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Human Capital Metrics Proposal Hits Snag

HRPA's continuing opposition to guidelines for human capital metrics means the standard will likely never make it to an ANSI review.

November 14, 2012

An effort to create a standard for disclosing people management metrics has hit a wall, amid stiff opposition from a major professional group.

Proponents of the draft human capital metrics specification say they no longer plan to submit their proposal to the American National Standards Institute for it to become an official standard. Despite revisions to the draft, the HR Policy Association, or HRPA, continues to criticize the proposal. The HRPA is a Washington, D.C.-based lobbying group whose members include human resources officers at more than 300 of the largest companies in the U.S.

The proposal likely will remain a guideline document on how to report on human capital metrics, says David Creelman, CEO of Creelman Research Inc. in Toronto and associate leader of the task force developing the standard.

"There is no point in getting into a prolonged battle with HRPA," Creelman says of the decision. "It's time to make peace."

He says the document will continue to be available from the website of the Society for Human Resource Management, or SHRM, the professional group that sponsored the standard initiative.

The latest version of the proposed human capital metrics standard was released in early October. It included several changes to simplify and clarify the language. But opponents of the standard were not impressed.

"The changes make no difference," says Timothy Bartl, a senior official with the HRPA.

Bartl insists that the HRPA is very supportive of developing meaningful human capital metrics for internal use, but that the group is adamantly against sharing that information outside the organization. "It's the public disclosure piece that we oppose," he says.

He also argues that the cost of collecting this data would "substantially outweigh the benefits."

The guidelines are meant to give corporations a way to quantify and communicate about HR expenditures so stakeholders and analysts can differentiate between companies that invest in their people and those that don't. It will also make it easier for HR leaders to justify investments in human capital development, Creelman says.

Despite HRPA's opposition, the guideline has many supporters, including Don Weinstein, senior vice president of product management for Automatic Data Processing Inc., a provider of HR software and services based in Roseland New Jersey.

"As with anything new, there will undoubtedly be some trepidation about adoption," Weinstein says. "However, we believe the benefits of consistency and comparability in measuring human capital will far outweigh any perceived downsides."

Giving companies a consistent way to measure human capital metrics will raise the worth of the human resource organization, Weinstein says. "It will provide better clarity on how an organization's human capital is performing ... and reinforce the ability of HR to provide more strategic value to the organization."

For those organizations that continue to be opposed to it, Creelman says that compliance is completely voluntary. "Guidelines don't force anyone to do anything," he says. "If it's too much work, don't do it."

In fact, many of the changes made in the second draft of the standard were done to emphasize this point.

"Some language used in the first draft made things sound mandatory when they are all voluntary," Creelman says. For example, in the section on reporting leadership depth, the original draft stated that: "This standard only requires Job Category information for the Executive/Senior Level Officials and Managers."

The new version takes that language out, and clarifies that users who want to comply with the standard need only report aggregate numbers around succession planning, rather than detailed lists of positions.

The team also simplified metrics around human capital spending by eliminating all "costs in support of employees." This category originally included overhead costs related to employees, including office space, furniture and technology. However, public comments indicated that this made the metric more complicated than it needed to be, Creelman says. So they took it out.

Despite all these steps however, Bartl and the HRPA's membership remain unmoved. "The bottom line is that this is still a disclosure without a clear purpose," Bartl says, "and we believe the standard should be withdrawn."

He is getting his wish. Despite accommodating the HRPA, Creelman remains puzzled by its position. "HRPA is the single group leading the opposition, he says. "And it's odd because many of their members already do this kind of reporting."

Sarah Fister Gale is a writer based in the Chicago area. Comment below or email editors@workforce.com.