Companies that publish their workforce policies on issues like pay equity and paid maternity leave can generate up to 3% more return-on-equity than their peers who don't.
Human capital issues are becoming increasingly important to modern day corporate success. Over the last several years, some of the biggest U.S. corporations have enacted better workplace policies, from making efforts to narrow the pay gap (Salesforce and Microsoft) to providing better training (JPMorgan Chase and Walmart).
Even investors are starting to pay closer attention. Recently, the Securities and Exchange Commission (SEC) Investor Advisory Committee responded to petitions by institutional investors to incorporate human capital management into its corporate reporting and disclosure regime by recommending the SEC examine the case for better disclosure. This will only up the ante for human capital performance measurement and encourage companies to signal their leadership on transparency around the issues most important to the American people—their treatment of their workforce.
At JUST Capital, we spent the last year analyzing 890 of the largest publicly traded U.S. companies on their approaches toward key human capital management issues identified as priorities by a representative sampling we conducted of over 80,000 Americans. This assessment of the current state of worker-related policies across corporate America revealed a sobering picture: It’s still the wild west of workforce policy disclosure with little direction on how to best measure issues like pay equity, paid time off, paid parental leave, flexible work, diversity and inclusion policies and targets, provision of day care services, worker training policies, and tuition reimbursement. The lack of standards on this also means investors are unsure of how to evaluate the information once it is disclosed. These results support three major takeaways:
The first is that public information on these workforce policies is incredibly difficult to find. We found that only 2%—or specifically 18 of the 890 companies we analyzed—disclosed their workforce policies on all the nine issues we studied. This suggests that either the majority of companies have not committed to creating these workplace policies, or that they are reluctant to reveal results. Whatever the reason, this first step seems to be the hardest right now. Public disclosure, however, can pay dividends to those that commit to it: The companies that disclosed their workforce policies generated up to 3% higher return-on-equity than their peers.
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