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CIPD: HR Data Could Drive Ethical Investment

CIPD Says HR Data Could Drive Ethical and Sustainable Investment.

Research published by CIPD in partnership with Warwick University Business School looks at investors and the people data they use when making investment decisions.

The new research explores how investors make decisions using people data. Launched last month ‘The intangible workforce: do investors see the potential of people data?’ found there are many opportunities for HR in listed organisations to work better with investors to help demonstrate the value and contribution of the workforce. Investors and analysts are interested in HR data that describes quality of management, cost of workforce, and cultural risk; information which HR analysts often collect and analyse. This could help investors understand more long-term risks and opportunities to the business, and therefore inform better investment decision making. 

There are also more opportunities for senior HR leaders to demonstrate the value of HR insights to boards which may be looking to engage more effectively with their investors/shareholders. HR leaders can bring value that to boards, particularly in organisations which may be facing workforce risks arising from Brexit, and changing working practices. Data and insights that describe the approach boards are taking to mitigate against business risks are considered to be of high value by investors.

Currently, there is a bias towards financial information. Leading to Issues like herding and following the actions of other investors to maintain the status quo. There is more that needs to be done to illustrate the importance of non-financial information about the workforce. In addition to this there is also little research published which describes how investors make decisions using people data. 

The research concludes by highlighting a number of ways in which HR leaders can help to drive better decision making by investors. These include the adoption of standard metrics, clearer narrative reporting of people insights, and better linking HR data to business and people strategy. 

The new research is part of CIPD’s ongoing work to help boards and their external stakeholders to consider the workforce in their strategic decision making, and make more ethical and sustainable decisions.