Prove Your Value to the CEO Before Going Over His Head

This is interesting – lately, not a single person from HR can look me or my CFO in the eye. And it’s not because my management style is generally compared to that of the late George Steinbrenner or because my CFO has no personality to speak of. No, it’s because they know that I know that an HR association called “SHRM” is attempting to go over not only my head, but every other CEO’s as well in an attempt to legitimize their value. When has this strategy ever worked? I feel like a parent who told their kid no, only to have them go ask the other.

As I understand it, this SHRM outfit is proposing a new set of financial statement disclosures on people metrics that public companies will be required to publish each quarter. What, Sarbanes-Oxley isn’t enough of a time suck? Just what my CFO and I want – more items to generate investor questions on our earnings calls. Like we don’t get enough wacko questions as it is.

Here is a suggestion for SHRM and my HR department: before attempting to show your value to investors, how about you successfully prove to me that you can impact the bottom line? Heck, I will make it even easier – just prove to me that you understand our business. While I think the metrics below are vaguely interesting, all they do is highlight the fact that for most organizations human resources is a cost center – not a profit generating function. In running a public company, I want to put our best foot forward when engaging investors. I don’t want to scare them away by showing that HR is a money pit.

Here is what I think of these proposed metrics:

SHRM Chart

1. Overall,this will do one primary thing: scare investors. How are they supposed to know what is considered “good” from one company to the next? For example, in a huge company like mine, are you really able to correctly calculate the amount we spend on training and development? People are taking courses, accessing content, etc. all the time. And what’s better – a big spend on expensive instructors and classrooms, or relying on our employees to share information for a lot less money?

2. Another comparison that won’t translate across organizations well is turnover. While it is great to retain talent, it’s not great to retain waste. Don’t investors want us to get rid of unproductive employees? Shouldn’t we strive to streamline different businesses and operations? Unfortunately, not all employees are worth keeping and not all employees have an impact on revenue. Why should an investor care if there’s turnover in jobs that don’t fuel their dividends? Turnover is huge in retail organizations and low in professional services- do most investors know what amount is best for every industry in every situation? And what kind of havoc will a necessary reorganization or beneficial merger/acquisition have on whatever freaky standard is eventually set?

3. Leadership quality? According to whom? Do I really want to rely on some flaky assessment survey to quantify the quality of my organization’s leadership so it can be rated and displayed to our investors?

5. While engagement seems to have its merits, let’s be honest; if Fred has a best friend at work it doesn’t mean my company will meet its revenue projections for the quarter.

6. A narrative is required for all of this? Who is writing that each quarter? More importantly, who would want to read it?

Look, I’m not a total Luddite. People are what make companies successful. I get that. But, if we’re going to measure human capital, here’s what I really want to know:
Cynical CEO Chart
Maybe once you are able to accomplish these things within any organization, just maybe, you will deserve some space in the quarterly reports. But until then, stop acting like a little kid who can’t get what he/she wants and resort to promoting required disclosures to bring attention to yourselves. It’s embarrassing. And a little pathetic.
Just one CEO’s opinion.
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