HR Skills More Critical Than Ever for Competitive Edge

The skills of a company’s human resource professionals are more critical than ever, accounting for 20 percent of its business results, and are increasingly becoming part of an organization’s competitive advantage, according to a new study.

Ann Arbor, Mich. — April 18
The skills of a company’s human resource professionals are more critical than ever, accounting for 20 percent of its business results, and are increasingly becoming part of an organization’s competitive advantage, according to a new study by The RBL Group and the Ross School of Business at the University of Michigan.

The study is in cooperation with the Society for Human Resource Management (SHRM), IAE School of Business, IMI, Tsinghua University, the Australian Human Resource Institute (AHRI) and National HRD Network.

To be prepared for the greater demands being placed on them, human resource professionals must define, assess and improve their performance against a set of specific competencies, according to the 2007 Human Resource Competency Study.

“It’s no longer enough for human resource professionals to just want to contribute to the bottom line — they need to know how to do this and have the ability to use what they know,” said Dave Ulrich, partner and co-founder of The RBL Group and a professor at the Ross School of Business. “A company’s intellectual capital, talent, intangibles and capabilities all derive from the competence and commitment of its human resource professionals.”

The Human Resource Competency Study has been conducted five times over the past 20 years, and it is the most comprehensive global empirical review of the HR profession.

More than 40,000 HR professionals and line management employees have participated in the studies since 1988.

The 2007 round of the Human Resource Competency Study involved more than 10,000 HR professionals and line management employees in the United States, Canada, Latin America, Europe, China, Australia/Asia Pacific and India.

“When we first began the Human Resource Competency Study, we did not initially envision a data set that would include tens of thousands of participants spanning over 20 years,” said Wayne Brockbank, The RBL Group partner and director of the Center for Strategic HR Leadership at the Ross School of Business. “The sheer magnitude and scope of the research results is an extraordinarily valuable resource to HR professionals and departments around the world.

“The primary purpose of the Human Resource Competency Study is to provide empirical evidence on a global scale that helps HR departments and HR professionals add increasingly greater value as defined by customer and capital markets.”

To ensure they bring the most value to their businesses, human resource professionals must be adept in six major competency areas, according to the study.

The most critical human resource skill involves being a “credible activist” — part of which is performing “human resources with an attitude.”

“Human resource professionals must be both credible and active,” Ulrich said. “They need to be trusted, respected, admired, listened to but, above all, have a point of view and take a position. HR professionals who are credible but not activists are admired, but they do not have much impact. Those who are activists but not credible may have ideas, but they will not be listened to.”

Only 20 percent of human resource professionals are proficient in being “credible activists” for their businesses, Ulrich said.

“Sixty percent of HR professionals can master this crucial skill with the right training and awareness, while the remaining 20 percent may not have the right skills and/or personality to listen and take action,” he said.

In addition to being a “credible activist,” the five other major areas in which human resource professionals need to be proficient, according to the study, are:

  1. Culture and Change Steward. HR professionals recognize, articulate and help shape a company’s culture. “Culture involves a pattern of activities rather than a single event,” Ulrich said. “It starts with being clear about the expectations of external customers and then translates these expectations into internal employee and organizational behaviors.” In addition to managing change, successful HR professionals help make culture happen and develop disciplines to drive changes throughout the organization. “Through implementation of strategy, projects or initiatives, they help turn what is known into what is done,” Ulrich said.
  2. Talent Manager/Organization Designer. HR professionals master theory, research and practice in both talent management and organization design. “Talent management focuses on how individuals enter, move up, across or out of the organization,” Ulrich said. “Organization design focuses on the capabilities an organization has that are embedded in the structure, processes and policies that shape how the organization works.” HR is not just about talent or organization but about the two of them together. “Good talent without a supporting organization will not be sustained, and a good organization will not fully deliver without good talent,” Ulrich said.
  3. Strategy Architect. HR professionals need to have a vision for how the organization can win in the future and play an active part in the establishment of the overall strategy to deliver this vision. “This skill incorporates recognizing business trends and their impact on the business, being able to forecast potential obstacles to success and facilitating the process of gaining strategic clarity,” Ulrich said.
  4. Operational Executor. HR professionals execute the operational aspects of managing people and organizations such as drafting, adapting and implementing policies. HR professionals also ensure employees’ basic needs — including being paid, relocated, hired and trained — are efficiently delivered through technology, shared services and/or outsourcing.
  5. Business Ally. HR professionals contribute to the success of the business by knowing the social context or setting in which their companies operate. “They know how the business makes money — who their customers are and why they buy the company’s products or services. And they have a basic understanding of the functions of various corporate departments such as finance, marketing, R&D and engineering, so they can help the business make money,” Ulrich said.

The top four human resource competencies — credible activist, culture and change steward, talent manager/organizational designer and strategy architect — account for more than 75 percent of the success of a human resource professional, according to the study.

CEOs are more often looking to human resource professionals for knowledge about issues such as developing talent, changing the organization’s culture and moving into new markets, Ulrich said.

Human resource professionals are also more often involving external customers — the customers of the business — in the design of HR policies and linking them with customers’ expectations.

“HR professionals need to ensure that human resource practices are aligned with customer expectations and strategy, integrated with each other, and innovative,” Ulrich said. “This linkage helps make customer-driven business strategies real to the company’s employees.”