A Mercer Human Resource Consulting press release said that a two-year analysis of the 100 largest publicly traded US companies indicated that only about 20% discuss their HR operations in their annual reports and how the companies see those operations contributing to the bottom line. About a quarter provide only limited references to the workforce while others do not mention their people at all. Companies spend about 36% of revenue on HR, Mercer said.
“Imagine a company spending one third of its revenue on a capital investment or an interest payment and never addressing it with shareholders in their annual report,” said human capital strategy consultant Rick Guzzo, who helped conduct the research, in the news release. “It’s unthinkable.”
Mercer also found:
- Of those companies that do report on HR, the information typically focuses on simple payroll or wage statistics.
- About a quarter offer platitudes (“our people are our greatest asset”) or a few lines about the caring nature of the organization.
- Even when employees are discussed, the annual reports usually fail to provide hard facts about how the companies’ practices for managing human capital drive business results.
There is no regulatory requirement that companies report their human capital practices other than the number of persons employed, Mercer said. However, the state of external human capital reporting reflects a company’s internal state, according to Guzzo, with most firms having little to say on the subject despite the availability of various metrics.
“Organizations do have the capabilities – sophisticated tools and information databases – to gain insights into the workforce and how it can best be managed for business success,” Guzzo asserted. “The demand for human capital reporting will escalate over the next few years. Investors let companies off the hook in the past but I don’t think they’ll settle for the ‘sound of silence’ much longer.”