This post is the part of a series that discusses how the HR Policy Association stopped SHRM's efforts to develop investor metrics. This first post is more to give background on what the standard is, and what happened.
HR Standards?
If you haven't heard about the effort, Lee Webster at SHRM as been doing an amazing job in building out the set of HR standards in the United States. SHRM has been working on two major fronts. The first is to make sure that the standards are built with consensus and based on what the HR community says we need. The second front is that SHRM has been working with American National Standards Institute (ANSI) and International Standard Organization (ISO) to make sure these are real standards instead of well written HR white papers. As a result, just like other public standards efforts, there is a real protocol mandated by ANSI that has public involvement, review periods, etc.
The HR Investor Metric:
One of the standards groups that SHRM has been running has been focused on the metrics that represent HR aspects to investors. This committee has been going for over a year and under the great leadership of Jeremy Shapiro (Morgan Stanley) and Brian Kelly (Mercer). The committee was huge and had a broad stakeholder group ranging from HR Practitioners, HR Consultant, representatives from the financial community. The standard was well written and you can find it here:
The Actual Standard:
First of all, it is important to note that this was intended to be a voluntary standard. Just because ANSI makes something a standard doesn't mean every company has to do it. In order for this to have real "teeth" the Security and Exchange Commission (SEC) would need to mandate it as part of reporting requirements.
The metrics that the group wanted companies to release are:
Spending on human capital
a. Total amount spent on employees (salaries, benefits, taxes) b. Total amount spent in support of employees
c. Total amount spent in lieu of employees
d. Total amount invested in training and development
e. Total headcount and total FTE (full time equivalents) at the end of the period
Ability to retain talent
a. Voluntary and total turnover
b. Broken down by subset of EEO-1 job types
c. Industry standard formula of (# of terminations during the period) / (average active
headcount during the period)
Leadership depth
a. Percentage of defined positions that have an identified successor
b. Percentage of open defined positions filled internally during the period
Leadership quality
a. Index of relevant questions from employee survey
b. Information on the response rate and methodology/tool
Employee engagement
a. Index of relevant questions from employee survey
b. Information on the response rate and methodology/tool
Human Capital Discussion & Analysis (HD&A)
a. Narrative to provide context and discussion of the reported metrics
b. Disclosure of any material risks or any other material information related to human capital
a. Total amount spent on employees (salaries, benefits, taxes) b. Total amount spent in support of employees
c. Total amount spent in lieu of employees
d. Total amount invested in training and development
e. Total headcount and total FTE (full time equivalents) at the end of the period
Ability to retain talent
a. Voluntary and total turnover
b. Broken down by subset of EEO-1 job types
c. Industry standard formula of (# of terminations during the period) / (average active
headcount during the period)
Leadership depth
a. Percentage of defined positions that have an identified successor
b. Percentage of open defined positions filled internally during the period
Leadership quality
a. Index of relevant questions from employee survey
b. Information on the response rate and methodology/tool
Employee engagement
a. Index of relevant questions from employee survey
b. Information on the response rate and methodology/tool
Human Capital Discussion & Analysis (HD&A)
a. Narrative to provide context and discussion of the reported metrics
b. Disclosure of any material risks or any other material information related to human capital
What Happened:
The group was going for their second round of public review, and the HR Policy Association asked for a private meeting to try and shut the standard down. I wish I could say that there was insightful conversation, but I can't - actually - no one outside of the room - knows what happened. All we publicly know is that a public standards effort was stopped cold by the HR Policy Association and in private, squashed the standard.
Who is the HR Policy Association?
If you don't know who the HR policy Association is - don't worry - it is kind of intended that way. The HR policy association is an elite organization that is for VP's of HR for Fortune 500 companies only - according to their own "about us" page.
Now to be fair - the HRPA does a lot of good senior type of work - and a LOT Of lobbying in Washington. But this is the first time I am aware of the HRPA swinging in from the side lines and saying that only they can speak for the HR community...
Why this is funny and sad at the same time? Most of the Metrics are already being reported!
This is a bit like having someone have a temper tantrum and saying iPhones won't work and the adoption rate will be low - in today's times. The sky is not going to fall because HR reports on these numbers - but more importantly - a lot of companies are already reporting these numbers in the US and definitely in foreign markets. My next posting will cover how investors are getting at these metrics - with or without HR's help.
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