How does a company attract, develop and retain the right people? Does healthy corporate culture support higher innovation? What are relations like between employees and management? At Capital Group, we believe that considerations such as workforce skills, working conditions and labor relations can be very important in understanding a firm’s long-term risks and opportunities.

KEY TAKEAWAYS

• Our research suggests human capital is potentially one of the most impactful and underappreciated drivers of business value.
• Tight labor markets, shifting demographics and new regulations suggest that human capital is becoming an even more crucial consideration for active investors.
• We have identified five indicators that, in our view, can help investors discern how human capital management is affecting investment value.