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Weekly Wrap: SHRM Forced to Back Off on New Human Capital Standard
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I’m not always a big fan of SHRM — particularly how SHRM’s Board of Directors has chosen to operate — but this week, I think SHRM got big footed and forced to back off something that might have ultimately been a good thing.
In case you missed it, the American Staffing Association (ASA) and a number of other related organizations are crowing about forcing the Society for Human Resource Management to back off an effort they were leading to create standards around the reporting of HR metrics to investors.
According to a story on SHRM’s website, “This standard was to consist of a series of metrics intended to show the value of human capital in a manner that would be compelling to investors in publicly traded companies” according to Lee Webster, HR standards director for the SHRM.
“However, feedback from stakeholders in the business community during the public review and comment period prompted the task force that drafted the proposal to withdraw it from the American National Standards Institute (ANSI) standards-setting process, Webster said. “It became clear that there wasn’t sufficient support from the business community to proceed with this effort. After seriously considering all relevant views, the task force decided to discontinue work.”
Here’s what the ASA had to say about this in a story this week on their website:
At the behest of the American Staffing Association, HR Policy Association, U.S. Chamber of Commerce, and other business groups, as well as Fortune 500 companies, the Society for Human Resource Management has withdrawn its proposed American National Standards Institute guidelines that would have required publicly traded companies to disclose confidential human resource metrics, including expenses incurred in connection with the use of temporary workers. According to SHRM, the metrics were designed to provide human resource information to investors to assist them in their investment decisions.
In written correspondence opposing the proposed metrics, ASA and others stressed the lack of a genuine need or any sort of expressed desire on the part of the investment community for human resources metrics standards, and noted that the metrics would result in publicly traded companies having to divulge trade secrets and other competitive information by virtue of the disclosure of otherwise confidential human resource information.
ASA and its allies also stressed that the metrics, which were largely drafted by human resource consultants, would prove meaningless since investors would not have any benchmarks with which to interpret and compare them, and that the standards were outside the boundary of the kind of work that SHRM should be doing. “Instead of supporting human resource professionals and the businesses that employ them, the standards would, in actuality, be harmful to their companies.”
If you are one of those people (as I am) who thinks that better HR metrics would actually be a good thing, well, ASA and all of its buddies just big footed you, too.
The coalition that came together to fight this proposed HR standard is largely made up of big companies. I’m not surprised that Fortune 500 companies and the HR Policy Association is against it, because the bigger the company, the bigger the hassle it is to compile this kind of data.
I’m also not surprised that there is a “lack of a genuine need or any sort of expressed desire on the part of the investment community for human resources metrics standards,” as the American Staffing Association puts it, because trying to get two members of the investment community to agree on anything is like trying to get two economists to agree. It just doesn’t happen.
And, the notion that “the metrics would result in publicly traded companies having to divulge trade secrets and other competitive information by virtue of the disclosure of otherwise confidential human resource information,” is laughable on its face. If we used that standard to decide what kind of information businesses were required to disclose, nothing would EVER be disclosed, because businesses don’t ever want to disclose anything at all.
Yes, the American business community is not exactly a group that is clamoring for more transparency and insight into their business practices.
I guess what surprised me the most about all of this was how SHRM was actually forced to back off their support for this new standard, and if you know much of anything about SHRM, you know that just doesn’t happen very often. SHRM, as a national organization, is stubborn, bullheaded, and not easily forced to fold their tent and back away from something they want to do.
But as one person knowledgeable about the work on this HR metric standard told me about the coalition going up against SHRM on this, “It was like a grizzly bear walking into your picnic. No one is saying the grizzly bear is right to take your lunch, but the smart thing was to walk away.”
The rumbles I hear are that this fight over the proposed HR metric are not over just yet, despite SHRM’s action this week, and I think that is probably a good thing. Despite the hassle that something like this might cause businesses and organizations, a metric that shows the value of human capital — the single largest expenditure for most American businesses — is probably a good thing.
Again, I’m not a big fan of how SHRM operates sometimes, but this is one time where I am on their side. This debate over a proposed human capital metric deserves to continue.
Of course, there’s a lot more than the squabbling over a national HR standard in the news this week. Here are some HR and workplace-related items you may have missed. This is TLNT’s weekly round-up of news, trends, and insights from the world of talent management. I do it so you don’t have to.