Investors Seeking Human Capital Stats Amid Great Resignation
New York, NY, February 17, 2022-Workers are increasingly important to forecasting corporate profitability, but investors receive little information about them, reports the Wall Street Journal. “A growing number of large companies, such as General Motors Co., include some workforce statistics in annual sustainability reports, but the data isn’t standardized. Almost none quantify such information in quarterly or annual financial statements.
“Labor shortages, which hit hospitals especially hard this winter, also are affecting industries including retail, leisure, education and technology, forcing employers to increase worker pay. The phenomenon some call the Great Resignation is contributing to runaway inflation and forcing Wall Street to reckon with a problem that has been building for years.
“‘CEOs make these wonderful flowery statements about people being their greatest assets,’ said Jeff Higgins, founder of workforce consulting firm the Human Capital Management Institute. ‘Why aren’t people on the balance sheet if they are the most important asset?’
“Most public companies report the value of their property, accounts receivable and inventory but not human capital-the worth of their workers’ skills, loyalty, training and other characteristics. Investors want employers to consistently report specific data points using standardized measurements so they can compare one company to another.
“Some fund managers are using big data, scouring websites such as Glassdoor and LinkedIn to estimate workforce trends in the companies they cover and the economy as a whole. Others are reiterating longstanding calls for regulation that would force companies to report employee data, including pay, training, job satisfaction, demographics and hiring and promotion rates.
“California Public Employees’ Retirement System, the country’s largest pension plan, is a leader of the campaign for mandatory reporting. The pandemic has highlighted how critical human-capital risks are to companies and their investors, a Calpers spokeswoman said.
“Of the 100 largest employers in the U.S., 58% don’t disclose the salaries and benefits paid to their workforce, 85% don’t disclose turnover and 97% don’t disclose promotion rates, a key measure of job satisfaction, according to nonprofit group JUST Capital. The few companies that report human-capital statistics often do so using inconsistent methodologies that prevent easy comparison.
“The U.S. Securities and Exchange Commission is expected to unveil a rule in coming months requiring disclosure of standardized human-capital data.
“‘I think they have a strong sense of urgency because of the pandemic and also because of the Great Resignation,’ said Mr. Higgins.
“American workers quit at a record pace in November and the high turnover could last for years, forcing employers to pay more to keep their staff. Wages for Americans age 16 to 24 rose in December at the fastest pace in records tracing back to 1997, according to the Federal Reserve Bank of Atlanta.”