As 2011 draws to a close and a new year begins, SHRM is pleased to report that the global HR standards initiative has not only successfully launched but also continues to gather steam across the world. As of the end of December, there are 13 participating countries and 19 observing countries from around the globe that are involved with ISO Technical Committee 260 for Human Resource Management. Additional countries are expected to join the effort in 2012. This assembled body will propose and develop global standards for topics within the purview of HR.
Why do standards matter for HR?
The creation of voluntary global standards offers a means to establishing effective, consistent and internationally comparable practices in HR. Moreover, it is crucial that HR professionals and workplace experts create our own standards. HR is uniquely positioned to understand the effect that changes in the business environment will have on the workforce, business operations and the governance of companies, and to advise about strategies to help companies successfully navigate these changes. Consider instead having a regulatory body impose mandatory standards - laws - that are developed without an insightful approach to evaluate their feasibility or the impact that they will have on short term and long term business operations.
One such example internationally is the French law passed in early 2011 which established quotas to balance gender within companies’ boards of directors. The law was seen as a means to improving corporate image, diversifying management perspectives, and becoming comparable to the gender balance of governing boards among Scandinavian companies. Within three years following the passage of the law, the boards of directors of French companies quoted on France’s stock market index (CAC 40), non-quoted companies with 500+ employees and €50 million turnover during the previous three years, and public companies subject to commercial law must be comprised of 20% women. Within six years of the passage of the law, 40% of the members of the boards of directors of these companies must be women. The penalty for not reaching the quotas is that directors serving on the boards will not be paid.
The result is that French companies that are subject to the law are now scrambling to meet the required percentages of women in their governing boards. Whereas some companies have discussed the possibility of reducing the size of their boards, more often, companies have sought quick compliance with the law by populating their boards with wives, girlfriends, daughters and other surprising nominees whose main qualifications are their gender and connections to influential male business executives. Rather than creating a substantive change in the balance of traditionally male dominated boards and improving the quality of governance decisions, the decisions made by French boards reconstituted under the new law are no longer considered credible.
Had there been a process like the standards development process – deliberative, conscientious and inclusive of a broad and balanced range of interest groups and perspectives – rather than a regulatory process, France could have avoided making governing boards irrelevant by enacting a law that was not well thought out. Norway has guidelines to the same effect that people disregard, rendering them invalid. This gives you a glimpse of why HR standards are needed and how they can help businesses make meaningful, strategic decisions that positively impact operations and the bottom line.
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