Driving ethical business culture through better people data

By Louisa Baczor, CIPD Research Adviser

I recently attended the Institute of Business Ethics’ event on creating a ‘speak up’ culture, which is of course particularly topical given the multitude of sexual harassment accusations in Westminster and Hollywood. In an ideal world, organisations would create environments where everyone takes responsibility for acting with integrity, and feels confident that they will be heard. But this requires leaders and managers to be willing and able to deal with criticism and possibly uncomfortable truths about behaviour in the organisation.

One of the speakers at the event shared his experience of gaining the buy-in of leaders by explaining the value of speaking up in financial terms, such as the loss saving as a result of important issues being raised in the business. HR professionals have a key role to play in helping boards understand the impact of people and culture on the business. But how easy is it to quantify such intangible factors? The CIPD’s previous research demonstrated the need for measures of culture and better reporting of people data, to help companies manage risk and promote the opportunities available from investing in people and HR.

Today’s organisations operate in a society which is, on the whole, sceptical of the behaviour of big business. Trust is low in communities that feel excluded from receiving the benefits of ever-growing profits. And following high-profile cases highlighting poor treatment of workers, and business models that appear to be increasing inequality, many stakeholders now feel there needs to be a shift away from finding solutions for the short-term (which ultimately have a negative impact on organisations and their wider stakeholders) towards more sustainable decision-making. In this community of wider business stakeholders, investors play an important role in influencing corporate governance. While there’s growing recognition in the investor community that understanding the value of the workforce is a critical element of driving business sustainability and competitive advantage, our research suggests HR professionals and investors are not working together effectively in the use of people data. There is a lack of standard approaches and measures of human capital value, highlighting an opportunity for HR to provide better data to investors and enable more effective decision-making.

Insights provided by HR analytics and people data can drive long-term decision-making, in contrast to the tendency to make investment decisions that yield only short-term gains. For example, data showing how investment in skills and knowledge drives performance can demonstrate the value of people in the workforce, in terms of risk and opportunity. The people profession of the future can provide unique expertise on human capital and the longer-term benefits of investing in the workforce, to help investors and boards view it not as a cost, but a source of competitive advantage. At the CIPD, our research is continuing to explore how people data is viewed by the investor community, and how relationships can be developed between HR professionals and investors to enable better decision-making in organisations.

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