Business Community to HR: You’re Completely Irrelevant

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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.