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When companies talk to their investors they rarely mention their workers. But the few that do deliver superior shareholder returns. Maybe more managements should discuss their employees more often.

We’ve used machine-learning to identify which firms talk about employees in a meaningful manner on conference calls with investors when discussing their financial figures.

Analysis of 27 million sentences from 938 US and European companies since 2002 shows the firms mentioning their workers consistently outperform. Over the past seven years, shareholder returns from the 10 per cent discussing employees most often grew by a compound 16.0 per cent a year while the other companies averaged just 14.3 per cent.

Some organisations encourage employees to give their best, while others leave workers feeling disconnected, doing only what is needed to get paid. However, supporting anecdotal observations on ‘good employers’ has been difficult: investors can easily assess a company’s physical and financial capital but it is harder to measure investment in human capital.

This partly explains why very few management teams talk about employees to their shareholders.

Machine-learning allowed us to identify sentences on results calls that referred to employees as more than just costs. The most common mentions highlighted training, safety and hiring. Only 14 per cent referred to engagement, morale or satisfaction. Other subjects included employee turnover, thanking staff or company culture. Industrial relations, unions and strikes were monitored too, plus investing in and hiring staff.

We included positive and negative mentions because both show that management is focused on the importance of human capital.

However, we found that managements very rarely talk about employees at all on results conference calls. The 938 companies examined averaged less than one sentence a year. Nevertheless, 10 per cent made more than three references and it is the same 10 per cent consistently over time.

US and UK companies have the highest average sentence count and the top sectors are utilities and consumer discretionary. However, the outperformance of the top 10 per cent is not linked to either geography or industry, suggesting that - while our assessment is crude and focuses on talk not action - it matters whether employees are happy, engaged, loyal and inspired by the purpose of the company.

Concern for employees is reflected in easier recruitment, higher productivity, lower staff turnover and fewer accidents.

Although the number of companies mentioning employees is low, our analysis shows it is increasing. The shift to less capital-intensive business models coincides with a rising concern for environmental, social and governance issues.

Investors’ ability to make an assessment of workforce topics will increase as disclosure of employee metrics improves and becomes more consistent. Shareholders should thus search for new sources of information on workers and encourage companies to increase labour-related disclosure.

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