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HR Leadership Column

Setting Standards for HR

An ongoing process to set minimum standards for HR, similar to the generally accepted accounting principles so prevalent in finance, offers both an opportunity and a risk for HR leaders. Being able to comply with already-set standards leaves one free to concentrate on more strategic issues. But being unable to comply could put one's job at risk.

Monday, February 21, 2011
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While I was CEO at the Society for Human Resource Management, I often met with other CEOs and non-HR executives to talk about the profession and discuss what they wanted from their HR executives and the HR function.

Usually the conversations revolved around the issues identified in the Ulrich/Brockbank and other HR competency models. They fell into categories such as wanting someone with credibility, business savvy, operational capability and strategic insight. Someone able to help build a culture and find great talent. (Or, as they frequently said, "Someone who gets it.")

But some just answered my question with a question: "Well, let me ask you -- how do I know if HR is doing what it should be doing? What's the standard?"

It's not a surprising question, if you think about it. After all, how many CEOs came out of finance, where they had to understand the Financial Accounting Standards Board requirements?

Of course there's no "one true way" for HR; context really does matter for much of what HR does.

How talent is sourced depends on the type of talent needed for the business strategy. How the work is organized depends on what work needs to be done. How compensation and benefits are set depends on what the market will bear or requires. And so on and so on.

Nevertheless, aren't there areas of the profession that could be subject to a set of minimum standards? Couldn't minimum standards enable a non-HR executive to better assess the quality of the HR function?

And couldn't standards prove a useful tool for creating investor metrics that could provide analysts a common language to assess the human capital practices of a business?

In case you missed it, a process for identifying and setting such minimum standards has begun.

Early in 2009, the American National Standards Institute named SHRM as the exclusive national developer of HR standards for the United States.

(Update: On Feb. 24, the International Organization for Standardization ratified a proposal by SHRM for it to lead a group charged with creating global HR standards; thus the standards-setting authority that SHRM now has is both domestic and global.)

As a "Standards Developing Organization," SHRM was authorized to begin the process of appointing and convening task forces to craft standards for the HR function in the United States, which organizations can chose to voluntarily adopt.

Those standards are likely to cover a range of HR practices.

As Lee Webster, director of HR standards with SHRM, said when the organization first received ANSI approval, "It's really only limited by what the profession says is necessary or not necessary to be a standard."

The standard could end up being a few pages or an entire manual.

The process required by ANSI to develop standards isn't quick and it isn't easy. It requires task forces made up of a cross-section of the profession and the public to develop a draft for public comment.

From start to finish, individual standards are likely to take more than a year to develop.

Recently, the first standard developed by this process was published for public comment.

Designed to identify how to measure cost-per-hire, it's not particularly exciting. But it's a great example of an area where standardization could prove useful for analysts trying to compare HR practices in similar businesses.

It also could provide a road map for HR practitioners who are unsure of what should or shouldn't be included in their calculations. Rather than wasting precious time on figuring out how to measure cost-per-hire, they can adopt the standard and use their time to make more strategic contributions.

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The draft, known as SHRM Draft Standard 6001: Cost Per Hire, is structured at a topical level with components addressing issues for individual organizations based on specific hiring environments and requirements. Click on the link if you'd like to take a look or make a comment.

Other standards that are under development by various task forces are in the areas of performance management, diversity and inclusion, turnover measurement and dashboard elements HR professionals should maintain to measure HR efficiencies.

My particular favorite standard under development is for investor metrics; that is, developing a standard for which human capital metrics should be provided to investors who want to analyze the value of a business.

If such a standard can be developed, and it provides a useful analytical tool for investors, we will enter a new frontier for the HR profession, where a business' efforts to manage its human capital is more effectively measured -- and recognized -- in driving organizational success.

This is just the beginning of a standard-setting process, and it's incumbent on HR executives to pay attention to the direction of the effort and to actively participate in the process.

The value of the final standards will be dependent on the contributions made from those who are affected by the standard -- HR practitioners, academics, consultants and line managers from public and private firms across the United States.

There's certainly risk for some individuals due to these future minimum standards -- because they offer the possibility of setting the bar higher for organizations and HR professionals. After all, an HR professional who can't meet with investors and explain a business's human capital metrics according to a generally accepted standard is unlikely to survive.

Susan R. Meisinger, former president and CEO of the Society for Human Resource Management, is an author, speaker and consultant on human resource management. She is on the board of directors of the National Academy of Human Resources.

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