Investors should look at an organisation’s employee engagement activity when considering its investment value, according to the Local Authority Pension Fund Forum (LAPFF).
Its People and investment value guide encourages pension fund trustees and asset managers to consider the employee value proposition a business uses to engage staff beyond monetary rewards when looking at whether to invest in an organisation.
According to the guide, employees who are engaged with their employer are more likely to choose to stay and will work harder for the organisation.
The guide includes a set of questions that pension fund trustees and asset managers can use to appraise the link between people and the investment value, including:
- What is the ratio of engaged to disengaged employees in your organisation?
- What hard evidence can you share with us that a link exists in your organisation between pay and staff performance?
- How do you ensure the people who work for you share the organisation’s values in a way that enables them to connect with each other?
Ian Greenwood, chair at the LAPFF, said: “By publishing this guide, the forum hopes to broaden the debate investors have about reward and motivation, and change the nature of their discussions with organisations.
“Too much time is spent talking about the pay packets of a handful of people on each board, while what is going on inside the business is left unexplored. This report will inform LAPFF’s future engagement. We hope other shareholders take up these questions too.”