My last update here on HRExaminer offered an idea that obviously wasn’t too new or too radical due to the number of comments and links that showed me brighter minds than mine had already considered it.
The idea was to create a measure of “employee value” that a publically traded company could use to differentiate itself from its competition when determining stock value. My rudimentary suggestion was to find a way to create an “asset class” for the past, current and future employee contribution to the company’s success.
The idea (at least mine) sprung from the fact that many companies take into account “brand value” when looking at mergers and acquisitions and list that as an asset. My point was that if you can value something as intangible as a brand you could value something as intangible as “employee.”
You Can’t Do That
I love that response because it means that I might just be on to something. Many of the comments focused on the fact that you can’t count something as an asset unless you own it and because employees aren’t owned, then the concept falls flat. They are right. Accounting rules say you can’t list something as an asset, in the purest sense of the word, if you don’t own it.
The discussion died down – mostly because I think people got tired of me saying I didn’t really care if it couldn’t be done today – but we should continue to think of how it COULD be done. I’m stubborn that way.
SHRM Following Similar Lines
Then I see a post by Kris Dunn at the HRCapitalist.
In Kris’s post he talks about the effort that SHRM and a few hundred HR pros are engaged in to bring standardization of employee reporting metrics to business (emphasis mine, I’ll get to why in a bit.) Kris pulls a quote from business week article that says; “A group of 600 HR managers, academics, and advisers are drafting guidelines for standardizing measures of workforce diversity, turnover, job training, and the like. They are also drawing up a template for how companies should report such information to shareholders. Those involved in the project argue that companies and investors would benefit if a single set of metrics were used to gauge what they call “human capital.”
So HR pros are looking at the same idea – find a way to value employees.
Detractors are saying it would be too transparent and open up information that competitors would want. In addition, the HR Policy Association is saying these “rules” would create a heavy administrative burden on companies to comply – likening it to the costs that Sarbanes-Oxley created.
Marketers Wouldn’t Care
I’m a marketer by trade and training, with a little psychology and statistics thrown in and my first thought is this…
If I can create a point of differentiation between me and my competition that increases my company’s ability to generate sales, profits and lift the stock price I’m going to do it. Rules be damned. In fact, I DON’T want standardization of reporting – I want to OWN the metric. Me, my company, us.
To me this sums up the problem HR has at the table:
Marketers look for ways to drive competitive differentiations. HR looks for ways to create rules.
If HR truly wants to impress the C-Suite – find a way to value your employees, the employee onboarding processes, your employee training structure/method, your employee reward and recognition strategy and tie it to company performance. Advertise it, market it and let everyone else argue over whether it is right, wrong or indifferent.
Marketers created the brand value idea to help finance people get more money out of an acquisition. Marketers created branding audits to determine brand value. And they did that WITHOUT someone’s permission. Marketers didn’t go to the American Marketing Association Marketing and ask them to create rules by which they would find brand value. They did it themselves, marketed it and iterated as they went along.
Want to know why HR doesn’t get the same respect as Marketing and Sales in the boardroom? I think this juxtaposition is why.
Marketers look for ways to differentiate or die.
HR looks for ways to legislate – and ultimately die.