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. And organizations that are known for their progressive human resources policies — for example, a strong commitment to promoting women and minorities to executive positions — will be better able to withstand a public-relations crisis, as they will have accumulated a reserve of goodwill among the public.

Such potential advantages aside, companies have generally been mum on the topic of human resources, even given the growing pressure to be forthcoming. More than a third of the survey respondents said that investors had recently requested specific data on employee retention, compensation and so forth. But, for now at least, the perceived incentives for complying are minimal, especially given that the disclosure of human resources information is neither standardized nor mandatory, except in France and Belgium, among other countries.

Even so, some organizations have made it their official policy to release human resources data regularly. European firms like Skandia, a Swedish insurance company, and BSCH, the largest bank in Spain, publish “intellectual capital statements” to supplement their annual reports, and in many cases that information is validated by external, independent auditors. In the United States, one company that has been particularly open with human resources information is Ben & Jerry's. For 2001, the Vermont-based ice-cream maker published details of its benefits expenditures per employee ($10,892), its entry-level salary ($31,254 including benefits and bonus), the ratio of the highest salary to the lowest (16), the gender balance of the work force (60% male and 40% female), how it filled job openings (40% by internal candidates), the number of injuries at its facilities (28) and the total work time lost due to those incidents (194 person-days).

But is there such a thing as too much disclosure? Specifically, could the publicizing of intimate details of a company's work force make the corporation more vulnerable to human-resources-related litigation, such as discrimination lawsuits? That question is of particular concern to companies in the United States because of the country's strong unions and litigious environment. The authors state that further research will help establish general guidelines and rules of thumb for a company to determine what human resources data it should release (and what information it shouldn't), given that particular organization's long-term objectives and strategy.