HR Information Disclosure

Although most large corporations routinely collect data on employee turnover, benefits expenditures, training costs and so on, they rarely make that information public. But that could be a mistake, claim Fabienne Autier, associate professor of human resources management, and Rodolphe Durand, associate professor of strategy, both with E.M. Lyon in France, and Stephen Gates, principal researcher of the Conference Board in Paris. The researchers contend that companies should regularly release human-resources-related statistics, just as they do financial data such as operating costs and research and development expenditures.

Those and other findings are contained in the December 2002 paper “There's More to Cooking than Reading the Recipe: The Case for HR Information Disclosure.” For that research, the authors conducted a worldwide survey of 102 international companies based in Europe and the United States. The study revealed that although businesses are collecting an increasing amount of human resources data, less than 10% disclose that information publicly. For the companies that don't, the top reason cited was that they wanted to keep human resources information secret from competitors, mainly because they wanted to prevent rivals from imitating their best practices for attracting and retaining talented employees.

That fear is basically unfounded, assert the authors. They argue that human capital, unlike other traditional resources such as land and equipment, is difficult to replicate successfully because it is embedded in complex social systems. So even if a rival business learns details of a company's work-force profile, level of expenditure for training and so on, that information won't necessarily provide any competitive advantage. In other words, when it comes to human resources, competitors may know the ingredients and recipe, but that doesn't mean they'll automatically be able to prepare the same dish.

Thus the authors contend that companies with successful human resources policies have much to gain by disclosing that information. For one thing, the enhanced reputations of such organizations will enable them to attract better employees and business partners. And the disclosure could have tangible benefits on the stock market. Certain shareholders — union pension funds, public-employee pension funds and socially responsible investors — might be attracted to the stocks of companies that are perceived to treat their employees well, leading to higher market capitalizations for those concerns.