HR Management, HR News & Trends

Business Community to HR: You’re Completely Irrelevant

fast-company-issue-97

In 2005, Fast Company published Why We Hate HR. It caused much hand wringing and introspection inside the HR profession.

Here’s the last paragraph from that article:

That’s where human resources is today. Stuck. “This is a unique organization in the company,” says USC’s (John) Boudreau. “It discovers things about the business through the lens of people and talent. That’s an opportunity for competitive advantage.” In most companies, that opportunity is utterly wasted.”

Seven years later, that opportunity remains utterly wasted.

More trouble than they were worth?

Last month, SHRM withdrew a proposed standard “intended to show the value of human capital in a manner that would be compelling to investors in publicly traded companies.”

In plain English, the standard was all about measuring the value of human capital, and by happy coincidence showing that the HR profession measurably contributes to shareholder value.

Those that would have been most affected by these new standards were the large public companies, and their statements were damning. Large businesses and the associations representing them effectively told the Society for Human Resource Management that the proposed standards had no relevance, and far from being valuable, they would actually be more trouble to collect than they were worth.

A few select quotes from the Joint Trade Letter to SHRM From the Business Community (the emphasis is mine):

The metrics contemplated by the standard are not material to investors, nor are investors requesting the information. …”

“Public disclosure of HR metrics is not being requested by senior management of companies. In fact, when told about the standard, senior management strongly opposed establishing a standard for the public disclosure of this information. … “

“The information required to be assembled has not been shown to be material to investors or desired by them.”

Where are the demands for such a standard?

Yes, these statements are all from organizations who advocated against the standard. They are not objective.

But, they have a point. Where are the demands from CFOs that these standards be reported? The calls from mutual funds pleading for hard human capital numbers to guide their investments? The accountants who insist that they can’t analyze a balance sheet without knowing about the people side of the business?

The standard was a well-intentioned idea, but it answered a question that nobody outside of HR had been asking. It was driven by a need within the profession to gain respect and have others understand and acknowledge that we add value to our respective organizations.

The rest of the world does not even think our efforts are worth measuring. Let the hand wringing commence.

David Manaster is the founder of ERE Media, the parent company of TLNT.com. Contact him at david@ere.net
  • Maureen Sharib

    Maybe Recruiting Really Does Belong Under Finance? http://tinyurl.com/popuy6

  • http://twitter.com/AFischhaber Anne Fischhaber

    That’s a thought provoking conclusion. Organizations that know and acknowledge their talent as their competitive advantage know exactly what to measure when it comes to talent. The idea of HR standards has to be viewed within the type of business outcomes that are expected, and against the overall strategy of the business.
    HR will only be relevant as long as it stays in touch with the overall vision and strategy of the business, and as long as it can translate the strategic plans into specific talent ideas that contribute to the overall strategy.

  • John Bushfield

    David – It just baffles me that HR still doesn’t get it. It doesn’t surprise me that SHRM would attempt to advance an irrelevant standard; that organization doesn’t get it either.

    Done properly, HR is a hard job, and requires a level of intelligence and skill that seems to be lacking in the current practitioners. Its a sad commentary on a unique function that has enormous potential to add real value, but doesn’t know how to realize that potential or understand the value that can be brought to bear.

    Every function has a lens through which it views the organization. HR has a lens as well, but suffers from tunnel vision because it limits its view to the ‘Human Capital” rather than the organization at large (there is a difference). Thus, HR is sucked into a tactical role dealing with issues in the here and now, rather than exercising real leadership in devising strategies for the future.

    Ted Turner had a sign on his desk that said: “Lead, Follow, or get out of the way”. HR should pay heed.

  • SOI

    HR teams are forced to handle the day-to-day activities that don’t directly support the efforts of the company to improve customer service and revenues. If the company outsourced the transactional HR duties it faces, they could utilize experienced HR professionals and redirect them towards customer experience management.

  • http://twitter.com/oncontracting Pradeep Chauhan

    I always find it sad that functions that were created to increase efficiency, start suffering from ‘lack of appreciation’ mentality and actually spend money and effort justifying their existence. This often indicates the political ambitions of the leaders in these groups. Feel under-appreciated- move on till you don’t! You won’t find the marketers at Nike, the Logistics folks at UPS or the Buyers at Walmart complaining about not being appreciated or valued.