SHRM MEMBERS for Transparency Trust Email: Members@lmproveSHRM.com Website: www.mproveSHRM.coy Welcome to SHRM Members for Transparency & Trust SHR MEMBERS FOR TRANSPARENCY AND TRUST _ |} This website is the home for communications related to a voluntary group WELCOME of Society for Human Resource Management (SHRM) members and their TARE YOU AWARE? efforts to reinstate transparency and trust in the Society's governance HOARD COMPENSATION | process. BOARD PERKS DUES LINKED TO CPL ‘This group was established in 2010 after many long-time SHRM members LACK OF HRCLPRIORITY | jhecame concerned about the establishment of SHRM Board of Director ‘CEO JOB SPECIFICATIONS policies that were not in SHRM members’ best interests. In addition, there BOARD ELECTION ISSUES Ee are concerns about SHRM’s financial and operating performance and TEVERSED POLICIES long-term direction, SUMMARY AND APPEAT. Examples of such issues are surnmarized on this website as well as an invitation to join us in recommitting to the principles upon which SHRM ‘was established. OUR HELP ts NEEDED! We invite you to join our effort to make necessary changes to SHRM Governance and selected policies. For instance, are you aware and concerned about the following? ‘Are you aware that the SHRM Board of Directors has been compensated for their service since 2006 and the practice of compensating a not-for-profit Board, especially for a member society such as. SHRM, is very rare? Notwithstanding member appeals that the Board Compensation Plan be discontinued, are you aware that not only has the Board Compensation Plan been continued, but this year the SHRM Board voted themselves a substantial salary increase? Few are aware of the new levels of Board compensation will cost members hundreds of thousands of dollars a year. Also, do you know that the Board established a policy this year which allows any Board member traveling on SHRM business to utilize business class on aircraft, regardless of distance or cost? This isa benefit not only extremely inappropriate for a not-for-profit board but.a benefit few employers permit. ‘Are you one of the few who realize that at the same time the Board has voted to increase their own compensation, and provide other “perks” for themselves, they voted to increase our members’ dues? Also, these improvements were made during a period the Society is reporting financial operating losses, membership is decreasing, the staff had just come off ofa salary freeze and many members don't even have a job. ‘The Board also passed, along with the new dues increase, a new board policy to automatically increase the dues in the future, each two years; with some proviso any dues increase will be linked to the Consumer Price Index? Are you aware ofall ofthe implications such a decision will have on SHRM membership and the SHRM Chapter network? Do you know that for the first time since HRCI certification was established by SHRM: © In 2011, the SHRM Chair of the Board of Directors will not be HRCI certified?© Only 3896 of the SHRM Board is HRCI certified yet SHRM is critical of chapters who do not have sufficient HRCI certified officers on their board of directors. © That there is no requirement that the new CEO being recruited be HRCI Certified? © That several HR professionals who were not SHRM members or HRCI certified were recruited for SHRM Board positions. Only subsequent to their recruitment did they join the Society, but none have achieved any type of HRCI certification, ‘+ Have you seen the Board approved Korn-Ferry Job Specifications currently being utilized to search for a new SHRM CEO and how it treats HR education and experience as incidental and not important? ‘+ Would it surprise you to know that China has only, by SHRM records, 119 members, of which many are students? Of Course, this is fewer members than exist in most chapters yet this is a country ‘where SHRM maintains a Beijing office and staff and has expended untold time and resources over the past several years. ‘+ And what would you do if you had been a former national SHRM Board chair or officer, CEO or chapter leader and professionally petitioned to visit with the SHRM Board to discuss issues like this but not even get the courtesy ofa response. Totally ignored! This is simply not right! Issues of Concern: Board of Directors’ Compensation In 2005, the SHRM Board of Directors created a policy to pay themselves an annual salary for what had always been, within SHRM, and almost all other not-for-profit membership organizations, volunteer positions. In 2010, the Board increased those levels of compensation substantially, some as great as 100%. ‘The levels of Board of Directors’ compensation went from: YEAR ESTABLISHED 2005 2010 PERCENT ‘AMOUNT © Chair $25,000, $35,000 40% > Committee and other $15,000 $25,000 167% officers +Other Board member $10,000 $20,000, 100% ‘Approximate Annual Cost (@ $170,000 $310,000 82% 13 members) ‘Approximate annual cost Since establishment, Projected cost over 82% five years: $850,000 | five years: $1,550,000 Our group, SHRM Meambers for Transparency and Trust has investigated anid foun ‘The existence of the Board Compensation plan has not been fully communicated to members, especially Region, State and Chapter leadership. Itis our experience and opinion that key ‘uncompensated volunteer leaders spend much more time adi ig, for instance, a chapter and its professional programming than a SHRM Board member spends attending only four SHRM Board members a year. 2. Compensating the SHRM Board of Directors is not justified when compared to the practices of other not-for-profit organizations. For instance: a. The American Society of Association Executives (ASAE) reports that only 12% of 874 associations surveyed compensated their board and that those who do are mostly healthcare organizations, such as Blue Cross Blue Shield, b. BoardSource reports of 1000 not-for-profit associations surveyed only 2% compensate their board in some way. 3. Inaddition, ASAE and Board Source report that any plan to compensate a not-for-profit board should be established by an independent group of non-board members and not, as the SHRM Board has done, by the Board itself. 4, Public policy concerns are reflected in the fact that some states may have restrictions or require approval to compensate not-for-profit board members.5. With a quarter million SHRM members and probably thousands willing to serve on the SHRM Board there is no need to provide direct compensation to recruit, retain or ensure a high quality SHRM Board of Directors. 6, Atleast one employer will NOT permit their employee, who serves on the SHRM Board, to accept SHRM Board related compensation, 7. To what extent other employers of SHRM board members even know of the existence of the SHRM Board Compensation Plan is unknown. 8. Inour professional opinion, the 2005 consultant study to justify the SHRM Board Compensation Plan ‘was fatally flawed and lacked justification for establishing the Board Compensation program 9, As stated previously, the SHRM Board has refused to discuss any of these issues and specifically the new Board Compensation issue, including any supporting consultant's report. Based on other research done by our group it is our professional opinion that the recent SHRM Board action to not only continue the contested Board Compensation Plan, but greatly increase that compensation is totally unjustified. 10. The new Board Compensation Plan has not been effectively communicated to SHRM volunteer leaders or the general membership, even at the encouragement of the SHRM Members for ‘Transparency & Trust group, 11. The Board continues to use the misleading term of honorarium’ to mislead members about the magnitude and nature of the Board Compensation Plan. According to IRS regulations, itis our understanding, payments in these significant amounts, made directly for services rendered, is compensation and not an honorarium. 12, These extraordinary Board compensation increases were granted after SHRM staff experienced a one-year compensation “freeze” given poor business conditions. 13. The SHRM Board of Directors announced the first membership dues increase in greater than twenty years and at the same time they mutely increased the cost ofthetr special compensation plan approximately 84%. 14, The dues increase of twenty dollars a member will take the dues increase of approximately 15,500 members to pay for the cost of the new Board Compensation Plan. Recommendation: > Conduct an independent review of the SHRM Board Compensation plan to determine if the plan is justified. Review to compare the SHRM Board to other non-profit boards, not corporate boards. ‘SHRM Board Members receive other “perks” that may not be justified. 1. In2010 the Board voted to allow all SHRM Board Members to fly “business class" regardless of nature or duration of such a flight! ‘This is unjustified for the following reasons: ‘a. The cost ofa round trip, non-stop flight from Washington, DC to Chicago, business class, is, for instance, currently quoted as $1,684 versus coach class at $527. Thus fora relatively. short two-hour flight, this Board travel “perk’s" cost is greater than three times the cost of coach class travel b, Such a generous policy is not necessary and not permitted at most employers. ©. The number of SHRM members allowed by their employers to fly “business class” under these conditions is miniscule. d._ This type of perk for Board members is unheard of in other not-for-profit organizations. e. This “perk’ is not necessary as a matter of travel comfort, status or ability to recruitand retain Board members. Some suggest the attractiveness of such a benefit to SHRM Board members is inversely related to the type of SHRM Board member needed. ‘+ pctual quote from Boacd Summary for lune 2010: "Approved amendments tothe SHRM Board Member Expense Reimbursement Poi to allow for remursement of al Board-elated Gomestc/intemational ar travel at business cass rates ‘and to provide the Immediate Past Char, whose Board duties wil not diminigh, with the same level of benefits 3¢ forded the Board Chale”2. The Board also recently established a policy to provide any board member arriving at a destination for a SHRM related meeting a chauffeured limousine. Recommendation: ° Review subject policies and compare them to other non-profit board policies. Discontinue these policies ifthe review does not justify their existence. SHRM Member Dues to be linked to the U.S, Consumer Price Index (CPI) 1. Notwithstanding the former objective of keeping dues as low as possible as long as possible, in June 2010, the SHRM Board voted to implementa process whereby membership dues would be raised every two years. Itis understood such dues increases will be based on average increases in the CPI, as set forth in the June 2010 member dues analysis report, but not yet disclosed. 2. The inappropriateness of linking dues to the COL is not in the SHRM members ‘best interest. For instance: Recommendation: Dues increases should be a function of need and to help offset the clearly defined cost of doing business and not a generalized index that includes factors nat applicable to SHRM. Our group had difficulty identifying any association that linked dues to the CPI index. Automatic increases may cause deterioration in staff attention to cost and the need for increased revenue, especially non-dues revenue. Dues should also reflect market conditions -- in other words, how is SHRM positioned in terms of the cost of membership and services when compared to other associations? ‘The assumption that the CPI index reflects either SHRM's cost or the members’ ability to pay is faulty. ‘The concept of automatic dues increases will have a negative impact on SHRM new member recruitment and will most likely cause the SHRM member retention rate to decrease. That will only serve to increase the need for even more expensive dues. All of this is likely to result ina lack of membership growth or a possible decrease in SHRM membership. Since itis the practice to increase the cost of SHRM professional member dues to all members in all countries at the same time, and in the same amount, how does linking the dues to the US CPI index help or hinder SHRM members from other countries who are not impacted by the US CPI index? Ifthe capacity to increase dues is linked to the US CP! index then presumably, if necessary, the ability to increase dues earlier than once every two years, and/or in an amount greater than the CPI index may also be limited. Itisalso feared the Board's lack of understanding of linking anything to a CPI index is a deficit in understanding basic human resources practices and history. Avery negative result of linking SHRM national dues to the CPI index would be the simultaneous impact oni SHRM Chapters. SHRM National Members will have to pay more in dues, thus increasing the cost of belonging to both a SHRM chapter and the SHRM national organization. What's more, the automatic SHRM dues increase policy will disadvantage the chapters if the chapter needs to raise dues since the SHRM dues increase will always come first. This will also discourage the establishment and maintenance of 100% chapters and make it harder for other chapters to meet their minimum percentage of SHRM members they must have to be a chapter. Therefore, the new CPI dues policy is a disaster for chapters and who may see this as one more "SHRM Comes First” issue. ‘The policy to establish predetermined dates for increasing membership dues and to link any Such dues increase automatically to the Consumer Price Index is not appropriate and should be reviewed with the intention of developing a new policy,‘SHRM Board of Directors does not give priority to HRCI Certification 1, The 2011 SHRM Chair Elect, Jose Berrios, is not HRCI certified. This will be the first time since HRCI certification was established that the SHRM Chair shall NOT be HRCI certified. 2, The immediate past CEO was not certified when employed by the Board of Directors and the Board failed to require HRCI certification after hire. 3, Several Board HR practitioners are not certified 4. Less than 40% of the SHRM Board are certified yet SHRM measures and grades the certification status of Chapter, State and Regional Board members. 5, ‘The HRCI/SHRM relationship is being jeopardized by this very visible lack of support for HRCI certification. Recommendations: © [tis the SHRM Members for Transparency and Trust position that HRCI certification is critical to ensure any SHRM volunteer leader, and especially the SHRM Board of Directors, has, by becoming HRC! certified, demonstrated that they know the Human Resource Management profession Body of Knowledge, © Therefore, the Board needs to be more demanding in terms of SHRM Board members being HRCI certified. ‘The SHRM CEO Job Specifications (See: hitp://www.ckornferry.com /Library/Pracess.asp2P=Qpportunity 2.) ‘The Korn-Ferry SHRM Board approved Job Specifications utilized to search for a new SHRM CEO treats HR. education and experience as incidental and not important. 1. The only reference to human resource management experience is: presumably nota requirement. 2. “Experience in the field of HR highly desirable”... also referenced but again, not a absolute requirement notwithstanding the fact the job specification stresses: a, Must". represent the organization to the highest level as the entire HR community.” . experience in HR a plus” but business and government as well Recommendation: © Itis the SHRM Members for Trust and Transparency position that itis impossible to skillfully represent the profession of human resource management to members, volunteer SHRM. leaders, the media, Congress, other influential groups without proven HR experience and performance. Therefore, we recommend the revision of the SHRM CEO Job Specifications to include appropriate levels of proven education, experience and performance in the profession of human resource management. SHRM Voting Procedures for the SHRM Board of Directors 1. SHRM Bylaws require the SHRM Board be comprised of members who will serve “staggered terms’. ‘a. This requirement was not followed for the 2010 Board of Director voting conducted by the SHRM Board of Directors. b, All Board candidates were only listed for one year terms, therefore, technically a violation of the Society's bylaws. Recommendation: © The SHRM Board of Directors should conduct the election of officers in accordance with the ‘SHRM Bylaws, 2. The Bylaw provision for write in ballots administered correctly,Since all candidates for the SHRM Board of Directors are exclusively selected by the existing Board of Directors, the existing Board has an advantage by selecting only individuals who the Board feels will support their agenda i. The only way to allow alternative candidates is for members to “write in “alternative candidates for the Board. However, SHRM’s write-in voting was not administered correctly either. Specifically, the ballot for the SHRM Board positions provided only one opportunity fora member to cast a write-in vote. Recommendation: © For SHRM Board of Directors’ balloting purposes, the ballot should have available have as ‘many write-in opportunities for alternate Board candidates as there were SHRM Board advanced candidates, SHRM Bylaw requirements related to these issues are: + Onstaggered terms “ . the Governance Committee shall prepare and submit to the Chair its list of nominees for the offices to be filled, and in the case of each at-large Director nominee, the ‘suggested one (1), two (2) or three (3) year term therefor (sic). The Governance Committee shall list one (1) or more candidates for each office to be filled.” + Onwrite-in voting: — “No provision of these Bylaws shall prevent any member of the Society eligible to vote from casting a write-in vote, on an official ballot, for any eligible member or members of the Society not selected by the Governance Committee. + Tie Votes: — Inthe event tie occurs during an election, through two (2) or more candidates for the ‘same office receiving the same number of votes, successive balloting shall be conducted between the tied candidates until one (1) candidate receives a plurality. (Presumes the existence af a competing ballot) Other Issues: + China & India = What has been the financial investment to date? (We suspect millions) — What is the objective for countries such as this? + Members? + Programs? + Education? + Financial returns? — These answers are simply not known and we feel must be investigated to ensure such continued investment is justified and/or planning related to these countries is appropriate, + Membership — 2009 membership decreased to 245,233 from earlier reported levels of greater than 250,000 members, This s the first decrease in membership in twenty years. — Increased dues will surely have @ negative impact on retention and recruitment of members. + These issues need to be carefully studied and evaluated. ‘+ Turnover of SHRM CEO's: — There have been five SHRM CEOs? in the past ten years and the Board is currently recruiting fora sixth. This revolving door of CEOs is very unfortunate and has surely had a negative effect on many things, not to mention the Society's reputation as a HR world leader. Examples of SHRM Board Policies which upon appeal, have been changed or completely reversed. 2 Including Henry Jackson who is serving as CEO while a new SHRM CEO is recruited.A board of directors that not only encourages and welcomes feedback, but also makes necessary adjustments to even their own polices, much better meet the needs of the Society and would certainly win the praise of members. During the past few years the Board has reversed itself several times, which is appreciated, but also highlights the need for improved decision making Examples are: 1, Board of Directors’ Speaking Fee Policy + The SHRM Board's "Speaking Fees" policy allowing SHRM Board members to charge SHRM Chapters and related SHRM interests a speaking fee, was reversed. Primary reasons were the lack of justification or precedent within the association industry for such a practice and the substantial negative feedback that was received from past leaders, members and especially chapter leadership. 2. SHRM President & £0 as a "voting" SHRM Board member * The SHRM Bylaws previously provided that SHRM’s President & CEO, a staff position, would be a voting member of the Board of Directors. This policy was changed in 2001 to the CEO being a non-voting member of the Board. The reason offered by the Board at the time was because CEO non-voting status was the "best practice” in the association industry. However, that policy was actually only the "prevailing practice” as everyone in the association industry knows. SHRM, by prior Boards and in previous strategic plans, had created the “best practice” of having the CEO Vote. That contributed greatly to the effectiveness of the CEO's position and success of the Society. This decision was finally reversed, this year, and by a unanimous vote of the Board the Board of Directors. 3. Board of Directors’ Meeting Minutes Summary ‘* [n2009 the SHRM Board Minutes summaries for published for members, key volunteers, past chairs and former SHRM presidents, was discontinued. This action was also reversed this year given feedback to the Board. ‘Summary and Where We Go From Here ‘The SHRM Members for Transparency & Trust has professionally attempted to follow SHRM protocol to discuss the current issues outlined in this paper. As highlighted earlier the Board has refused to meet and discuss any issues with the SHRM Members for Transparency and Trust, Therefore, with our continuing concern about certain board policies and practices, the SHRM Members for Transparency & Trust have decided to take their appeal directly to the general SHRM membership as well as SHRM's Regional, State and Chapter network. Let the SHRM Board hear from you! Our hope is still to cooperatively work with the Board of Directors in addressing these issues, If you support our efforts, we encourage you to seek other members who would share your interest in these matters. Also, We encourage you to write to the SHRM Board of Directors and let them know haw you feel. A list of the SHRM Board Members and their SHRM Board emails can be found on the SHRM web site at: hip://www,shrmorg/about/governanceleadership/boardofiirectors/Pages/defaultaspx. (Note: The SHRM Board practice is to not include on the SHRM Board of Directors web page any Board member's personal or business email address. All Board members have the same email address (Joard@shrm,org ) and apparentlysomehow, by someone, an effort is made to forward emails to the Board members. (Make sure you insist this be done) Ifyou prefer to send a more formal letter to the SHRM Board, the SHRM Headquarters address is: 1800 Duke Street Alexandria, VA 22314 We seek your comments, questions and suggestions .. And hopefully your involvement! NOTE: There is no cost to join SHRM Members for Transparency and Trust. We hope you are interested in becoming a member of SHRM Members for Transparency and Trust. If so, simply click the link below or send your name and email address to Members@ImproveSHRM.com Thank you for your attention, Members of the SHRM Members for Transparency & Trust Steering Committee Fae] rar Naa A naiui paragticioagy Tur sensandeeor) | ‘st andlcalvatary To be listed when the Se FILE: SHRM BOARD WEB PAGE CONTENT 118 final