Great discussion! Many thanks to David Creelman and Laurie Bassi. The slides are attached.
Here's a video of the presentation.
Here's the comment stream with David Creelman's responses in italics:
Waltraut Ritter: Have other national standards organizations started similar initiatives?
There have been many guidelines related to reporting on intellectual capital including human capital; but I don’t know of anything as focused as what ANSI is doing.
Ken Jarboe: Are you working with other organizations like FASB?
We get input from all over, and hopefully have influence all over, but do not have any formal relationship with FASB. One thing we’ve learned is that this project is hugely demanding of its volunteers and we are all volunteers (expect for the overall administrative leader from SHRM). So when you are involved in this kind of effort, you think of dozens and dozens of people you should get more closely involved, but to do that would take a couple of full times staff people.
A lesson learned is that it would be very helpful if there was enough money for this sort of project to hire at least two or three full-timers.
Matthew Loxton: Do you have any advice on how we do could (and whether we should) do the same for Knowledge Management? What do investors need to know about the way a firm manages it's knowledge both tacit and explicit?
I think we shared most of our lessons but just to relate a few. Make what you do ‘easy to love’ so that people call all start in a common place. You don’t have to build the whole thing, “if they come it will build itself.” Also, think of it as trying to spark and guide a conversation, you don’t have to have all the answers, just some good solid stuff that ground what follows.
Manfred Bornemann: @waltraut: http://www.theiirc.org/
Matthew Loxton: Would this standard have signalled to investors that HP, for example, had succession issues?
The standard by no means picks up on all human capital problems, however it will do two things. One is that it will raise red flags in some cases. In all cases it should raise awareness of the broader topic (e.g. Leadership Depth) and make it more likely key stakeholders will pick up on problem areas.
Waltraut Ritter: Ken, there are probably some industry specific differences
Yes and this is an important point. Everyone tends to think that the standards are value-laden e.g. “Engagement should always be very high; Turnover should always be low.” The standard does not make these value judgements. We say these are important issues to look at and it is up to the stakeholders to interpret them based on the context.
Nikita Bernstein: What about using performance management data/system to work with user engagements? We use expectation feedback at www.fairsetup.com.
Ken Jarboe: David -- got it - good distinction about what issues are important to look at versus final metric
Waltraut Ritter: Could you share some feedback from the consultation group?
The positive thing about public consultation is that we got a lot of good, highly specific, helpful feedback.
There are also misunderstandings which require time to address (and so it is a demanding period for volunteers).
However, the most salient point was that there was some harsh criticism from people who just didn’t want any kind of standard at all. Some of the more experienced people warned us that one needs a thick skin for this public consultation phase and suggested we trust the process. You ask for feedback, assess it, respond formally, and where changes to the standard are appropriate, make them.
Ken Jarboe: And who the feedback was from (HR folds, investors, etc)?
HR tends to be positive but we did get some “We don’t want to be assessed” and “We don’t want to do the work.” These were both blanket comments and emotionally laden. Our sense is that a firm with a good HRIS can produce the required data easily; furthermore the complaints were not “point 3.2 is too hard” but just “let’s not do anything at all”.
Many investors (e.g. day traders) are not interested at all, but there is a subset, mainly those associated with sustainability, who are keenly interested.
Waltraut Ritter: David -- got it - good distinction about what issues are important to look at versus final metric
Nikita Bernstein: Seems like reporting on this should be automated if integrated into management systems... so perhaps you could get more support for the standard from SuccessFactors, Workday, us, etc.?
We’d love to get support from the vendor community and while it may come it time so far no one has stepped up with actual funding.
Ken Jarboe: LOL - don't make us do any more work or make us accountable -- what a great responce from teh HR community.
I think the only two valid reasons for killing this is:
a) human capital doesn’t matter
b) human capital is so ineffable that nothing you could say would help an investor distinguish really good from really bad
Nikita Bernstein: Can you talk about the core specifics of the standard?
Google ansi-shrm 02001.201X and you will find a copy of the standard.
Join the HC IM group on LinkedIn to stay informed.
Nikita Bernstein: We could potentially see about rolling this out to some of our clients with www.fairsetup.com. We are targeting companies that want to improve culture, productivity, engagement, etc.
That would be fantastic. It does not need to be a big project for them. They just need to read over the standard and say “Yes, we can do #1 easily. I don’t understand what you mean by #2. I get what you mean by #3 but it’s too hard for us.” It would be better of course if they actually tried to produce the numbers (that’s the only way to really know what is easy, what is hard, what is unclear).
The next version of the standard should be out in early August which will be a good point for them to take a look.
Constantinos Stavropoulos: Will upcoming standard approach impact on value (main interest of stakeholders)?
Hopefully when people notice the red flags (something wrong with the human capital) they will act to fix it which will generate true value.
Matthew Loxton: Are firms likely to see their HC metrics as a competitive advantage and that reporting on it might give away details that they consider to be proprietary information?
As I understand, introduction of systems that indicate that the company cares about employees leads to an increase (although often temporary) in engagement.
Here is what we hope will happen. Good firms will start reporting and after a while if you don’t report people will assume you have something to hide. Also even though the standard is voluntary investors may start asking pointed questions.
I don’t think anything in the standard reveals anything proprietary.
Anne Marie Hoogland: What when you discover risk in the human capital?
In general if an investors sees a problem they sell, and if the board or management sees a problem they try to fix it.
Constantinos Stavropoulos: How will you treat connections with structural and relational capital.
Some of this work blurs the traditional boundaries between human, structural and relational capital But basically, we are just looking for some helpful indicators on human capital and don’t attempt to consider the connections.
Anne Marie Hoogland: I lke the down-to-earth approach, and I’m curious about the ambitions of the HC standard?
My own ambitions are that this become global, more fully rounded out in future versions (without losing the ‘easy to love’ condition). And more than anything a sophisticated ability to interpret and act on the information evolves. I imagine a world where boards and investors are as savvy about human capital as they are about financial capital. All leading to better organizations.
Nikita Bernstein - My apologies - I need to run. Very interested in adjusting our system to do a better job with IC reporting for our clients. If anyone is interested in continuing the conversation, please feel free to email me at nikitab [at] fairsetup.com …IC/HC reporting that is
Anne Marie Hoogland: I like your very positive judgement on the knowledge of investors if it comes to Human Capital, Am I a cynic?
Many investors will be stupid about human capital but we don’t need them all to be smart, just a meaningful minority. Also, over time we hope they can learn.
David Creelman: There is an HC IM group on LinkedIn. To find the standard, google: ansi-shrm 02001.201X
Please note that I added David Creelman's responses to the listing of the comments above!