Global research shows HR professionals’ unique skill sets can make them invaluable counsellor to CEO
Wayne Brockbank knew the HR competencies survey he and his colleagues were working on proved the profession was in the midst of a transformation. But the magnitude of the change really hit home one day when he presented the findings to a group of leading business strategists and academics.
Brockbank was reviewing the findings from the worldwide survey of more than 7,100 HR professionals, line managers and non-HR executives. In high-performing organizations, he explained, HR leaders were increasingly playing a new role as business strategy architects.
In these best firms, he told the audience, HR executives were partnering with other executives to identify vital market and competitive information. Then HR took charge of the human resource implications of that data and helped lay the foundation for action. If marketing has information about customer buying requirements, HR has to figure out the human capabilities requirements. In time, he added, this will emerge as a distinct HR competency the research team called “market-driven connectivity.”
At that point, said Brockbank, one of the most respected business strategists in the world stood up to comment. “But that is not the job of HR. That is the job of the CEO.”
“Well okay, maybe,” said Brockbank. “But that is what is happening. The research shows HR is starting to play a central strategic role in high-performing firms.”
In an interview with Canadian HR Reporter, Brockbank explained that in the past few years, HR leaders — in leading organizations, he stressed — have assumed a sort of adjutant role to the CEO. They no longer focus solely on the human capital dimensions of strategy, but the overall strategy with their HR expertise suffusing their analysis and interpretation, he explained. Increasingly, CEOs are recognizing that human resource challenges and concerns underlie most everything an organization does. The CEO needs the complementary perspective of business-savvy HR professionals to figure out the best course of action.
In other words, a knowledge of the business combined with an expert understanding of human resources management not only makes HR professionals important contributors to strategy design and implementation, it can make them one of the most important.
This was one of the most exciting of several revelations about HR arising from the survey, said Brockbank. The Human Resource Competency Study was started by a group of University of Michigan HR academics in 1987. There have been four surveys in total with the latest completed in June 2002. While there is no shortage of HR competency models, the University of Michigan research is believed to be one of the best in the world. Aside from being developed and managed by some of the leading international HR academics, it also has the largest database of HR professionals and line managers in the world, with more than 26,000.
Based on last iteration of the survey, the team produced a new competency model for HR with five broad domains:
•business knowledge;
•HR delivery;
•HR technology;
•personal credibility; and
•strategic contribution (see sidebar).
One reason the model changed after the 2002 survey was because, more so than in the past, HR technology was identified as a primary competency area, said Warren Wilhelm, one of the competency team members and managing director of the Global Consulting Alliance.
Though technology is an important competency, it does not appear to be having much of an impact on performance, he said. Some organizations are still working out the bugs of a new system. Others have their system running smoothly, though total cost savings may still be relatively small. Still, technology is now seen as a vital component of the HR function.
By examining HR practices and organizational performance over time, the group concluded that HR can potentially improve the bottom line of an organization by as much as 11 per cent, said Wilhelm.
Non-HR professionals may say personal credibility and HR delivery are the most important HR competencies, but these may not be the areas where HR can help to improve organizational performance the most.
HR professionals need to prove they are reliable and can deliver the basics of HR administration and management, he said. “That is just the price of poker, the ante to get into the game.”
It’s in developing strategic contribution competencies where HR can make the most impact on the bottom line, he said. But it’s not always easy to improve in that area, because in many organizations HR is caught up responding to non-strategic requests and tending to activities that don’t add much value. “Often the urgent completely pushes out the important,” he said. “At a certain point, we may have to just start saying ‘no’ to people. HR people have typically always said ‘yes,’ and that is the role we have placed ourselves in. It is hard to break out of that.”
Methodology
Aside from being the largest data set for an HR study of this nature, the University of Michigan study is unique because it took an approach different from that used by most researchers, said Brockbank.
“We used a process called exploratory methodology instead of confirmatory methodology,” he said. A confirmatory process is usually used to prove existing hypotheses.
Instead the Michigan team relied on computer software to review data and identify patterns and relationships between survey respondents, HR practices and organizational performance, he said. “We are not trying to test our favourite models. We are tying to find out what is actually going on out there.”
Most importantly, the research objectively identifies the unique HR management practices that characterize high performing organizations based not on what HR says it is doing well, but what their internal clients say HR is doing well.
The study confirmed some assumptions, but also put to rest others, he said.
Aside from “market-driven connectivity,” culture management has emerged as a crucial competency for strategic contribution, he said.
In the past, many HR professionals felt their responsibility was to make employees happy and keep satisfaction numbers high. But in high-performing firms the perspective is very different. “In those firms it’s a case of ‘Let’s make the internal customers happy by making external customers happy,’” said Brockbank.
“If you have employees that are not happy, not willing or not focused on meeting the needs of the external market, the job of HR is not to make those folks happy. It is to either retrain them to do so or else encourage them to find a job elsewhere.”
The University of Michigan work is impressive, but as is the case with all competency models — and there is no shortage of them — it is important to look hard at the validity, said Monica Belcourt, director of the graduate program in Human Resources Management at York University in Toronto.
It is not easy to prove beyond doubt that the HR competencies and practices proposed are actually improving the bottom line, she said. “They would have to establish the organization is performing so well because of the HR practices and not because of its marketing practices.”
What’s more, the performance of organizations tends to be cyclical. They go up and down regardless of HR practices, she said.
That is not to say these models aren’t useful, she added. Far from it. “As a starting point, I think they are spectacular,” she said. They are very useful for HR professionals looking for ways they can become more effective. But they will not be applicable in all organizations or situations, she said. “I would caution against using the list wholesale.”
Five areas of HR competence
Strategic contribution: Includes managing culture, facilitating fast change, involvement in strategic decision-making, and creating “market-driven connectivity.”
Personal credibility: HR professionals must promise and deliver results and establish a track record with key people inside and outside the organization. Personal credibility also requires effective written and verbal communication.
HR delivery: Includes proficiency in the four major categories of traditional and operational HR activities: staffing, development, organization structure and performance management.
Business knowledge: HR professionals must know the business and the industry they serve, including applied understanding of the integrated value chain (how the firm horizontally integrates) and the firm’s value proposition (how the firm creates wealth).
HR technology: Technology is increasingly important. HR professionals must leverage technology and use e-HR/web-based channels to deliver value to customers.
Brockbank was reviewing the findings from the worldwide survey of more than 7,100 HR professionals, line managers and non-HR executives. In high-performing organizations, he explained, HR leaders were increasingly playing a new role as business strategy architects.
In these best firms, he told the audience, HR executives were partnering with other executives to identify vital market and competitive information. Then HR took charge of the human resource implications of that data and helped lay the foundation for action. If marketing has information about customer buying requirements, HR has to figure out the human capabilities requirements. In time, he added, this will emerge as a distinct HR competency the research team called “market-driven connectivity.”
At that point, said Brockbank, one of the most respected business strategists in the world stood up to comment. “But that is not the job of HR. That is the job of the CEO.”
“Well okay, maybe,” said Brockbank. “But that is what is happening. The research shows HR is starting to play a central strategic role in high-performing firms.”
In an interview with Canadian HR Reporter, Brockbank explained that in the past few years, HR leaders — in leading organizations, he stressed — have assumed a sort of adjutant role to the CEO. They no longer focus solely on the human capital dimensions of strategy, but the overall strategy with their HR expertise suffusing their analysis and interpretation, he explained. Increasingly, CEOs are recognizing that human resource challenges and concerns underlie most everything an organization does. The CEO needs the complementary perspective of business-savvy HR professionals to figure out the best course of action.
In other words, a knowledge of the business combined with an expert understanding of human resources management not only makes HR professionals important contributors to strategy design and implementation, it can make them one of the most important.
This was one of the most exciting of several revelations about HR arising from the survey, said Brockbank. The Human Resource Competency Study was started by a group of University of Michigan HR academics in 1987. There have been four surveys in total with the latest completed in June 2002. While there is no shortage of HR competency models, the University of Michigan research is believed to be one of the best in the world. Aside from being developed and managed by some of the leading international HR academics, it also has the largest database of HR professionals and line managers in the world, with more than 26,000.
Based on last iteration of the survey, the team produced a new competency model for HR with five broad domains:
•business knowledge;
•HR delivery;
•HR technology;
•personal credibility; and
•strategic contribution (see sidebar).
One reason the model changed after the 2002 survey was because, more so than in the past, HR technology was identified as a primary competency area, said Warren Wilhelm, one of the competency team members and managing director of the Global Consulting Alliance.
Though technology is an important competency, it does not appear to be having much of an impact on performance, he said. Some organizations are still working out the bugs of a new system. Others have their system running smoothly, though total cost savings may still be relatively small. Still, technology is now seen as a vital component of the HR function.
By examining HR practices and organizational performance over time, the group concluded that HR can potentially improve the bottom line of an organization by as much as 11 per cent, said Wilhelm.
Non-HR professionals may say personal credibility and HR delivery are the most important HR competencies, but these may not be the areas where HR can help to improve organizational performance the most.
HR professionals need to prove they are reliable and can deliver the basics of HR administration and management, he said. “That is just the price of poker, the ante to get into the game.”
It’s in developing strategic contribution competencies where HR can make the most impact on the bottom line, he said. But it’s not always easy to improve in that area, because in many organizations HR is caught up responding to non-strategic requests and tending to activities that don’t add much value. “Often the urgent completely pushes out the important,” he said. “At a certain point, we may have to just start saying ‘no’ to people. HR people have typically always said ‘yes,’ and that is the role we have placed ourselves in. It is hard to break out of that.”
Methodology
Aside from being the largest data set for an HR study of this nature, the University of Michigan study is unique because it took an approach different from that used by most researchers, said Brockbank.
“We used a process called exploratory methodology instead of confirmatory methodology,” he said. A confirmatory process is usually used to prove existing hypotheses.
Instead the Michigan team relied on computer software to review data and identify patterns and relationships between survey respondents, HR practices and organizational performance, he said. “We are not trying to test our favourite models. We are tying to find out what is actually going on out there.”
Most importantly, the research objectively identifies the unique HR management practices that characterize high performing organizations based not on what HR says it is doing well, but what their internal clients say HR is doing well.
The study confirmed some assumptions, but also put to rest others, he said.
Aside from “market-driven connectivity,” culture management has emerged as a crucial competency for strategic contribution, he said.
In the past, many HR professionals felt their responsibility was to make employees happy and keep satisfaction numbers high. But in high-performing firms the perspective is very different. “In those firms it’s a case of ‘Let’s make the internal customers happy by making external customers happy,’” said Brockbank.
“If you have employees that are not happy, not willing or not focused on meeting the needs of the external market, the job of HR is not to make those folks happy. It is to either retrain them to do so or else encourage them to find a job elsewhere.”
The University of Michigan work is impressive, but as is the case with all competency models — and there is no shortage of them — it is important to look hard at the validity, said Monica Belcourt, director of the graduate program in Human Resources Management at York University in Toronto.
It is not easy to prove beyond doubt that the HR competencies and practices proposed are actually improving the bottom line, she said. “They would have to establish the organization is performing so well because of the HR practices and not because of its marketing practices.”
What’s more, the performance of organizations tends to be cyclical. They go up and down regardless of HR practices, she said.
That is not to say these models aren’t useful, she added. Far from it. “As a starting point, I think they are spectacular,” she said. They are very useful for HR professionals looking for ways they can become more effective. But they will not be applicable in all organizations or situations, she said. “I would caution against using the list wholesale.”
Five areas of HR competence
Strategic contribution: Includes managing culture, facilitating fast change, involvement in strategic decision-making, and creating “market-driven connectivity.”
Personal credibility: HR professionals must promise and deliver results and establish a track record with key people inside and outside the organization. Personal credibility also requires effective written and verbal communication.
HR delivery: Includes proficiency in the four major categories of traditional and operational HR activities: staffing, development, organization structure and performance management.
Business knowledge: HR professionals must know the business and the industry they serve, including applied understanding of the integrated value chain (how the firm horizontally integrates) and the firm’s value proposition (how the firm creates wealth).
HR technology: Technology is increasingly important. HR professionals must leverage technology and use e-HR/web-based channels to deliver value to customers.
