This section focuses on the insights that we can derive from a variety of data sources, both internal and external, to answer the question of how effectively employers are delivering on employee well-being issues. By combining information obtained from reports companies make publicly available, and data derived from our Member WatchTM database, a picture is slowly beginning to emerge.
To lead in this section, Michael Rea from Integrated Reporting and Assurance Services (IRAS) provides a discussion to employers on what publicly available data can say about the level of focus a company exhibits on employee well-being. The data is telling, more for its absence than for its accuracy. The data paints a picture of a corporate body that is only just beginning to appreciate why this data provides important insights, not just to potential investors, but potential employees, current employees, unions and the employers themselves, about how engaged the employer, is on managing this aspect of their employees lives.
Data from our Member WatchTM database provides an additional perspective for employers by producing sector comparisons of benefit structures, contribution rates, replacement ratios and more.
Ultimately the story for each sector is pulled together by our sector-specific benefits barometer readings. This helps readers identify what the critical issues are that may be impacting on each specific sector’s ability to translate employee benefits programmes into employee well-being.
Amid rising community discontent, worker solidarity, record levels of work stoppages due to strike action and an ever-increasing polarity between those who have skills and those without, companies can no longer claim to be ‘responsible’ based on traditional public relations spin. Making claims of ‘high levels of worker satisfaction’, based on surveys constructed around a central bias, fails to meet reasonable standards for research integrity. Stakeholders want, expect and ought to expect companies to be held accountable for decisions that affect society. Understanding how employers regard and manage their employees is an important component of that societal impact. Stakeholders would be correct in demanding access to a transparent record of those factors that provide insights into how companies effectively manage their human capital.
For the past seven years IRAS has produced an annual review of the sustainability reporting of all of the companies listed on the Johannesburg Stock Exchange (JSE). Using elements of the King Code of Corporate Governance and the Global Reporting Initiative (GRI) Guidelines for
Sustainability Reporting as the basis for assessing accountability, IRAS tests levels of transparency by data mining the public record for evidence of critical disclosures. At base, IRAS investigates whether or not JSE-listed companies provide comparable quantitative data for a series of 84 Environmental, Social and Governance indicators. IRAS then compares the data, within and across industries, to assess the quality of the data presented. IRAS constructs a comparative analysis of the available data to draw conclusions about how well companies perform relative to their industry peers.
The puzzle pieces
Indicators such as ‘number of employees’, ‘total revenue generated’ and ‘total income paid to employees’ are useful in understanding the size of the business, but in isolation they don’t help to determine whether one company is ‘better’ than the next. However, these (and other) indicators form the skeletal framework against which we can make a useful comparative analysis. For example, how do we determine ‘fair wages’? We can begin by comparing the ‘average compensation per employee’ between companies that all operate in the same industry – or go further and calculate the ‘average compensation per executive director’, and then the ‘income disparity ratio’ (the ratio of ‘average compensation per executive director’ to ‘average compensation per employee’) to determine if one company appears to be more, or less, ‘fair’ than its peers.
We should not underestimate the power of this data to tell a story to stakeholders. The presence of reliable comparable quantitative data within companies affects our collective understanding of four critical elements:
Whether or not companies have robust systematic procedures in place to identify, classify (or rank), and mitigate key risks, including those that result from the everchanging socio-political environment in which they operate, provides an important element to risk management. Demonstrating management commitment to developing employees is key to attracting critical skills in an increasingly competitive labour market. Managing costs cuts across the full spectrum of considerations. Whether the issue is about managing electricity demand in an energy– constrained environment, or about reducing worker unrest resulting from perceptions of inadequate compensation, effective reporting is all about demonstrating that a company is not only ‘a going concern’, but of providing comfort to shareholders and insurers that the company has the structures in place to weather all but the most cataclysmic of events. Effectively, are they sustainable?
We should not underestimate the power of this data to tell a story to stakeholders. The presence of reliable comparable quantitative data within companies affects our collective understanding of a company’s ability to remain sustainable.
1 The following report was produced by the research team from Integrated Reporting & Assurance Services (IRAS) and as such does not reflect the views of Alexander Forbes. Note that all data in this report was derived from information supplied by the companies themselves. Both the data and the IRAS report are all in the public domain.