Investors and human capital: the role of HR leaders

Back in 2015, when I was editor of HR magazine, I wrote a piece exploring whether investors were finally beginning to take workforce data seriously when it came to making valuation decisions about a company. In it I cited research that found 94% of investors believed culture was important to them when making investment decisions, and concluded we might be reaching a tipping point for the investment and wider business community in recognising the value of people.

Four years later, it appears I may have been too hasty – or too optimistic. Progress continues to be slow, but there are encouraging signs of that the pace of change is ramping up. The CIPD’s recent research on investor perspectives on people data found an increasing recognition from the investor community of the importance of human capital information, although very little consensus on what the information that matters looks like, where to find it and how to properly interrogate it. The appetite exists for different measures of value, beyond purely financial metrics, but the challenge remains a lack of understanding or consistency over what this looks like in practice.

To move the conversation on, the CIPD recently convened a group of stakeholders from the investment community, as well as some senior HR voices, to debate whether investors will ever take information around people and culture as seriously as financial metrics, the practical steps that would allow them to do so, and the role of HR leaders in making this happen.

As in our research, we found some willingness to assess a greater diversity of information about a company, including looking ‘under the bonnet’ into employee experience via channels like Glassdoor, but confusion over what good looks like, and what information to look for in the first place – compounded by lack of standardisation in reporting. As one attendee put it: “What gets measured gets done. If we are not seeing the measures, how do we know it’s being taken seriously?”

While apathy exists in some quarters of the investment community – particularly those involved in the short term ‘renting’ of shares, with minimal focus on stewardship and governance – the increasing interest from some in the sector presents a significant opportunity for HR leaders. If investors aren’t quite sure what they are looking for, HR directors should take a lead in showing them. Mobilising this critical community to ask challenging questions around people and culture is what will lead to change, but HR has a role to play in making a strong case around the value of people.

The external context is showing signs of shifting towards more people and culture-centric business models. The revised UK Corporate Governance Code, for example, puts more of a focus on ‘HR’ issues, such as employee engagement and voice. Regulatory shifts such as gender pay gap reporting, upcoming pay ratio reporting and the highly likely introduction of ethnicity pay gap reporting provide a burning platform for shaping a compelling narrative around workforce data. 

These may be fairly blunt tools, but they are a starting point for conversation and change, which HR leaders should be eagerly jumping on. If it isn’t the HRD providing strategic thinking around creating value through people, then who is?

Some investment groups are also now calling out businesses over lack of diversity. Earlier this year the Investment Association ‘shamed’ 94 firms for failing to boost the number of women on their boards, giving them the highest ‘red top’ rating. That’s a pretty iron-cast business case that CEOs and chairs will find difficult to ignore. 

HR leaders need to step up and seize this opportunity. I would love to see more HRDs following in the footsteps of SSE HR director John Stewart, who has consistently led the way in human capital reporting, having published reports on the value of the firm’s human capital as well as its Return On Inclusion’. “We don't know if our numbers are good or bad, but we are publishing them to start a debate and get investors interested in more [people metrics],” he said at our breakfast event. For change to happen, someone needs to go first, even if they are only midway through their journey.

The corporate reporting and governance space is an area the CIPD is playing an active role in, representing the voice of the people profession in a debate that it is getting increasing amounts of airtime and attention. We are working with the FRC as it develops tools around culture monitoring and assessment, and I am convening a breakfast in October for CHROs to debate the reporting of culture with the FRC, which HR leaders are welcome to get in touch about. 

As one of my interviewees said back in that 2015 piece: 'This is as strategic as it gets in the HR field. There is no better way of reinforcing the relevance of all things human capital.' That remains true today and the profession should be energised by the opportunity to add even more value to organisations and all our working lives. 

If you are an HR leader who is interested in getting more involved in this agenda, please contact Katie Jacobs on

Thank you for your comments. There may be a short delay in this going live on the blog page as we moderate the comments added to our blogs.

  • Fascinating post, Katie, I do wonder how much human capital data is considered when making financial investments. Governance is gaining traction, what with ESG indices becoming popular to track, as well as a nice way to sell financial products. I also wonder how much focus mergers and acquisitions place on the role of organisations' human capital. Thanks again for sharing!