Frankfurt am Main, June 6, 2021. Non-financial reporting by leading listed companies in Germany, specifically on the subject of HR, or human capital management (HCM), appears to be fragmented into different report forms, disparate with regard to the subjects covered and reports vary significantly in terms of the quality and quantity of the information presented. Companies report on a very selective basis and only in a few cases they do so in an integrated form with defined key figures including target and actual values. Comparability or even a common understanding of reporting content based on established standards are rare. Consistently addressed themes such as pay and employee development appear alongside areas that receive no or only partial coverage, such as diversity or data security.

These are the findings of the hkp/// group HCM Monitor DAX 2021. The international one of a kind study run by the corporate consultancy firm hkp/// group in collaboration with DGFP – the German Association for Human Resource Management, DIRK – the German Association for Human Resource Management and the Academy of Labour, analyzed the management, sustainability, and HR reports of Germany’s DAX30 companies for the previous financial year. The contextual framework for the analysis is underpinned by institutional investors' increased focus on HR management themes amid a general increase in the significance of the environmental, social and governance (ESG) factors in investment decisions.

“Institutional investors are radically changing their strategy. While the focus was once on financial performance, attention has since turned to governance issues and a broader view of sustainability. Investors are giving human capital management (HCM) issues such as, for example, staff turnover, human rights, diversity or quotas for women, more attention than ever,” says hkp/// group Managing Partner Michael H. Kramarsch, explaining the context behind the latest study. His conclusion based on the results: “As it stands currently, non-financial reporting on HCM issues is failing to live up to the requirements of investors and has proven inadequate for communications regarding value creation and risk management.”

Specific taxonomy as a basis for a future reporting standard

For the study, a taxonomy was developed based on international frameworks making analysis of current reporting practice possible and to promote a future standardization of HCM reporting. In addition to statutory and regulatory requirements, information from key ESG frameworks such as the Global Reporting Initiative (GRI), the International Labor Organization (ILO), the UN Global Compact (UN GC) and the Sustainable Development Goals (SDG) served as basis for the evaluation logic. Leading investor and proxy advisor expectations derived from voting guidelines were also integrated.

“The end result was a taxonomy with 16 HCM categories,” explains director of the study Frank Gierschmann: “The results of the analysis are reflected in these categories. These can help companies to optimize their own HCM reporting so as to gain the trust of investors and can also be perceived by other stakeholders as playing a key role in the communication of important non-financial key figures,” explains the hkp/// group Partner.

Results: overview & selected categories

Current HCM reports by DAX30 companies accounts for a significant part of reporting, but there is significant variation when it comes to scope, timing, and publication practice. For instance, HCM sections account for roughly 14% of the overall content in management reports. One third of DAX companies already engage in integrated reporting, i.e. solely within the management report. The significant majority of companies publish their sustainability and/or HR reports significantly later than their management reports, sometimes with a delay of more than three months.
In addition to general overviews, the hkp/// group HCM Monitor DAX 2021 presents the results concisely in reporting categories with descriptions, graphs and KPIs and outlines best-practice examples. Examples of findings in individual categories include:

  • HCM strategy: Many companies do not outline their HCM strategy in its entirety. Furthermore, their reporting is often very generalized, its descriptions qualitative and lacking clear KPIs. But investors look for information that illustrates the link between business activities and the HCM strategy.
  • Diversity & equal opportunities and non-discrimination are central content covered in management reports, with reporting generally focusing on the gender aspect of this. Other subject areas such as, for example, the demographic distribution of the workforce, receive limited coverage. Country comparisons are neglected too.
  • Compensation, incentives & benefits are addressed by all companies. Aside from the highly regulated details on Management and Supervisory Board pay, a great deal of attention is afforded to initiatives for fair and equal gender pay. Only two companies indicate the gender pay gap as a KPI. Information relating to fee structures and payment for non-pay scale employees is surprisingly rare. Aside from occupational pension schemes, there is little said about any other benefits.
  • Data security: Reporting in this category falls short across the board. These sections tend to include general, sweeping statements. Only a few companies’ reports include statements that enable sound conclusions regarding the priority of data protection and information security. Only a few KPIs are featured.
  • Initial and further training, qualifications and engagement are very prevalent themes. Education is frequently emphasized as strategically important in the context of transformation and digitalization. Most companies report on digital skills and/or future viability and digital learning opportunities. In contrast, there is less detail regarding employee engagement – although nearly all DAX companies conduct regular surveys to that effect and derive KPIs like engagement index, mood index and employee satisfaction from these.

Diverse views on the need for action for HR, IR, and employee representative bodies

The study results delivered very specific findings and areas for action for the partners involved in the study project – DGFP, DIRK and the Academy of Labour. For instance, Kai Helfritz from the DGFP - the German Association for Human Resource Management took from the study the growing relevance of meaningful qualitative and quantitative reporting on HR issues – and the need for an intensive discussion on the subject with investors. He is convinced: “Current investor strategy will see CHROs and HR managers – for the first time in many cases – more prominently involved in dialog with investors. This will require key figures, best practices and a coordinated approach with the Supervisory Board, Executive Board and Investor Relations. We will see a change in HR reporting in the context of financial market communication.”

In terms of co-determination, Tanja Jacquemin, policy specialist for supervisory boards and corporate co-determination at the Academy of Labour, states that the new investor focus offers employee representatives in Supervisory Boards and works councils the opportunity to have more impact in favor of employees. “And that’s something that’s in investors’ interests too. After all, when representatives of employee interests feature prominently, employee standards are generally high and the corresponding risks addressed by investors low,” explains the multiple Supervisory Board member. She feels that, as a supervisory body, the Supervisory Board can and must reinforce a commitment to adequate reporting that goes beyond the statutory requirements and thereby reinforce the role of the employee as a company stakeholder.

To Kay Bommer, director of the DIRK - the German Investor Relations Association, HCM has not yet arrived on the investor relations agenda. The fact that, in addition to regular reporting, queries regarding key figures and issues from this area are increasingly being put to IR, is something he sees as an opportunity: “The latest developments in HCM provide investor relations with room for maneuver to establish their own standards and thereby compensate for deficits on the investor side. IR should use this opportunity to boost its own strategic positioning!”

Background on the study

The hkp/// group HCM Monitor DAX 2021 is a study initiative run by the hkp/// group in collaboration with DGFP - the German Association for Human Resource Management, DIRK - the German Investor Relations Association and the Academy of Labour. Analysis focused on reporting by Germany’s DAX30 companies for the past financial year, with management, sustainability and HR reports used as the basis. Management reports for Delivery Hero and Linde were not included due to their late publication dates. All in all, the management, sustainability, and HR reports comprised more than 9,000 pages, barely 2,000 pages of which were dedicated to HCM reporting.

Purchase of the study report

The full report of hkp/// group HCM Monitor DAX 2021 is available as a PDF document for a price of 275 euros plus VAT. Customers of the hkp/// group, members of the DGFP and the DIRK and supporters of the Academy of Labour can purchase the full study document at special rates. Orders should be sent via informal email to

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Author Frank Gierschmann

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