Paper

Competencies of Strategic Human Resource Professionals in Australia. A comparison of a competency model in American Human Resource Management literature to an Australian Company
Authors: Jennifer Wharton and Janine Brown (*) Australian Catholic University *  Submitted in partial fulfilment of the Bachelor of Business (Hons) (HRM), Australian Catholic University with Ms. Janine Brown as her Supervisor
ABSTRACT
It is proposed in the literature and in this study that in order for the HR profession to be truly effective, it must take on a more strategic role in organisations, as opposed to solely carrying out the traditional technical HR role. This study investigates this problem of how HR professionals can play a more strategic role in organisations, from an Australian perspective, as opposed to the mostly American perspectives in the literature. It is also proposed in this study that gaining certain competencies will assist HR professionals in playing this strategic role. A major purpose of this study is to compare the results from this study with American competency studies, namely the Michigan HR competency studies. The results revealed that the competencies included in the US literature were validated in this study, suggesting similarities between Australian and US HRM. However, the data also revealed a significant number of additional competencies, suggesting that although the US literature is valid in Australia, it is also incomplete.
KEYWORDS
Strategic Human Resource Management, HR professional, Strategic Role, Competency.
The need for HR competency research
Pieper (1990) states that it was in the mid 1980’s that the term strategic human resource management surfaced in the literature to highlight the “strategic orientation” of the HR department (p.95). Buford and Mackavey (2003) agree that in the 1980’s and 1990’s “thought leaders positioned HR professionals as business partners and value added members of the organisation” (p.600). Others argue that the SHRM literature began to refer to the HR professional strategic partner concept as early as Ulrich (1987), who assessed the strategic partner role as “shaping” rather than just implementing organisational strategies (p.39). The introduction of SHRM represented a need from the business, for a new role to be played by the HR function. A new more strategic perspective needed to be placed on the HR function, and on the way it carried out its operational activities. This new role involved HR being more involved in the strategic management of the organisation, and being more accountable and business focused. The emergence of SHRM symbolized a shift in the way HRM was carried out in organisations, and an introduction of more business focused roles for HR, however the traditional HRM activities remained intact, as did HRM as a business function. This is the factor that differentiates the move from HRM to SHRM from the move from personnel management to HRM. HRM was a model that was introduced to replace personnel, and to revolutionise the way the function operated. Whereas SHRM was a new perspective that was placed on HRM activities to make them more strategic and business focused, it did not replace HRM; it signified an evolution, rather than a revolution. For example, there has been no sudden change in the titles of HRM managers, to SHRM managers, which occurred with the transition from personnel. SHRM has simply changed the focus of HRM and the manner in which each of the traditional HR functions are executed.
Figure 1.1 Evolution of SHRM
As a result of this quest to make HR more strategic, this topic has become very popular in the HRM literature including methods by which HR can play a more strategic role where they are contributing to improving organisational performance. They guide HR professionals towards what they should be doing to become more strategic. The new strategic role of HR contrasts greatly with that traditionally played by the HR department, and therefore it can be said that this new role requires new and different skills, than that of the traditional role. The contention has also been made that HR professionals do not possess the required skills to be able to play a more strategic role in the organisation, so they are not able to provide the organisation with the value that comes with a strategic HR department. HR professionals may not actually know what competencies are required for them to play a more strategic role. If HR professionals do not know what skills are needed to carry out this strategic role, or if they do not possess these skills, they will not be able to make a strategic contribution. As HRM takes on a more strategic perspective, there is a need for HR professionals to gain new competencies in order to support the movement into this more strategic role, and increase their professionalism within the business (Schuler, Jackson & Storey, 2001; Becker, Huselid & Ulrich 1997; Buford & Mackavey, 2003). The new business environment and its associated challenges dictated a need for a more strategic approach from the HR function, which according to several authors, required new strategic competencies for HR professionals (Hunter, 1999; Lawson & Limbrick, 1996; Losey, 1997). De-Ceiri, Kramar, Noe, Hollenbeck, Gerhart and Wright (2003) argue that the transformation from HRM to SHRM has “resulted in a misalignment between the skills and capabilities” of HR professionals and the new pressures it faces (p.562). Anderson (1997) suggests a close relationship between a more strategic role and gaining new competencies in asserting that a shift to a more strategic HR role is dependant on shifting the competencies of HR professionals. Concerning the assumption that increasing the competence levels of HR professionals will increase HR department effectiveness, Huselid, Jackson & Schuler (1997) and Becker et al (1997) found that overall HRM effectiveness increases when the HR practitioners within the HR function have certain competencies. This proposal is supported by Kessler (1995) who states that HR will not add value to the organisation and play a strategic role unless there is change in consensus as to the nature of the role, along with the appropriate competencies to carry it out. Conversely, a lack of competence on the part of HR professionals has also been noted to contribute to their lack of HR effectiveness. For example; numerous studies have been conducted to examine the relationship between a strategic role for HR, and its impact on firm performance. In most of these studies no such correlation was found (Martell & Carroll, 1995; Bennett, Ketchen, Blanton & Schultz, 1998; & Wright, McMahan, McCormick & Sherman, 1998). Both Bennett et al (1998) and Wright et al (1998) attribute this outcome to HR being placed in a strategic role without possessing the appropriate skills to carry out the role effectively. HR competency research also impacts significantly on the level and quality of developmental activities for HR professionals. Brockbank, Ulrich & Beatty (1999) assert that competency research can be translated into “tools to build HR professionals” (p.114). Understanding professional competencies is important in both developing and assessing competence (Hearn, Close, Smith & Southey 1996; Lawson & Limbrick, 1996). Examining HR competencies can indicate performance and knowledge gaps in which development activities are required (Ulrich, Brockbank & Yeung, 1989). In order to become a valued profession, distinct benchmarks of highly effective HR performance must be discovered through competency research, and then development programs created which address these competencies so HR professionals have a means of obtaining these competencies (Brockbank et al, 1999).
Strategic HR Competency Study The main purpose of this study is to contribute to the SHRM body of knowledge by examining the competencies that are required for HR professionals to make a strategic contribution in their organisation in Australia. By identifying competencies, this study will ultimately provide a method for HR professionals to understand what a strategic role involves and what skills they need in order to become more strategic.  More specifically, the purpose of this project is to investigate whether the HR competencies identified in the Michigan studies are relevant to Australian HR professionals. This leads to the major research question of this study: “What competencies do senior HR professionals require in order to increase their strategic contribution in the organisation, according to senior HR professionals and line managers in a large Australian private company?” This study will provide further insight to the state of HRM in Australia through making available research data which reflects the views of Australian HR professionals and line managers’ regarding the competencies that are required for HR professionals to make a strategic contribution in their organisation. In addition, a project of this nature has not been carried out in Australia before. This research will also be instrumental to the overall SHRM body of knowledge by providing HR professionals with a collection of specific skills that can be used as a guide in their professional development, which will hopefully assist them in becoming more effective individually and in turn as a function and a profession. Whilst the SHRM literature at present does supply some insight as to the characteristics of a HR professional that is carrying out a strategic role, it has not been expressed in terms of the specific competencies that are required. A number of HR professional competency studies have been carried out in the US, namely by a group of researchers at the University of Michigan. This group have carried out a major longitudinal study identifying the competencies that HR professionals require in order to become strategic partners in their organisations. Like the majority of the general HRM literature, the studies are predominantly carried out from an American perspective. This represents a gap in the HR competency literature in terms of the absence of an Australian perspective. There has been no investigation that has focused solely on the state of HR competencies in Australia. The Michigan University Competency Studies The most prominent and renowned HR competency study, also the first published study, is the group of studies, conducted in three stages, at the University of Michigan by a particular group of authors including Ulrich, Brockbank & Yeung (1989), Ulrich, Brockbank, Yeung & Lake (1995) and Ulrich, Brockbank, Yeung & Lake (1998), published in Becker et al (1997). These studies involved considerable research depth, in that the whole study involved over 20 000 participants and was carried out over 10 years. It is the largest study ever conducted on HR competencies. The Michigan studies used a number of different research methodologies and not only concentrated on identifying HR professional competencies, but also studied many other aspects of competencies. The main aim of the research was to identify competencies that make HR professionals ‘strategic partners’ in the organisation. The Michigan University studies found that there are certain clusters of competencies, which are most relevant to high performing HR professionals. Ulrich et al (1989) state that when HR professionals have attained the professional competencies identified in their study, they will become strategic partners, as it is these competencies that are exemplified by HR professionals who are strategic partners in their organisation. In the 1989 study, it was concluded that the most successful HR professionals possessed three main competencies, which were knowledge of the business, delivery of HR and change management. The second stage of the study reported in 1995 found that in addition to the competencies identified in the 1989 round of research, personal credibility was also important for HR professionals to become strategic partners in their companies. The last series of research conducted by the University of Michigan was conducted in 1998 maintained the importance of knowledge of the business, HR delivery, change management and personal credibility as important for HR professionals to become strategic partners, and added culture management to this group.  Research Methodolog The research methodology in this study was a replication of the Michigan University studies, namely the 1989 study conducted by Ulrich, Brockbank and Yeung titled Beyond belief: A benchmark for HRM and the 1995 study conducted by Ulrich, Brockbank, Yeung and Lake titled Human Resource Competencies: An empirical assessment. This study identified important competencies from the literature, namely other competency models cited in the literature, and then empirically tested the importance of these competencies in their relevance to a strategic role for HR professionals. A case study was conducted on one large Australian top forty ASX listed company. Within this company six senior HR professionals and six line managers were chosen to participate in a semi-structured interview where they were asked questions regarding important strategic HR competencies. This study therefore makes a comparison between the opinions of both the HR professionals and line managers in this company. The interview method has been selected because the type of data required to answer the research question includes the opinions, attitudes and expectations of participants, with the semi-structured method has been chosen to allow for the interview to have some structure but also the flexibility to gather appropriate and interesting information. The competencies utilised in this research have been taken from a number of American HR competency studies, mainly the Michigan studies. The main reasoning behind this is to test the relevance of an American competency model to the Australian experience. Gray (1999) also drew from a US competency model (developed by the American Society for Training and Development) in order to establish the relevancy of an American model in terms of competencies to New Zealand. Following the methodology of the Michigan University studies, the first stage of this study involved identifying important competencies from the literature, (namely other cited competency models for this study) and then it empirically tested the importance of these competencies against their relevance to a strategic role for HR professionals. Similar to the Michigan studies, this study also gathered the opinions of the associates of the HR professionals, that is, line managers. Therefore, although this current research project is similar to the 1995 Michigan study, it also differs in a number of significant ways. Not only did this study test the validity of the SHRM literature, by gaining the participant’s opinions regarding the relevancy of the competencies stated in the literature, as did the Michigan studies, it also asked the participants to provide their own list of the competencies that they feel are important to HR professionals wanting to play a more strategic role. It is in this aspect that this study goes further in identifying HR competencies than the Michigan studies did. In addition, the main aim of the Michigan studies was to assess to the competency level of a large number of HR professionals. This study only replicated the former part of the study, in that it was concerned with the identification of the most important HR professional competencies, not the assessment of HR professionals. Results and Discussion
Figure 1.2 HR Competencies - provided by participants Table 1.1 HR Competencies - provided by participants
1 People Skills 7 Analytical Reasoning 2 Business Acumen 8 Legal / IR knowledge 3 HR Delivery 9 Internal Consultancy Skills 4 Influencing 10 Change Management 5 Leadership 11 Culture Management 6 Stakeholder management 12 Project Management
In this question, participants were asked to freely produce their own list of competencies, which they think are important for HR professionals to play a strategic role in their organisation. These competencies were grouped into representative competency groups. Asking participants to provide their own competency lists, without being aided by a list from the literature allows for more empirical data to be gathered, as participants are not restricted in the manner in which they provide their responses. This is opposed to just presenting the literature to the participants, and asking them to rate the importance of the literature competencies, as was done in the Michigan studies. Figure 1.2 shows that people skills was the most important competency according to the HR group, also receiving a high importance rating from the line manager group. The most important competency as reported by the line managers was equal between people skills and business acumen, which also received a high importance rating from HR. HR delivery was reported as being very important by the HR group, but not from the line managers. Influencing was the next most important competency for HR. There was however, as with HR delivery, a large discrepancy between the proportions of which influencing was reported between the two participant groups, with HR representing a much larger proportion than line management. Moreover, HR delivery represented the competency grouping with the highest discrepancy rating between HR and line managers out of all the other competencies. There are four extra competency groupings, which were provided in the data, which were not offered by both participant groups simultaneously. Two of these were provided by the line managers (internal consultancy skills and culture management), and three by the HR group (change management, culture management and project management).
Figure 1.3 HR Competencies Survey - average scores for HR and Line Managers Table 1.2 HR Competencies Survey - average scores for HR and Line Managers
1 Interpersonal skills and people management 8 Knowledge of the business 2 Personal Credibility 9 Influences Peers in other organisations 3 Leadership 10 Risk Taking 4 Culture Management 11 Analytical Reasoning 5 Change Management 12 Vendor Management 6 Teamwork 13 HR Technology 7 HR delivery 14 Computer Literacy
This question also asked participants about the competencies they think are most important for HR professionals to acquire in order to play a strategic role in the organisation. Participants were given a survey with the HR competencies found in the literature and asked to rate their importance against a seven point scale, one being very important for HR professionals to make a strategic contribution and seven being unimportant. Figure 1.3 shows the average scores HR and line managers gave each of these competencies, with the lowest scores representing the most important competencies. The responses from both HR and line managers were very similar in this question. Where there were differences in the responses, these were minor, with the most significant competency in this category being risk taking, with HR managers scoring it as quite important and line managers scoring it as moderately important. The top six most important competencies for HR professionals to increase their strategic contribution, as reported by both respondent groups, were interpersonal skills and people management, personal credibility, leadership, culture management, change management and teamwork. Results in relation to the hypothesis Hypothesis 1: The most important HR competencies that are required for senior HR professionals to increase their strategic role in organisations in Australia, are the following ones that were identified in the HR competency literature: Knowledge of the business Change management HR delivery Personal credibility Culture management Leadership Interpersonal skills & people management Analytical reasoning HR technology Vendor management Overall, the data reveals certain patterns which correlate to the literature, and prove Hypothesis 1 to be correct, as a large proportion (seven out of the ten) of the competencies chosen from the literature also appear in the data. This result proved to be equally evident from both the individual HR and line management respondent groups each demonstrating six out of the ten competencies, although there were differences in one of the competencies chosen between the groups. This is shown where six of the competencies chosen from the literature list were the same between the groups; however, the HR group also listed the change management competency. The three competency groupings from the literature list, which are absent from the data, were HR technology and vendor management from the general HR literature, and personal credibility from the Michigan studies. This indicates that these three competencies are not as important to these respondents as are the ones that were listed. This data suggests that, taken as a whole, the competencies from the US SHRM literature appear to be also important to HR professionals and line managers in Australia. The data did however produce some additional competency groupings that were not present in the literature as being important to enabling HR professionals to be strategically involved in organisations. This suggests that there is a gap in the HR competency literature in that in addition to those competencies cited in the US literature, an Australian HR competency model, according to this data, would encompass some further competency groupings, as listed below: Influencing Stakeholder Management Legal / IR knowledge Internal Consultancy Skills Project Management Another theme that emerged when participants were asked to list what they thought to be important competencies for HR professionals was also found in the competency study by Buckley and Monks (2004). That is, the competencies identified could also be thought of as general management competencies rather than HR specialist competencies. Competencies such as people skills, business acumen, influencing, leadership, stakeholder management, and analytical reasoning would certainly be most valuable for a manager of any organisational function. As is suggested by Buckley and Monks, while HR professionals need specialist HR knowledge, “this is of little use without the meta-abilities that are required to transform this knowledge into action” (p.51). The results show that the opinions of HR professionals and line managers regarding what are the most important competencies for the strategic HR role are in line with those suggested in the literature. All of the competencies from the literature were scored as being very important, proving hypothesis 1 to be correct. What the results tell us from Figures 1.2 and 1.3 is that there is a gap in the literature. This gap however does not suggest that the HR competencies already in the literature and presented here are invalid as important competencies to line managers and HR professionals in this study, as they are all confirmed to be important in Figure 1.3. The gap is suggested in the number of additional competencies presented in Figure 1.2 that are absent from the literature. Thus, a more accurate competency model for Australian HR professionals would include the ones suggested by the US literature, in addition to the further ones provided in figure 1.2, as shown below in table 1.3; Table 1.3 Strategic HR Competencies
1. Knowledge of the business 6. Leadership 11. Influencing 2. Change Management 7. Interpersonal skills & people management  12. Stakeholder Management 3. HR Delivery 8. Analytical reasoning 13. Legal / IR knowledge 4. Personal credibility 9. HR technology            14. Internal Consultancy Skills 5. Culture management    10. Vendor management 15. Project Management
A number of speculations can be made to explain why this study produced so many additional competency categories. Firstly, the questioning strategy used was designed to be less restrictive than some of the other competency studies, namely the Michigan studies. Participants were not restricted when asked to suggest competencies and therefore were given free reign to suggest as many competencies as they thought appropriate. In the Michigan studies for example, only five competencies were presented to participants to rate, whereas in this study such restrictions were not in place. Therefore, it is logical that this study would produce more competency categories. Secondly, time differences may have contributed to the results produced in this study. For example, the Michigan studies were completed in 1998, which means that there is around a seven-year time lapse, which may have accounted for the differences in results. Finally, the additional reported competencies that are absent from the literature may be illustrative of cultural disparities between the US and Australia, as the literature competencies originate from the US. Another reason for the extra competencies may be the small sample size used in this study, in that the results may be unique to this company, and may not have been found if the study was extended to a wider population. In addition, this company’s highly unionised workforce may have an impact on the results, which may not have arisen in other companies. For example, a factor that may have caused these results to be unique to this study is that this company belongs to an industry that is highly unionised compared to other industries in Australia with union membership rate of 50.1% (ABS, 2000). This factor results in a large proportion of the HR professional’s role being associated with IR related activities, which may give rise as to why an outcome such as ‘decreased industrial disputes’ was included in the results.  For example, legal / IR knowledge may not have appeared as a strategic competency if the study was more widespread in other Australian companies. Limitations The research design chosen for this study does produce some limitations that may affect the utility of the results. One of the main characteristics of the case study methodology is that it usually only involves gathering data from a few firms. This characteristic held true in this study, where only one large Australian company participated in the case study. As a result, due to the small sample size from which data was collected, the results cannot be generalised to the wider population with enough confidence to warrant them valid. Therefore, when viewing the results from this study, one must remember that as only one firm was included in the study, it may be the case that the results are unique to this company, and may not be representative of all Australian firms. However, the results from this study do provide some interesting insights into the opinions of line managers and HR professionals from one large Australian firm regarding the characteristics of SHRM, and the competencies required for HR professionals in order for HR professionals to make a strategic contribution in the organisation. In addition, as mentioned previously, this study does overcome one of the weaknesses of the Michigan studies in that it not only tests the validity of the HR competencies in the literature, it goes one step further in gathering the opinions of the participants regarding what competencies they consider to be important for HR professionals. Conclusions & Recommendations The main purpose of this study was to examine certain characteristics of the strategic human resource management role in Australia. It has been argued throughout this study that the SHRM role evolved from the HRM role to address growing business expectations and changes in the business environment. With this evolution from HRM to SHRM, it has been proposed in this study that HR professionals will need different competencies to carry out this new SHRM role, compared to those required to carry out the HRM role. Consequently, this study investigated what this strategic HR role involved, and specifically, what competencies are required for HR professionals to make this strategic contribution in their organisation. This subject has been well researched in the US, with some notable strategic HR competency studies, along with considerable quantities of literature on the topic. The most notable of these studies are the Michigan studies, conducted over three stages in 1989, 1996 and 1998. These studies revealed that the competencies required by HR professionals to play a strategic role were ones associated with becoming more knowledgeable about the business, and becoming credible among top management which will allow them to join the management team at a strategic level, becoming strategic partners to the business. This study attempted to in part replicate the Michigan studies in order to test the relevance of this US literature in Australia. The competencies found to be important for the strategic role for HR professionals, along with the other findings that were found in the results from this study provided some interesting observations into the characteristics of SHRM in Australia. In particular, the additional competencies identified in this study which are not found in the SHRM literature may need to be further examined in future research in Australia to determine if these competencies are also relevant in a larger number of firms, and if they are, these competencies will require further examination individually as to their meanings and implications for the role of the HR professional. The observations made from this study have implications for various aspects of SHRM, including comparative HRM between the dominant US model and Australian HRM, and comparing the views of line managers and HR professionals. For instance, it was found in this study that the competencies identified by HR professionals and line managers were parallel to those found in the US studies. However, the results also showed some key differences in terms of the additional competencies identified. Further research is required to investigate whether these additional competencies do have further relevance in other Australian companies, and therefore if there are genuine differences, as this study has found, between the US and Australia.  The competencies identified in this study will also be useful for Australian HR professionals to use as a benchmark for their own professional development, which is based on research based in a large Australian company, instead of American studies published in Australia. However, due to the small-scale of this research project, having a very small sample size, these results cannot be confidently represented as being a depiction of a large population. This factor presents a need for more research to be conducted in this area, using a research methodology that will involve a more representative sample size. Future research of this nature will result in a deeper understanding of these issues, as more large-scale research will provide for more generalisable data. Therefore, the themes from the findings that have surfaced in this study provide an introduction to the issues that may require further examination in future research projects on the characteristics of SHRM, and in particular the competencies required by HR professionals in Australian firms.
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AUTHOR BIOGRAPHY
Jennifer Wharton Jennifer Wharton graduated from ACU National with a BBUS (Hons) specialising in Human Resource Management in April 2006 with Second Class Honours (Division A).
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