HR Professionals Add Greater Value to Companies
Human resource professionals, once heavily focused on transaction-processing, are now assuming a more influential role as strategic contributors who create and facilitate corporate culture that drives top-line growth and profitability, according to a recent survey released by the University of Michigan Business School’s Executive Education Center.
The 2002 Human Resource Competency Study reports that HR competencies and practices now impact nearly 10 percent of business financial performance, more than double the influence five years ago. As the trend toward outsourcing and electronically processing transactional HR work continues, HR professionals increasingly will have the time and focus to be able to add greater strategic value, the study shows.
“We found that in high-performing firms, HR is becoming more of a strategic contributor,” said Wayne Brockbank, professor and director of Human Resource Executive Programs at the Business School. “Strategic contributions include culture management, disciplines of fast change, mobilizing the organization for tightly integrated responses to competitive pressures and enhancing the quality of strategic decision-making.”
The HR Competency Study has been conducted four times in the last 15 years by Brockbank and U-M Business School colleague David Ulrich. It has involved more than 26,000 participants.
In this year’s iteration of the competency study, nearly 7,100 HR professionals, HR associates and non-HR associates from 241 large and small companies in diverse industries around the globe were involved. The results have been shared at business conferences in North and Latin America, Asia and Europe, and have been incorporated into the HR curriculum of Michigan's Executive Education programs. They also will contribute to a HR Competency Guidebook and Self-Assessment offering, now under development.
The 2002 study identified five major competencies ? strategic contribution, personal credibility, HR delivery, business knowledge and HR technology. In the past, culture management, change management and personal credibility were separate “silos,” but now they are integrated within the HR function as a new strategic-contribution competency area.
In other key findings, the study reported that HR professionals from high-performing companies are centrally involved in strategically connecting the firm with its external environment, marking a shift in focus from internal to external customers. HR professionals also are taking greater responsibility for building powerful organizational cultures based on market demands and company requirements to execute strategy, and for disseminating these cultural underpinnings throughout their organizations.
Change management has given way to a new emphasis on facilitating fast change in response to rapidly shifting market demands, and to setting the direction of change within an organization. HR professionals also are emerging as strategic partners who identify problems, provide alternative insights and raise the standard of “intellectual rigor” for business decision-making.
Personal credibility and a good track record of results as well as knowledge of the firm's business and its industry are still requisite competencies for HR professionals who seek acceptance as key players in an organization, according to the study. In addition, HR professionals and departments must be able to deliver both traditional and operational HR activities related to development, structure and measurement, staffing, and performance management. HR technology, though promising, was found to have relatively little impact on the corporate bottom line at this point.
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