HCM Reporting: A New International Standard

HR analytics is a cognate area that has recently grown in credibility amongst seasoned practitioners

Many candidates at interviews for entry-level roles in human resources (HR) are asked the standard question, “Why do you want to join this profession?” and just as quickly comes the predictable answer, “Because I’m a people person.” This is coded language for “Why don’t you want to be a proper manager?” and “Because I hate figures.” 
 

This is a gross misrepresentation, of course, but there is some truth here based on my, limited, experience of relating with many thousands of HR managers in many companies across a range of industries in 6 continents. Such avoidance of quantitative analysis sometimes mimics an automatic or allergic response. Fear-based behaviours are usually illogical and may find their stimulus not in the present reality but instead can be found in a childhood dislike for maths, or at least for the poor teacher who tried so valiantly to impart her wisdom. 

However, for so long, HR leaders have been wanting ‘a seat on the board’. Unfortunately, the other board members seem to communicate with each other in a different language, using not just numbers, but graphs, charts and visualisations. This has done nothing to assist with an invitation to the HR expert to join this, usually male, elite group. The hapless ‘people person’ so often relies instead on her experience, her intuitions, and her insights. Increasingly, those in the C-suite are expecting – even demanding – data, evidence, and analysis. 

HR analytics is a cognate area that has recently grown in credibility not just among those in academia, but also amongst seasoned practitioners.  Developing from HR balance sheets, dashboards, and notions of ROI, HR analytics is fast becoming the necessity that differentiates candidates at interview, that enables HR professionals to make and substantiate strategic decisions, and that provokes a positive acceptance by those in the boardroom. 

With some justification, experts in HR have been joined by their colleagues in both the IT and finance functions when bemoaning the lack of objective, credible, substantive, and applicable metrics in the human capital management (HCM) arena. Due diligence by potential investors, employees, clients, and suppliers have been wanting frequent HCM reports. Professional institutes have argued long for the application of human capital disclosure and  integrated reporting. Financial auditors, advisers, and others involved in mergers and acquisitions have longed for HCM standards and measures that are applicable regardless of the organisation’s size, location, industry, or sector.  

There are many well-known HCM platforms, each of which have many features and benefits, but using these across a large organisation in a consistent manner has sometimes proved difficult, for many reasons. Comparisons between organisations for the purpose of benchmarking have similarly been frustrating. Differences are soon revealed even in, say, a medium-sized company when different heads of department are asked the straightforward question, “How many staff have you got?” 

Finally, the drivers for change and the various stakeholders can now have their needs met with the publication of the new standard ISO 30414:2018 – HCM reporting. 

What are the benefits of standards? According to the British Standards Institute, over a third of UK productivity growth and over £6billion of additional exports a year can be attributed to standards. Moreover, the Centre for Economics and Business Research stated that almost half of all companies reported a net benefit from standards, and 41% of companies in the ICT sector agreed that standards have increased inter-operability of products and systems. Indeed, the International Standards Organisation itself outlines the benefits of a standardised approach to human capital management (HCM) reporting include:

 the use of standardised and agreed data, which describes organisational value in a broadly comparable sense;

 the improvement of HRM processes that support good practice in establishing and maintaining positive employment relations;

 greater understanding of the financial and non-financial returns that are generated as a result of investments in human capital;

 accessible and transparent reporting of human capital data and insights that enhances internal and external understanding and assessment of an organization’s human capital and its present and future performance.
 

The core HCR areas are:

    compliance and ethics;
    costs;
    diversity;
    leadership;
    organizational culture;
    organizational health, safety and well-being;
    productivity;
    recruitment, mobility and turnover;
    skills and capabilities;
    succession planning;
    workforce availability.

A certificate of accreditation provides tangible evidence. There is now a library of metrics with which HCM practitioners can assess and provide evidence of the efficiency and effectiveness of the HR function. This new International Standard ISO 30414:2018 provides all professionals working in the HCM arena with access to an international and objective framework to apply to the human resources function of any organisation, irrespective of its size, location, or industry type. 

Additional Resources
New ISO International Standard for human capital reporting
Human Capital Management Standards: A Complete Guide

Author Bio

David Simmonds (M.Sc. HRD, FITOL, Chartered FCIPD) is Chairman of HR Analytics Ltd. He has a lifetime's experience in learning and development. He has worked on five continents, making presentations and running Masterclasses. He is an award-winning author. Visit www.hranalytics.org.uk