Quality standards often get a deservedly bad press.  Tom Peters ridiculed ISO9000 by suggesting that a lifejacket made of concrete would satisfy the standard.  He was perfectly correct of course because the standard is more concerned with process than outcome or the functionality of the end product.  It is a pity no one on SHRM’s Taskforce for HR Standards had learned this lesson before it submitted its first attempt, Cost Per Hire (CPH), to the American National Standards Institute (ANSI).

We do not have to look very far for evidence of setting concrete.  Page 3 of this standard – the Executive Summary – tells us that:

“The CPH metric has been in use for decades, providing HR professionals and
managers with information to assist them in establishing budgets and also serving as a benchmark for recruiting effectiveness and the efficiency of staffing processes.”

CPH was just one of many ‘HR metrics’ promoted by the work of SHRM’s favourite, number-crunching, benchmarker Jac Fitz-Enz but neither he nor SHRM ever showed any understanding of the crucial distinctions that must be made between efficiency, effectiveness and value (that’s $’s to you and me).

Cost-per-hire is just the average cost of recruiting someone.  It does not tell you whether that person is of sufficient quality to do their job effectively.  Nor does it tell you anything about their subsequent performance.  So to claim that it can serve “as a benchmark for recruiting effectiveness” is actually a lie and to suggest it gauges “efficiency” is also nonsense until the outcome, the performance of the new hires, is established.  You could be hiring idiots at a very low cost and it would still satisfy this standard (sic). In short, this is not a standard at all.

In fairness, the standard acknowledges some of the “Known Limitations” of CPH (6.4) but then blithely carries on without resolving any of the complex issues inherent in the pursuit of value through strategic HR management.  This simplistic approach also ignores, or is unaware of, the paradigm shift required to move HR onto an evidence-based management footing.

As a lifelong campaigner for improving HR professionalism I should be welcoming the introduction of standards.  I was even a volunteer on SHRM’s Taskforce for six months before I realised that no one was listening to common sense or learning from their own mistakes.  History tells us that the use of such HR metrics never improved HR’s credibility or reputation in the US (or anywhere else for that matter).

What worries me more is that SHRM now wants to use its ANSI standards (there are more in the pipeline) as the basis for globally recognised, ISO standards in HR.  If it manages to do so there will be many HR departments, not just in America, who will be drowning under the immense weight of this misguided bureaucracy (all 50 pages of it).  As an adviser to the British Standards Institute (BSI) on the same ISO-HR standards effort I will certainly be doing my best to ensure that the UK does not get dragged down with them.

Update – 9th June 2012 – the Americans have now submitted the ANSI CPH standard to ISO for approval as an international standard. It will be put to the vote in September 2012. See also HR Standards