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Human Resource Competencies:An Empirical Assessment

Dave Ulrich, Wayne Brockbank,Arthur K. Yeung, and Dale G. Lake

With data from 12,689 associates of human resource (HR) professionals in 1500businesses in 109 firms, this research represents an extensive assessment of HR competen-cies. It extends current HR theory and practice in two ways. First, it proposes specificcompetencies HR professionals may demonstrate to add value to a business. Second, itoffers an empirical assessment of how these competencies affect the performance of HRprofessionals as perceived by their Associates. The results indicate that when HR profes-sionals demonstrate competencies in business knowledge, delivery of HR, and manage-ment of change, then HR professionals are perceived by their associates as more effective.© 1995 by John Wiley & Sons, Inc.

INTRODUCTION

In the last decade, the role and responsibility of human resource (HR)professionals have changed dramatically (Dyer, 1984; Bowen & Greiner,1986; Ulrich, 1987a). For years, HR professionals often faced closed doorstatus; they were often perceived as second team players trying to gainaccess to key decision making forums. In more recent years, many HRprofessionals have successfully become business partners, have newopportunities for professional growth, and have greater opportunities tobe active builders of their firms' competitive advantage {Schuler & Mac-Millan, 1984; Ulrich, 1994).

While the transition in HR roles and responsibilities has been welldiscussed (see Tichy et al. 1984, Schuler & MacMillan, 1984; Ulrich, 1986,1994), much less discussion has occurred about what competencies arerequired for HR professionals to fulfill their new role. This article {1}proposes a model for HR competencies, then (2) tests the model withinformation collected from 12,689 individuals in 1500 businesses in 109firms. The proposal and testing begin to answer the overall question;What are the comp^etencies required for successful HR professionals? We in-tend for this article to be a milestone in moving beyond the call for anew role for HR professionals to actually specifying specific competen-

Human Resource Management, Winter 1995, Vol. 34, Number 4, Pp. 473-495© 1995 by John Wiley & Sons, Inc. CCC 0090-4848/95/040473-23

cies that HR professionals must demonstrate to become full businesspartners.

A RATIONALE FOR HUMAN RESOURCE COMPETENCIES

Competency refers to an individual's demonstrated knowledge, skills,or abilities. While a number of papers have explored the requirements foreffective HR departments (Boudreau, 1983; Tsui, 1984; Cascio, 1987;Ulrich, 1989a), little work has been done to conceptually or empiricallyidentify competencies required of HR professionals.

Competencies for HR professionals may be defined either by theinsights of senior managers and other internal customers or by an empir-ically tested conceptual framework. Many firms follow the former ap-proach, by appointing an HR competency task force which interviews anumber of senior managers and other internal customers, then categor-izes these interview data into a competency model While tailored to theneeds of a particular firm, this approach does not develop a broaderperspective of HR competencies across firms.

An alternative approach to defining competencies builds a theory, orlogic, as to what competencies are necessary, then collects data to testagainst that theory. We propose a simple theory of HR competencieswhich suggests that HR professionals demonstrate competence whenthey add value to their business. They add value by ensuring that theydeliver ideas, programs, and initiatives to their business which helps thebusiness compete. Thus, the value of HR professionals resides in theirability to create competitive advantage thereby positively influencingbottom-line metrics (Ulrich 1987b; Pfeffer, 1994).

This value-added reasoning is based on a five step causal logic whichresults in the defining competencies of HR professionals: (1) businessconditions are changing dramatically; (2) organizations, to respond toturbulent conditions, must focus resources on sustained competitiveadvantage; (3) competitive advantage comes from generating sources ofuniqueness not easily repHcable by competitors; (4) organizational capa-bility is a unique set of organizational attributes that provides values tobuying customers and may not easily be replicated; (5) HR practices arecentral to the creation and maintenance of organizational capability. IfHR professionals develop the competencies to design and deliver prac-tices which build organizational capability, they create and sustainunique sources of competitive advantage. HR professionals demonstratecompetence when they help their firms compete.

A FRAMEWORK FOR HR COMPETENCIES

For the last decade^ debates on HR competencies have been consis-tent with the value-added framework we propose. Walker (1988) sug-

474 / Human Resource Management, Winter 1995

KNOWLEDGE OFBUSINESS

HR FUNCTIONALEXPERTISE

MANAGING CHANGE

Figure 1. Framework for HR competencies.

gested that HR professionals may develop competencies on four di-mensions: functional, business, role, and style. Eichinger (1987) sug-gested six leadership areas for HR competencies: cognitive complexityand agility, achievement directed assertiveness, interpersonal effective-ness, personal management, business savvy, and job skills. Burke(1989) suggested five management practices that impact HR compe-tence: ensures effective HR practices, facilitates group relations, as-sesses business impact, encourages innovation, and gathers informa-tion for action planning. In firm-specific studies and the resultantdiscussions^ of competencies at Amoco, AT&T, Digital Equipment Cor-poration, Eastman Kodak, General Electric, Hewlett Packard, Honey-well, and Pfizer, similar competencies have been identified as critical toHR professionals.

Consistent with previous discussions on HR competencies and basedon our view that HR professionals must add value, a three-domainframework for conceptualizing HR competencies is proposed: know l-edge of business, delivery of HR, and management of change processes(see Eigure 1).

Knowledge of Business

HR professionals add value to an organization when they understandhow the business operates because it helps the HR professional adaptHR and organizational activities to changing business conditions. Know-ing the financial, strategic, technological, and organizational capabilitiesof an organization is a necessary condition of entry to any strategicdiscussion. HR professionals who are knowledgeable exclusively in in-dustrial, employee, or human relations may be fully competent in theirdiscipline, but may fail to understand the essentials of the business inwhich their firms compete. Some HR professionals know the technologyof human resources but are unable to adapt that technology to businessconditions. Business acumen requires knowledge, if not direct opera-tional experience, in functional areas such as marketing, finance, strate-gy, technology, and sales in addition to human resources. The compe-tence required of HR professionals in "knowledge of the business" is not

Ulrich et al.: Human Resource Competencies / 475

the ability to do all the business functions, but the ability to understandthem.

Delivery of HR Practices

HR professionals, like any other staff function, must be experts intheir specialty. Knowing and being able to deliver state-of-the-art, inno-vative HR practices build credibility of HR professionals. As describedby Tichy et al. (1984), Tsui (1984), and Ulrich and Lake (1990), HR prac-tices may be delineated into six categories: staffing, development, ap-praisal, rewards, organization design, and communication. HR profes-sionals who are perceived as being competent in these categories(depending on experience and position) will be seen as credible de-signers and implementers of HR systems. Credibility and professionalrespect evolve from HR professionals being seen as competent in theirunique area of expertise. Competence in the "delivery of HR practice"goes beyond knowledge and requires that the HR professional be able todeliver HR practices to organizational members.

Management of Change Processes

As the pace of change increases outside businesses (e.g., globaliza-tion, information flow, customer expectations, technology), HR profes-sionals will not be competitive unless the rate of internal adaptivechange is commensurate with that of the external environmental. Busi-nesses with a greater capacity for change will be more competitive overtime. Individual resistance to change often keeps organizations fromadapting as quickly as desired. By having competencies to managechange processes, HR professionals can help other organizational mem-bers manage change, thus creating an overall organizational capacity forchange as a key source of competitive advantage. HR professionals whohave competencies to manage change processes demonstrate the attri-butes of an outstanding change agent (Tichy, 1983); they are able todiagnose problems, build relationships with clients, arhculate a vision,set a leadership agenda, solve problems, and implement goals. By dem-onstrating competence in change, HR professionals will have competen-cies which will survive the selection test.^ The competencies exhibited inthe management of change are knowledge (of change processes), skills(as change agents), and abilities (to deliver change).

Based on the requirement of HR professionals to add value to theirfirm, we hypothesize that HR professionals who demonstrate compe-tence in each of these three domains (knowledge of business, delivery ofHR, and management of change processes) will be perceived by theirwork Associates as more effective. (See Figure 1.)


Given this framework, our research explored a series of questionsabout competencies of HR professionals:

OVERALL RESEARCH QUESTION:What are the most critical competencies for HR professionals to be effective in

their job? '* . . . .SUB-QUESTIONS:A. Do HR competencies vary by:

1. Time: Do results vary over time?2. Industry: Are required competencies different in different in-

dustries?3. Respondent: Are required competencies different by job title

of respondent?4. Primary role: Are required competencies different by primary

role of the HR participant?5. Geography: Are required competencies different by country in

which HR professional works?6. Size of business: Are required competencies different by size

of business?B. How are HR competencies related to business performance?

The answers to these questions will shed insights on competencies ex-pected of HR professionals.

SAMPLE AND MEASURES

To test the above framework and answer the questions, data need tobe gathered from more than one organization so that idiosyncratic orga-nizational demands do not bias the data. The test also requires thatperceptions of the competencies and effectiveness of HR professionalsshould come from Associates of HR professionals, not from the profes-sionals themselves to avoid self-report bias.

The study reported here began in 1988 and continues through today.Two major waves of data collection (1988/1989 and 1991/1992) which arereported here were conducted. The data were collected by asking Asso-ciates of HR professionals* to rate their perceptions of the HR profes-sionals' competencies in each of the three domains. Associates weredefined to include those individuals within the Participants' companieswho were familiar with the Participants' functioning as HR profession-als. This definition included Participants' internal customers and otherbusiness associates (e.g., members of the Participants' departments).This 360 degree approach provided extensive information about HRcompetencies from HR professionals themselves and from peers, subor-dinates, supervisors, and internal customers.

The sample is summarized in Table I. It indicates that we have a


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478 / Human Resource Managemenl, Winter 1995

Table U. Charac ta tes of the Data Set (Ail Associates).

N (total sample)

RespondentAssociateParticipant ." .;'•' ., •

MaleFemale

Functional Specialty of AssociatesGeneral managementFinance/accountingManufacturing/productionMarketing/salesPlanning ' 'R&D . -, V, - . .HROther

Relationship of Associate to ParticipantSupervisorPeerSubordinate "•-'• -Client

Primary Role of ParticipantIndividual contributorManager of ind. contribs. •Director of managers r.General manager •'

Primary Function of ParticipantAffirmative actionBenefits ."Compensation ^' ' ' 'Communication •' • ' :HR Planning .• ! •Labor/IR ,.AMedical/safetyOrg. DevelopmentOrg. ResearchRecruitingTraining . .Generalist

Education of ParticipantHigh schoolAssociate collegeBachelor degreeGraduate degree

Time 1

10,291

77%7^

11%58612

607

12%422818

20%3636

8

2%55046i

" 2' 0

37

. 61

3%5

4844

Time 2

4,556

3,805751

78%22

12%58622

569

12%412621

24%42296

1%451781326

1345

7%7

4343


substantial data set with 12,689 Associates and 2,148 HR professionalsspread over the four year time horizon of the study. We believe this isthe most comprehensive data available on competencies of HR profes-sionals. The characteristics of the sample are in Table II. This table indi-cates that the Associate sample is more male than female (78% to 22%),predominantly from respondents with the HR function (56%), generallymanagement level (76% managers and above), responding to questionsabout HR professionals who are generalists (45%), and highly educated(90% with degrees). The large percentage of generalists and the percent-age of those with degrees appear to indicate that the sample is domi-nated by relatively more senior HR professionals.

Measures

To measure indicators of competence in each domain, a three stepprocess was followed. First, we examined literature on business knowl-edge, HR, and change management to identify a set of possible compe-tencies in each domain. Second, through interviews with general manag-ers, HR professionals, and an advisory group of Industrial Psycholo-gists, we specified knowledge, skills, and abilities which reflected com-petence in each domain. Third, a pilot test of our initial instrument wasadministered to 23 HR professionals and 190 Associates. Based on thesethree steps, we derived our final instrument for assessing HR compe-tencies.^

For the knowledge of business domain, 16 business activities or functionswhich are central to business operations were identified. The 16 busi-ness activities were conceptually classified into four "capabilities": finan-cial, strategic, technological, and organizational (Ulrich & Lake, 1990).Organizational capabilities—which included a demonstrated knowl-edge of human resources practices and organization structure—wereincluded in the business knowledge category for two reasons. First, andmost obvious, these are essential elements in any business operation.Second, including them in the business domain serves as a validation ofthe instrument. If Associates do not perceive Participants high in theseitems and if these items are not seen as important, then the instrumenthas been misinterpreted.

For the delivery of HR practices domain, 21 total HR practices wereidentified across the six HR categories: selection, development, apprais-al, rewards, organization design, and communication. The specific prac-tices in each category were selected based on choices that HR profes-sionals made in each category (Schuler & Jackson, 1987; Ulrich & Lake,1990). For example, in the selection category, choices can be made abouthiring, promoting, and out placing employees. In the organization de-sign category, decisions are made about creating reporting relationships,building accountability, restructuring an organization, and integrating


diverse organizational units. The extent to which HR professionals dem-onstrate competence in each of these 21 choices is an overall measure oftheir HR competence.^

For the management of change processes, 30 behaviors that reflectedability to manage change processes were identified. The "managementof change" domain is probably the most elusive. The 30 items identifiedin this domain were drawn from research on managing change by Warn-er Burke and his associates.^ The conceptual model used to developthese 30 competencies drew on the change agent literature (Tichy, 1983).Included in the 30 items were items around both the processes for mak-ing change happen (e.g., building relationships, managing data, prob-lem solving, leadership, influence) and the content of change (innova-tion and creativity, business goals). When these 30 items were analyzed,they fell into four factors or categories: problem solving, influence, inno-vation, and contracting.

In total, 67 competencies (knowledge, skills, or behaviors) in threedomains (knowledge of business, delivery of HR, and management ofchange processes) were measured. We acknowledge that these 67 itemsare not inclusive of all the competencies which HR professionals mayrequire and hope that future research refines and extends this initiallist.

To measure the overall performance of the HR professional, a 20-itemscale was used that asked the Associate to respond to the following:

Overall, compared with other HR professionals you have known, howdoes the participant compare?

The response categories were in increments of 5%—from bottom 5% totop 5%.9

RESULTS

Our results answer the questions we proposed. They help us identifyoverall competencies of HR professionals, how competencies vary byorganizational characteristics and the relationship between HR compe-tencies and business performance.

Results will be reported by restating the target research questions,summarizing findings, and concluding with implications.

Overall question: What are the most critical competencies for HR profes-sionals to be effective in their joh?

Figure 2 summarizes the overall findings from all 12,689 associ-ates. The statistic used throughout this paper is multiple regression. Aregression score reports the amount of explained variance (R ) by each


Knowledge HR Functionalof Business Expertise

Management of ChangeFigure 2. Overall results relative competencies for HR professionals asbusiness partners (data from 12,689 associates).

competence domain in the overall performance of the HR professionals.This percentage suggests how important a set of competencies is inexplaining the overall performance of HR professionals, i" For example,the results of Table III indicate that knovi'ledge of business competenciesexplain 18.8% of the overall performance of HR professionals; functionalexcellence 23.3%; and management of change 41.2%.

These data suggest that effective HR professionals have all three setsof competencies in the indicated proportionality. The R^ for Knowledgeof Business suggests that effective HR professionals will have substan-tial knowledge of a wide variety of business areas. Through follow-upinterviews with selected participants, we concluded competencies in thebusiness domain are prerequisite for HR professionals to join the man-agement team. Without knowing the language and activities of businesssuccess, HR professionals are unlikely to be invited to the team. Func-tional expertise enables HR professionals to discern best practice. Knowinggood from bad HR practices helps HR professionals implement bestpractice. This is significant because of a number of firtns have attemptedto hire key HR professionals who have little or no experience in HR.These data suggest that these hires would have difficulty being effectivein their jobs, unless they quickly surrounded themselves with HR func-tional experts. While knowledge of business and HR functional exper-tise explain less variance in over competency, they may serve as theprice of admission to the higher value-added agenda of change manage-ment. Having competence in managing change enables HR profession-als to add value to their organization by facilitating the development ofthe organizational change capability in a way that encourages adapta-tion to key changes in the business environment. The high R^ in managing


change suggests that this competence is the most important predictor for overallcompetence of HR professionals.

Sub question 1: Do results vary over time?Table 111 shows that expectations of effective HR professionals vary

over time. Even with a short span between time 1 and time 2 (3 years),overall expectations of HR professionals went up. Table IV shows thatknowledge of business went up the most (16.9% to 25.4%) follov»red bydelivery of HR practices (22.5% to 27.8%), then management of change(41% to 45%). These data suggest that as time progressed from the late1980s into the early 1990s, HR professionals were expected to knowmore about business.

The specific items listed in Table III are statistically significant andlisted in order of importance. A few interesting results occur. In the"knowledge of business" domain, financial management was not a sig-nificant competence in 1988, but it is the second most critical businesscon:\petence in 1991. The majority of the explained variance increasebetween time 1 and tin:\e 2 was accounted for by knowledge of financialmanagement. In the "delivery of HR practices" domain, outsourcingbecame a critical competence during the three to four year time frame.This is probably due to the large number of outsourcing activities whichoccurred during this time in response to the deep recession of the early1990s. The lack of any items in the performance appraisal practice may intime 2 reflect a shift away from "hard practices" of measurement andappraisal and a shift tow^ard more attention being paid to the "softerpractices" of communications and feedback (Deming, 1988). Also of noteare the consistency in the "management of change" competencies. Es-tablishing trust and credibility, vision, verbal communication, and tak-ing a proactive role in change are critical items across the time periods.Over time, the overall expectations of HR professionals have risen, par-ticularly in knowledge of business. The constant amidst the rising expec-tations is the ability to manage change.

Sub question 2: Industry: Are required competencies different in differentindustries?

Table IV reports only the R^ on each of the three competence domainsby 10 industry groups (specific competencies within each industrygroup are available from the authors). Without this data base of over12,000 Associates, such reports by industry would be impossible. At themacro level, the results across different industries are remarkably simi-lar. Regardless of industry, the pattern for HR competencies is similar(except for automotive''). Management of change is most important andis followed by the delivery of HR practices which is, in turn, followed byknowledge of business, We are surprised by these results. They implythat while industries may have very different technologies, competitive

Ulrich et al,: Human Resource Competencies / 483

Table III. Human Resource Competencies over Time.

Time 1 Time 2

Knowledgeof Business

16.9%

Human resource practicesCustomer relationsComputer/Information

systemsCompetitor analysisProduction capabilityGlobalizationOrganization structureMarketing & sales

25.4%

Human resource practicesFinancial managementOrganization structureCustomer relationsCompetitor analysisGlobalization

Delivery of HumanResource Practices

Staffing:

Development:

PerformanceAppraisal:

Reward:Communication:

OrganizationDesign:

22.5%

Attract appropriate peoplePromote appropriate people

Design development pro-grams that facilitatechange

Offer career planning ser-vices

Design feedback processesDesign performance ap-

praisal systems to dif-ferentiate performance

Design benefit systemsWork with managers to

send clear and consis-tent messages

Help create reporting rela-tionships

Facilitate Ihe integrationof different businessfunctions

27.8%

Attract appropriate peoplePromote appropriate peopleOut place appropriate

peopleOffers development pro-

grams that facilitatechange

(none significant)

Design benefits systemsWork with managers to

send clear and consis-tent messages

Help explain why busi-ness practices exist

Facilitate the process ofrestructuring the orga-nization

Management ofChange

41.0%

Establishes trust and credi-bility in relating to oth-ers

Is visionaryExpresses effective verbal

communication

45.0%

Establishes trust and credi-bility in relating to oth-ers

Expresses effective verbalcommunication

Is visionary

(continued)


Table UI. (Continued)

Time 1 Time 2

Management ofChange {cont.)

41.0%

Puts specific problems incontext of the largersystem

Takes a proactive role inbringing about change

Builds supportive relation-ship with others

Encourages others to becreative

Uses reasoning toinfluence others

Identifies problems centralto business success

Engages in constructiveproblem solving withclient

Clarifies roles andresponsibilities

Expresses effective writtencommunication

Clarifies business goals

45.0%

Takes a proactive role inbringing about change

Encourages other to becreative

Builds supportive relation-ships with others

Expresses effective writtencommunication

Uses reasoning toinfluence others

Articulates outcomes ofchange

Engages in constructiveproblem solving withclient

Clarifies business goalsPuts specific problems in

context of the largersystem

Clarifies roles andresponsibilities

infrastructures, customer requirements, and other processes, the corecompetencies for HR professionals tend to be more similar than differ-ent. At the micro level, the data suggest that HR professionals in aircraftand finance must become masters of change processes, perhaps due tothe upheaval in these industries between 1988 and 1992. The data may

Table IV. Competencies by Industry (Overall Results—All Associates).

Industry

AircraftAutomobilesChemical, pharmacyElectronics, computerFinanceMisc. ManufacturingPetroleum, gas, coalServicesUtilitiesWholesaling, retailing


22.224.915.518.824.022.021.925.123.719.9

Deliveryof HR

26.117.521.826.024.4Z7.524.427.525.430.8

Managementof Change

53.639.345.649.253.448.049.245.842.844.2


also suggest that in the chemical/pharmacy industries, HR professionalshave fewer expectations about knowing their business, perhaps due tothe technology drivers of these industries; while in the service industrywhere labor is a larger percent of operating budget, HR professionalsneed greater knowledge of the business.

Sub-question 3: Respondent: Are required competencies different by job title ofrespondent?

Table V reports expected competencies based on the title of the Associ-ate. Again, at the overall level, these results indicate that regardless of therespondent's relationship to the HR professional, the order of importanceof competencies are: management of change, delivery of HR, and knowl-edge of business. In a more detailed view. General Managers are differentfrom other groups. These scores are generally lower for the GeneralManagers than for all other groups. These lower scores suggest that whilethe competencies we surveyed were important to General Managers,other competencies which we did not study warrant additional examina-tion. Associates in Planning and Manufacturing functions seemed torequire less knowledge of the business than did respondents in otherfunctions, particularly marketing/sales and human resources (humanresources respondents were generally subordinates, supervisors, orpeers within the HR function). Planners, in particular, wanted HR profes-sionals to be current in the delivery of HR and the management of change.

Perhaps the most interesting finding of Table V is the lack of congru-ence between the Associate scores (regardless of respondent title) andParticipant scores. Participants, when assessing what they think makesthem more effective, suggest that the three competence domains arerelatively equal (9.5%, 6.8%, and 13.6%). The R2 is also smaller than allother Associate groups. Such self-assessments indicate that HR profes-sionals may be somewhat out of touch with expectations of their Associ-ates. Even Associates who work within the HR function identify a differ-ent set of competency predictors than do the Associates who work innon-HR functions. The fact that some HR professionals have knowledge

Tabie V. Competencies by Respondent (Overall Results—All Associates).

Respondent Title

General ManagementFinance/AccountingHuman ResourcesManufacturing/ProductionMarketing/SalesPlanningR&DParticipant


7.819.223.915.523.113.316.39,5

Deliveryof HR

15.926.924.425.126.236.420.56,8

Managementof Change

29.146.842.342.749.353.740.413,6


Table VI. Competencies by Level of Participant (Overall Results—AllAssociates),

Role of Participant

Individual contributorManager of individ-

ual contributorsDirector of managersGeneral managers


19.021.2

22.419.3

Deliveryof HR

21.524.5

29.825.3

Managementof Change

43.345.4

48.651,9

and skills and offer HR services which are less valued by Associates maydetract from their credibility. This gap may be one of the reasons HRprofessionals may have moved more slowly than they would like inbecoming full partners in the business.

Sub question 4: Primary role: Are required competencies different by primaryrole of the HR participant?

Table VI shows that as HR professionals move up the hierarchy fromindividual contributor to Director of Managers more is expected of themin all three competence areas, but relative importance of the three compe-tence areas remains the same, regardless of hierarchical level. It is inter-esting to note, however, that HR professionals who are at the executive(General Manager) level are expected to have slightly less knowledge ofbusiness and delivery of HR competence but expected to have greaterability in managing change. There are two possible explanations. Perhaps,HR professionals who are most adroit at managing change are promotedto the most senior roles in the organization. Alternatively, at the GeneralManager level, the position itself requires greater ability in managingchange as opposed to knovi ing the business or HR functional expertise.

Sub question 5: Geography: Are required competencies different by country inwhich HR professional xvorks?

Table VII reports how competencies of HR professionals vary by geo-graphical location. We formed two geographic groups because ofdata restrictions. More refined "non-United States (US)" distinctions

Table VII. Competencies by Geographic Region(Overall Results—All Associates).

Knowledge Delivery ManagementGeographic Region of Business of HR of Change

United States 17.1 22.3 41.1Non-US 26.9 26.9 34.8


(e.g., by country) would have been desirable, but our data analysisrequires a minimum respondent to variable ratio of 5 to 1. With 63competency items, we were forced to group the non-US sample. Evenwith this broad grouping, however, some interesting findings arise. Notsurprisingly (given the large US sample), US results are consistent withthe overall data set; however, non-US HR professionals have somewhatdifferent scores. Successful non-US HR professionals need to be morebalanced in their overall competencies. Their pattern of competenciesimplies that they must be stronger in business and delivery of HR andless strong in management of change than US HR professionals. Aftersharing these results with many non-US HR professionals, their expla-nation is that non-US HR professionals often serve on managementcommittees. In some countries (e.g., Japan and Germany), senior HRprofessionals are very active and powerful within their companies. Theyoften come to senior HR positions having worked in a number of otherfunctions and are primarily business partners who happen to have HRtitles. As a result, their knowledge of the business naturally will behigher, and the change management agenda will be shared with othermembers of the management team rather than being primarily the con-ceptual agenda of HR.

Sub-question 6: Size of business: Are required competencies different hy size ofbusiness?

Table VIII reports how business size affects expectations of HR profes-sionals. These results are consistent with the overall pattern of findings.Regardless of business size, similar expectations of HR professionalsoccur. The only unique finding is that very large businesses (with over20,000 employees) score lower in all three domains. One possible expla-nation is that market dominance is a central element of business successrather than being a functional competency. In addition, other competen-cies not measured in our research may help explain the success of HRprofessionals in large businesses.

Sub-question 7: How are HR competencies related to business performance?The analyses reported in Table IX are different from those above. In

these analyses, we want to know if specific HR competencies affect

Table VIII. Competencies by Size of Business(Overall Results—All Associates).

Size of Knowledge Delivery ManagementBusiness of Business of HR of Change

Up to 1000 20.6 28.1 46 51001-5000 21.2 20.9 46.35001-20000 21.5 29.7 46.2Over 20000 16.5 20.1 34.9


Table IX. Overall HR Competence and BusinessPerformance over Time.

Change in Overall Competency Competitiveness Change

Decrease 004Same .037Increase -080

business performance {not the effectiveness of the HR professional). Inan ideal study, business results would be regressed onto the competen-cies of the aggregated HR professionals. However, this asserted relation-ship makes too great a leap of faith. Many other factors predict businessresults. The competencies of HR professionals may be far down the listof critical success factors for a business.

Nevertheless, we were able to give an indication of the relationshipbetween competencies of HR professionals and business competitive-ness through the following test. First, we used the 1,400 businesses asthe unit of analysis. Second, we examined the impact of HR competen-cies on business competitiveness, which can better be done in a longi-tudinal research design. We thus selected the 200 businesses which wereinvolved in the study in both time 1 and time 2. Third, for these 200businesses, we examined the change in overall competency of HR pro-fessionals within the business relative to the change in competitivenessof the business itself between time 1 and time 2. The change in overallcompetence of HR professionals was calculated by averaging the compe-tence scores for ail HR professionals and Associates in the business (Atminimum this included one HR professional and 3 Associates; at maxi-mum, it included six HR professionals who serve a business and all theirAssociates within the business) at both time 1 and time 2. We thencalculated a difference score between scores at time 1 and time 2. Thecompetitiveness change score is merely time 1 time 2 on the competitive-ness items by the individual in the business most qualified to providethis score'^.

Table IX reports the overall results of this analysis. This table indicatesthat when overall HR competency increases, a subsequent increase incompetitiveness also occurs. While the increase in competitivenessnumbers is relatively small, it is consistent with our expected results.Evidently, businesses which increase the competence of their HR profes-sionals also increase the competitiveness of their business. Again, cau-tion is suggested in this interpretation and the cause could easily be inthe other direction, e.g., because businesses are more competitive, theyhave more resources with which to upgrade the HR function. We be-lieve, however, that these data suggest a relationship between HR com-petence and business performance.

Table X offers more details of this relationship; it examines specific


Table X. Specific HR Competenciesand Business Performance over Time.

Change inKnowledgeof Business

DecreaseSameIncrease

Change inDelivery

of HR


Change inManagement

of Change


Competi ti venessChange

-.054-.105

.255

CompetitivenessClhange

-.019.087.054

CompetitivenessChange

-.098.081,137

domains of HR competencies. We find, for example, that when HRprofessionals increase their competence in knowledge of the business,business competitiveness goes up extensively (.255) as contrasted towhen HR professionals decrease or stay the same in knowledge of busi-ness competence. Likewise, management of change competencies arehighly related to change in competitiveness, while dehvery of HR areless related.

These results suggest that the competencies of the HR professionalswithin a business vary with business competitiveness. Such results areclearly tentative and need to be further pursued over time.

IMPLICATIONS FOR HR PROFESSIONALS

This research is important for two reasons. First, it extends thinkingabout HR as a competitive advantage and focuses on specific competen-cies required of HR professionals to deliver their new role. It identifiesthree competence domains and specific behaviors and knowledge with-in each domain that HR professionals should be able to demonstrate.Second, rather than continue to "dialogue, debate, and discuss" theseissues, we have created an extensive national data base to test the modelproposed. These findings demonstrate that what HR professionalsknow and do affects how they are perceived by Associates.


This research has implications for theory, research, and practice.While our study was limited to HR professionals, the three domainframework we propose may have implications beyond the Human Re-source function. Knowledge of business and management of changecompetence domains may be generic to other functions, e.g., marketing,engineering, finance, management information systems. We may haveidentified a generic assessment of staff competencies. The relative im-portance of each of the three domains may remain much the same, withonly the "delivery of human resource practices" being replaced by prac-tices in other staff functions. This conjecture may be the subject of futureresearch.

This is but one study in the ongoing process of increasing our under-standing of the HR profession. These initial findings merit further study.More questions are raised than are answered:

1. Under what business conditions do different HR competenciesbecome important?

2. What is the impact on business performance of different sets of HRcompetencies?

3. How will competencies of HR professionals evolve over time?4. What is the source of the competencies?5. How can competencies of HR professionals best be developed?

While these and other questions will arise, this research represents afirst step at moving beyond the talk toward a systematic assessment ofhow HR professionals may become strategic business partners.

Additional and more precise research needs to explore some of theseoverall findings. For example, in this research, knowledge of mergersand acquisitions did not emerge as a significant predictor of overall HReffectiveness. The conclusion should not be drawn that this competenceis unimportant. Obviously for businesses which have experiencedmergers or acquisitions, such a competence might be critical. Our dataset does not allow examination at this level of subtlety. A more refinedanalysis needs to examine the specific business challenges and to identi-fy HR competencies relative to those strategies. Based on our analyticalresults by functional area, we could project that different business chal-lenges and strategies will select and retain different HR competencies.

At a practical level, this study has implications for the staffing anddevelopment of HR professionals. As companies wish to expand thetalent of their HR professionals, these findings may indicate areas inwhich to invest time and money. Making sure that HR professionalsknow the business, can deliver state of the art human resources, andhave the capacity to manage change processes appears to be an essentialelement in developing more competent HR prof^essionals. Competence-based training and education of the HR professional have rarely oc-curred. Often HR professionals are so involved in developing trainingexperience for other managers that they fail to invest in their own devel-


opment. The conceptual framework and research reported in this articlemay serve to inform thinking and discussion as to how to better developHR professionals.

In addition, as companies seek to identify, replicate, and extend "bestpractices," this study may offer a benchmark for HR professionals. Wehave already seen companies use these data to benchmark the compe-tencies of their HR professionals against industry norms and against thecompetencies of businesses facing similar strategic and cultural profiles.We have also seen companies use this data to compare themselvesagainst the "best competencies" in an industry or against businesseswith similar strategic or cultural profiles. By benchmarking, HR profes-sionals may be able to better document and assess their progress.

As businesses change and become increasingly dependent on build-ing more capable organizations as sources of competitive advantage, HRprofessionals' role as business partners may increase. To fill that role,however, better understanding of the knowledge, skills, and abilitiesrequired of the HR professionals needs to be generated. This study isone step along a path which may lead to such understanding.

This research was partially sponsored by a research grant from the School ofBusiness, University of Michigan.

Dave Ulrich is a Professor of Business Administration at the University ofMichigan. He has published over 80 papers on culture change, strategic humanresources, HR competencies, learning capability, organization design, and lead-ership. He is a Fellow in the Academy of Human Resources and has been recog-nized by Business Week as one ofthe top 10 educators in the world in manage-ment education. His consulting focuses on building organizational capabilitiesthrough aligning organizational activities with customers. He has helped over200 of the Fortune 500 change culture, improve HR functions, build leadershipdepth, and organize to serve customers.

Wayne Brockbank (Ph.D., UCLA) is a Clinical Professor of Business at theUniversity of Michigan. He directs Michigan's Advanced Human Resource Ex-ecutive Program, Human Resource Executive Program, and Strategic HumanResource Planning and serves as the Director of Global MBA programs. Hiscurrent research and teaching focus on (1) conceptual and process linkages be-tween HRM and business strategy, (2) creating customer focused organizationcultures and structures, (3) executive leadership, and (4) competency develop-ment for HR professionals. He consults worldwide on these topics. He haspublished in Human Resource Management Journal, Human ResourcePlanning, and Personnel Administrator and has contributed numerous bookchapters.

Arthur K. Yeung is on the faculty of the University of Michigan's School ofBusiness Administration. He is also the founding Executive Director of theCalifornia Strategic Human Resource Partnership, a consortium consisting of


the senior HR executives of 30 leading California companies. His areas of teach-ing and research mterest include HR process redesign!reengineering. the trans-formation of HR functions, changing competencies of HR professionals, develop-ing organizational learning capabilities, designing high value-added HRpractices, and managing cultural change. He is the project manager of "HumanResource Competencies ofthe 1990s" zvhich won the 1989 Yoder-Heneman Per-sonnel Research Aivard presented by the Society of Human Resource Manage-ment. Dr. Yeung is the author of three books and his articles here appeared innumerous professional journals. . . v.

Dale G. Lake is President of Human Systems Development, a managementconsulting firm based in Fort Collins, Colorado. He has served as consultant tomany organizations including General Electric, Acco, MasterCard Internation-al, Citicorp, Bankers Trust. Inland Container, Florida Department of Education,Kodak, Pfizer, Nissan, Sony, Harley-Davidson, Northern Telecom, Shell, andAmoco. He is currently a member of the Management Executive Committee atCoyiAgra where he serves as lead consultant on competitive advantage. Dale haswritten books and articles in such areas as organization capability, team develop-ment, leadership and manageynent, sourcing, human resource development. Hehas served on the faculties of a number of universities and has extensive work-shop experience. He received his doctorate from Columbia University.

ENDNOTES

1. Summaries of the internal work done in these companies is available fromthe authors.

2. We highlight the word, "discussions." In our experience, most organizationshave iatked about HR competencies, but little writing on the subject hasoccurred; to our knowledge, this is the most extensive published research onHR competencies.

3. Our use of Associates' perceptions of HR effectiveness is not completelyconsistent with a selection argument. A selection argument would examinea longer-term view and identify the competencies of the HR professionals,then see which HR professionals continue in their jobs over time. The selec-tion theory would argue that HR professionals without the competencieswould be replaced by those who demonstrate the competencies. Using As-sociate rating of effectiveness is a viable, but not complete, substitute forsurvival because Associates' perceptions are likely to predict which HR pro-fessionals will survive over time. If Associates perceive that HR profession-als lack competencies today, over time they are likely to be able to replacethose HR professionals.

4. The specific instructions given to survey participants for the selection ofAssociates are as follows: "Send the Associate surveys along with the mail-ing envelopes to individuals who are familiar with your work as a HumanResource professional in your business. These individuals may be clients(not in HR), supervisors, peers, or subordinates."

5. A copy of this instrument is available from the authors.6. A factor analysis of the 16 business knowledge items found three factors:


marketing focus, production focus, and cost focus. These three factors areconsistent with the conceptual framework used in developing this construct.

7. The 21 items were scaled into each of the six domains. The alpha values foreach of the six domains were very high {above .75) (see Uirich, Brockbank &Yeung, 1990).

8. The research conducted by Warner Burke and his associates analyzes a seriesof dimensions of management change. While the results of this researchhave not been published, they have been applied both to general managersand to HR professionals.

9. In our pilot study, we had a more traditional 5-point Likert scale to assessoverall HR performance. Unfortunately, 100% of the respondents respondedwith a "4" or "5." This left us little variance in the performance measure. The20-point scale, we knew, would also solicit a response skewed to the posi-tive, but we felt it would also result in a relatively less skewed distribution.This turned out to be the case.

10. Each regression uses the overall performance of the HR professional as thedependent variable, then the competencies within each competence domainas the independent variables. The authors have more specific information onthe BETA weights for each regression reported in the manuscript. We usemultiple regression analysis because of ease of interpretation. We only re-port the R~ because it allov>/s for comparisons across regression models.

11. The reasons for the substantially lower R^ for functional expertise may bedue to the absence of questionnaire items which capture labor relations. Thelower R^ for managing change may be likewise explained by the heavy laborfocus in automotive firms and lack of the flexibility which may be imposedby heavily unionized environments.

12. The general manager of the business or senior financial executive we se-lected to be the individuals with the businesses who were most qualified toevaluate the competitiveness of their business relative to their direct compet-itors.

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