letter also highlights how the management and engagement of the workforce can have a material effect on a company’s performance and therefore the desire for pension funds and others to invest in it.
PLSA asks companies to share fuller information about the culture and working practices of their workforce
The letter comes after the PLSA published its toolkit, ‘Understanding the worth of the workforce’ in July. The toolkit outlines the type of information about workforce-related issues that pension fund investors should request from the companies in which they invest, and how this information could be most helpfully presented to investors.
The toolkit identifies a number of key performance metrics for assessing potential risks and opportunities facing companies within its workforce, including its: composition, stability, capacity and levels of engagement. It also recommends ways in which investors can encourage better reporting through private engagement and voting at company AGMs.
Detailing the investment into your workforce can increase the potential for investment by pension schemes
With the letter and the toolkit the PLSA is clearly highlighting how investing and detailing the investment into your workforce can not only boost productivity but also may increase the potential for investment by pension schemes.
Luke Hildyard is policy lead: stewardship and corporate governance, at the PLSA