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SHRM Drops Human Capital Metrics Standard In Face of Opposition From Business Groups

Monday, December 10, 2012

By Gayle Cinquegrani  

In response to opposition from the business community, the Society for Human Resource Management has withdrawn the proposed human capital metrics standard it was developing for the American National Standards Institute, SHRM announced Nov. 29.

The standard, Human Resource Indices for Investors, was intended to help investors evaluate the worth of a company's human capital. Some human resources professionals contended, however, that the standard would be burdensome to companies and irrelevant to investors (30 HRR 621, 6/11/12).

Under the draft standard, companies would have provided information in five main areas:

  • spending on human capital--including the total head count and number of full-time equivalent employees, the total amount spent on employees (all wages, benefits, and taxes), spending in lieu of employees (temps, contractors, outsourcing), and the total spent on training and development;
  • the company's ability to retain talent, including voluntary and total turnover broken down by job types;
  • the company's leadership depth, including the percentage of defined positions with an identified successor, and whether the positions were filled internally or externally;
  • the company's leadership quality based on responses to an employee survey; and
  • employee engagement based on an employee survey.

SHRM's HR Standards Director Lee S. Webster in a Nov. 29 statement said SHRM's task force on measures and metrics decided to withdraw the draft standard after receiving negative feedback during the public comment period that ended in November. "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,"Webster said.

Objections to the Standard.

The American Staffing Association was one of the groups opposed to the standard. In a Dec. 4 statement, ASA General Counsel Stephen Dwyer told BNA that many business community and staffing industry representatives communicated their objections to the standard at an October U.S. Chamber of Commerce meeting. Dwyer said ASA was "concerned that the proposed standards would have required companies to disclose certain 'human capital metrics' regarding companies' use of and reliance on contingent workers as well as their overall staffing strategies."

Dwyer added, "Although the stated purpose of such disclosure was to enhance investor information," in reality such disclosure would have reduced companies' flexibility "to adjust their workforces as demand conditions change"; compelled companies "to disclose proprietary staffing practices, trade secrets, and confidential information"; and increased "companies' already enormous information tracking and reporting burdens." According to Dwyer, "Since the investment community was not calling for such standards, they were not justified or warranted."

The HR Policy Association, which represents the chief HR officers of more than 335 large employers, had complained that financial and accounting requirements already overwhelm publicly held companies and that the standard could have disadvantaged them by revealing their internal organization and staffing structure to their competitors.

In a Nov. 30 statement, the association said "shortly before" SHRM's task force voted to withdraw the standard, "HR Policy joined the U.S. Chamber of Commerce and nearly 60 other business groups and individual companies expressing concern that the standard was 'contrary to the interests of the HR profession."

"The controversy that erupted over the investor disclosure standard has raised fundamental questions regarding the standards setting process generally," including whether the development of ANSI standards in human resources is "of value to the HR profession and the business community generally, and if so, who are the appropriate persons to be involved in the standards setting process," it said.

ANSI accredited SHRM in 2009 as a standards-developing organization in 11 HR functional areas. SHRM said work continues on other HR standards it is developing. SHRM said the voluntary standards provide consistent methodologies and a common approach for HR professionals.

By Gayle Cinquegrani  

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