There’s also more I disagree with in the CIPD’s attempt to re-establish Accounting for People through a project called Valuing Your Talent and which was launched with another research report at the CIPD conference.
Despite the change in name, this project is basically recycling Accounting for People, and adding an additional, dangerous twist.
It’s the same because it’s trying to do the same two things:
Firstly, it’s attempting to define externally reportable metrics for things which are standard across all businesses. These may not be that important, but if they can be defined and standardised, why not?
Well the two main issues with this are that A4P failed to reach any agreement on what these standards should be, and I’m not convinced that VyT will do any better. And also that SHRM have recently defined some standards anyway, but failed to get anyone to want to use them. Eg at the conference, Peter Cheese suggested there is no standard definition of headcount, but there is - see p8 in this SHRM document, it’s just that this wasn’t adopted by the American National Standards Institute. And once again, I’m not convinced that the CIPD will manage to do any better.
The only good argument I’ve heard for us being able to do this when the Americans failed was a point provided by Ann Francke CEO at the CMI (one of the CIPD’s partners in VyT) who I met whilst putting together a research report for the EIU (which was unfortunately never published) earlier this year. Ann suggested that 8 out of 10 of ISO’s standards including the big four: 9000 for quality, 14000 for the environment, 18000 for health & safety and 27000 for information security were developed first for BSI in the UK, as we have a better understanding of the value of standards. So maybe this will help move things forward here? But I’m not convinced.
The CIPD have grouped these metrics into two: Regulatory metrics, required for legal and similar reporting, and Transactional elements which some investors and others say they want, though that’s different to having a definite need to use them. They probably are amenable to standardisation, with enough time and effort, but the key question remains - will anyone care?
Secondly, VyT is trying to come up with standards for more strategic measures which are much harder to measure. These include analytical metrics such as engagement levels, and transformative metrics such as human capital enablement, utilisation and traction.
A4P suggested measures like these would need to be left to narrative reporting and SHRM also left them to a more qualitative 'Human Capital Discusion & Analysis’. Good luck to the CIPD in findings some quantitive standards for these. In fact during the conference presentation, Anthony Hesketh suggested the CIPD’s accountancy partners were only just about on board with engagement survey results and certainly weren’t going to go along with something like a social network analysis - a tool which is potentially more important but less easy to measure.
That’s the problem A4P found too - the more important the measure it, the less possible it is to make it into a metric!
Then there’s the dangerous twist - the top line in the slide diagram: putting human capital on the balance sheet. No, no, no!!! Now we’re into really troubling territory. It’s no longer just that metrics are difficult at this point, it’s that they’re completely impossible. And if we try, we’re bound to get dysfunctional results. I’ll come back on this again soon...
Actually, before I finish, I should note that there are aspects of the research report I agree with - and this seems much more balanced than Peter Cheese and Anthony Hesketh’s conference presentation. I do agree for example that where it is possible to do so, we should try to make the intangible more tangible.
And I love some of the comments in the report about HR as an art, or craft:
'Where the numbers finish, the executive craft begins
Of course, it is not all about numbers. Many grate at the description of human resources as an asset ripe for greater exploitation. While the accounting profession is for the first time getting to grips with the notionof an asset as aresource, the HR profession has steadfastly defended the human element in HRM.
There is a large element of executives who do not require the accounting, academic or consulting industries to prove something thatthey already know to be true: good management makes a difference tohow people perform.
It is for this reason that VyT is looking beyond the capitalisation of human resources to how we value our talent and our management practices as more art than science. Alongside the development of a raft of metrics we are investigating the craft of thehuman resource executive’s art. This in turn requires methodologies that utilise the narrative form to capture a company’s competitive intangibles.
This is much more like it. Though my preference at least isn’t due to any ‘grating at the description of human resources as an asset ripe for greater exploitation’ (or the fear the CIPD believes exists that it described in its analytics and big data report), it’s just a different, and I believe perfectly valid (and correct!) perspective on the role of measurement.
Oh, and I’ve no idea what this is about at all! (whatever it is, it isn’t art!)
It’ll certainly be interesting to see where this goes, though I don’t hold up much hope for it. Sure things have changed since 2004. The CIPD are right to signal the opportunities provided by changes in international financial reporting standards (IFRS) and integrated reporting (IR). But these are peripheral issues. Nothing fundamental has changed in the fundamental difficulty of capturing the most important aspects of people management in standardised form.
Anyway, I think this difficulty is probably a good thing as there’s probably as much chance of the project doing damage as it doing good should it succeed.
I certainly can’t see the project ‘creating a movement’ in the way it suggests. Firstly because movements come from crowds not managers and secondly because it’s too late to do so - engagement comes from participation, not from being sold things that have already been decided.
So it’s great that the CIPD, through the RSA, intends to use innovative social media to gain input from a breadth of stakeholder groups, but actually it’d be even better to have used the social media that already exists (eg by involving bloggers before this thing was launched.)
But as the project has already decided that “in the present context of concern and expectations about corporate cultures, we have to finally agree more consistent measures and frameworks that provide the visibility all stakeholders need” (do we?, is that the right choice? will this solve the real rather than the superficial problem?) it’s too late for me at least to get on board.
More on this again tomorrow...
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