Keywords

Introduction

Ulrich, Kryscynski, Brockbank, and Ulrich (2017) commented on the mission of human resources (HR) thatHR is not about HR, HR begins and ends with business. In the recent past the HR function has been under criticism for not being able to make an impact on business. It has been argued that the biggest role of HR is to create value for business. Some of the established HR systems started in the past have become redundant as they have not been able to create business impact. It has been widely argued that HR systems need to restrain themselves from establishing an administrative flavor out of their work responsibilities. They should focus toward competency building of workforce and culture and commitment building for the organization.

Pareek and Rao (2008) were invited in 1975 by Larsen and Toubro to make recommendations for increasing effectiveness of their performance management system. This led to the creation of what we call modern HR in India. Pareek and Rao presented a proposal to Chairman of Larsen and Toubro, N. M. Desai, and recommended that Performance Appraisal, Potential Appraisal, Feedback and Counselling, Career Development and Career Planning and Training and Development get distinct attention as unique parts of an integrated system which they named the Human Resource Development (HRD) System. This system was proposed as a separate system with strong linkages to personnel (human resources) system. Pareek and Rao came up with a philosophy for the new HRD system to promote HRD. They came up with 14 principles vital for designing the HRD system. The principles dealt with both the purpose of HRD systems and the process of their implementation. The following 14 principles were shared with the organization as fundamental to designing the HR system. It was proposed that HRD systems should possess the following attributes:

  • Help the organization increase enabling capabilities.

  • Help individuals recognize their potential and help them contribute their best in various organizational roles that they are expected to perform.

  • Help maximize individual autonomy through increased responsibility.

  • Facilitate decentralization through delegation and shared responsibility.

  • Facilitate participative decision making.

  • Attempt to balance the current organizational culture along with changing the culture.

  • Balance between differentiation and integration.

  • Balance between specialization of the function with its diffusion into the others.

  • Ensure responsibility for the function.

  • Build upon feedback and reinforcement mechanisms.

  • Maintain a balance between quantification and qualitative decisions.

  • Balance between external and internal help.

  • Plan the evolution of the function.

  • Promote continuous review and renewal of the function.

Review of the Literature

Creelman and Ulrich (2007) found that organizations who were managing their human capital effectively had a competitive advantage over others. Friedrich and Rajshekhar (2018) assert that organizations that have successfully created capacity and built strategic capabilities are beginning to evolve the role of strategic business partners to better align with business demands. They also suggest a good HR business partner model would include competencies such as business acumen, client service focus, consulting skills, personal and professional impact, coaching and influencing, facilitating organizational change.

Garavan, Shanahan, Carbery, and Watson (2016) introduced the concept of dynamic strategic human resource development capabilities and proposed a framework consisting of enabling factors, specific components, underlying processes and unique strategic human resource development capabilities. They also came up with views that the number of stakeholders must be involved while managing strategic human resource development that will trigger strategic human resource development to think differently about its role and value creation for organizations.

It was found that organizations having high scores on talent management were more likely to demonstrate strong financial performance (MacMillan, 2008). It has also been found in researches that support of stronger human resource management initiatives in times of crisis reduces problems related to lay off, maintenance and management of talent pool and leads to better motivated workforce (Cooper, 2008). Research results repeatedly demonstrate that organizations applying HR principles and practicing human capital development are far better in performance than others (Cheese, 2008).

HR function has repeatedly been admonished for making a strategic contribution to the business (Brockbank, 1999; Hammonds, 2005; Yeung, 2011). It has been witnessed that progress has not been much (Rasmussen, Andersen, & Haworth, 2010). It has also been witnessed that non-HR professionals are connected with strategic HR roles (Rasmussen et al., 2010), therefore there has been ambiguity in HR profession, professional boundaries and occupational identity (Wright, 2008).

Boxall, Purcell, and Wright (2007) made a distinction between three major subfields of human resource management. They identified them as Micro HRM, Strategic HRM (SHRM) and International HRM (IHRM). They went ahead and identified functions of Micro HRM as covering sub-functions of HR policy and practice, consisting of two main categories: one dealing with managing individuals and small groups (e.g., talent acquisition, induction, training and development, performance management and remuneration) and the other dealing with management of work organization and employee relations. Strategic HRM deals with overall HR strategies adopted by business units and organizations and tries to assess their effect on performance. International HRM covers HRM in organizations that operate across national boundaries.

When we see human resource as a discipline, we witness that the perspective of dynamic capabilities has an impact on it (Helfat & Peteraf, 2015; Teece, 2014; Wang, Senaratne, & Rafiq, 2015). Teece, Pisano, and Shuen (1997) assert that challenge for strategic human resource development lies in its contribution to create new capabilities and renewal of already existing capabilities when responding to environmental change (Bowman & Ambrosini, 2003; Zollo & Winter, 2002). Guzman, Neelankavil, and Sengupta (2011) in order to understand the current HR philosophy and specific roles practiced by HR professionals among Asian organizations conducted a survey with 377 HR managers in four Asian countries, namely, India, Indonesia, Malaysia and Philippines. Research found that there were considerable differences between current HR functions as practiced and ideal HR functions. In addition, survey results identified significant differences among countries in areas such as strategic practices and roles of HR managers. Difference between practice and ideal in HR administration was also witnessed at different levels of management. It was also found that differences among countries exist depending on the type and size of the organization and whether HR managers work for HR departments or for other functional departments.

HR professionals need to focus on more actively collaborating with top management and line managers in formulating strategy and execution of the strategy than on operational execution (Ramlall, 2006; Wright, McMahan, Snell, & Gerhart, 2001). Strategic HR as an area of study found its beginning only in late 1970s and early 1980s. This happened as strategic management had an impact on the area of HR (McMahan, Bell, & Virick, 1998). It has been witnessed that the concept of strategic human resource management came up in 1990s with focus on proactive and value-based approach to Human Resource Management (Schuler, 1992). Strategic HRM focuses on areas such as ensuring fit between HRM practices and strategic organizational goals, HR function as part of senior management, percolation of HRM practices to line managers and having strategic approach to talent acquisition, compensation, performance appraisal and value added to organizational performance by HRM.

Learning organizations started to realize that of all the factors that have a contribution to organizational performance, the human factor was the most critical factor (Huselid, 1995).

As transnational organizations moved ahead with the objective of internal consistency, the importance of human resource in international organizations that had business transactions across different cultures compelled HR professionals to focus at HR from an international perspective (Bartlett & Ghoshal, 1998; Rosenzweig & Nohria, 1994). Even the field of international HRM may be considered as not too old and relatively new. The role of HRM is development of talent of employees to facilitate them to compete in a changing, complex and competitive environment (Hanlon, 1990; Zaleznik, 1988). As we witness large-scale differences existing in cultural and economic environments, the task of development of human capital becomes more tough and challenging, especially in the context of increasing multinationals operating in global context (Hualt, 1996).

Yeung, Woolcock, and Sullivan (1996) proposed that to sustain the transformation of human resource functions, HR professionals must develop and demonstrate a new set of competencies to fulfill their changing roles and responsibilities. Based on in-depth interviews with ten senior HR executives, they proposed an HR competency model which is both generic (i.e., able to encompass the key competencies that are frequently used by companies in different industries) and specific (i.e., able to highlight the competency differences in various HR roles). Research indicated that only 10–35% of HR professionals possess the required new competencies. They also discussed ten strategies that ten prominent companies use to bridge the competency gap of their HR professionals. Important levers for competency development include planning and assessment, communications, performance management, training and development.

Ulrich, Cody, LaFasto, and Rucci (1989) in a study of HR practices at Baxter Healthcare Corporation merger reported that human resource (HR) professionals face increasing demands to add value to business performance. To be strategic business partners is not merely a concept and ideal but a set of specific, concrete behaviors and activities. The merger between Baxter Travenol and American Hospital Supply produced the largest hospital supply firm in North America. Through the study it was found that HR professionals played a significant partnership role in this merger. Baill (1999), in a study of changing requirements of the HR professional, examined the new competencies that are required in human resources (HR) professionals. The challenge that comes with HR moving into a more critical role at the management table is that the expectations for their contributions also increase. This challenge is made even greater because the requirements are not only changing, they are growing. In addition to traditional HR disciplines, the HR function is now looked to for expertise in designing organizations and organizational systems and for managing major changes to increase competitiveness.

Studies have confirmed that strategic HRM has a positive impact on organizational performance (Huselid, Jackson, & Schuler, 1997). Strategic and functional HR competencies were considered to be different (Huselid et al., 1997; Ulrich & Brockbank, 2005). Researchers have also put forward an argument that HR competencies may be role specific (Blancero, Boroski, & Dyer, 1996; Schoonover, 2003). Rao (2007) says as a future CEO, an HR professional needs to have a total business orientation. They need to be goal driven and need to use HRD effectively as a strategic intervention and a future-building tool. They must possess a high degree of cross-functional orientation. They need to align HRD very well with business and organizational goals. They have to be vision driven and futuristic. They need to balance the present with future, short-term and long-term systems.

Strategic HR may lead to performance effectiveness of HR professionals as it fulfills the expectation of an ideal HR professional’s role. It has been increasingly felt that HR professionals are expected to be business partners who have the power to influence the business outcomes (Ulrich, 1997). SHRM may enhance HR professionals’ work commitment and satisfaction also. Furthermore, as research points to vital importance of strategic HR competencies for success in human resource jobs, many HR professionals still perform better when doing their functional role than in making strategic contribution to the business (Ramlall, 2006; Ulrich, Brockbank, et al., 2013). However, it may still not be clear whether this lack of strategic focus is due to HR professionals lacking HR competencies or because HR professionals lack competencies considered as necessary to be a business partner. It might also be due to the fact that they have them but are not able or required to use them or because there may be ambiguity on the strategic competencies needed. Caldwell (2010) and Wright (2008) stressed that focusing too much on competencies relating to business knowledge while under-focusing on other vital areas of HR expertise may reduce professional identity for HR experts and professionals. Also, HR competency studies have focused more on job-specific behaviors with less attention on personal attributes behind that behavior (Buckley & Monks, 2004; Lounsbury, Steel, Gibson, & Drost, 2008).

There has also been a growing concern that HR professionals need to possess high levels of moral and ethical standards, which are seen as critical in maintaining trust with employees and line managers (Francis & Keegan, 2006; de Gama, McKenna, & Peticca-Harris, 2012; Greenwood, 2013). Graham and Tarbell (2006) discovered that less attention has been paid to employee-related HR competencies in the development of HR competency models. Han et al. and Brown et al. found that having a set of strategic HR competencies did not necessarily pave way for HR effectiveness.

McClean and Collins (2011) examined the relationship between high-commitment HR practices and firm performance in professional services firms through the mediator of employee effort. They found that the relationship between effort and performance is contingent on the value of the employee group to firm-competitive advantage, suggesting that companies may only want to expend the effort and resources on building a high-commitment HR system for employee groups that are clearly tied to creating firm-competitive advantage.

Another research looked into the strength of HR practices in India and their effects on employee career success, performance and potential. The study explored the role of HR practices for individual and organizational success via a survey of 4811 employees from 32 units of 28 companies operating in India. Study focused on employee perceptions of the effectiveness of three specific human resource practices within their firms and the relationship of these practices to career success, performance and potential. Companies operating in India appear to be creating strong human resource climates based on structured HR practices in performance management, professional development and normalized performance ratings. The perceived effectiveness of these HR practices influences employees’ perceptions of career success and, to a lesser extent, organizationally rated performance and potential. Study also reported differences in perceptions of HR practices among national, international and global companies and among the industries of information technology (IT), manufacturing and services. The relationship to perceived HR practices and outcomes was partially contingent on firm geographic scope and industry sector (Stumpf, Doh, Tymon, & Walter, 2010).

Long and Ismail (2011) examined the competencies of human resource professionals in the manufacturing companies of Malaysia. The competencies examined in this study were business knowledge, strategic contribution, HR delivery, personal credibility, HR technology and internal consultation. The sample consisted of HR professionals from Malaysian manufacturing companies in the southernmost state of Malaysia, Johor. A total of 89 firms responded to the survey exercise. The finding showed that the top nine ranking HR competency factors are from the domain of personal credibility and HR delivery. The respondents’ self-rated competency shows that personal communication, legal compliance, effective relationship and performance management rank above all other factors. Competencies such as strategic contribution, business knowledge, HR technology and internal consultation have significant correlation with firms’ performance. Furthermore, it is found that out of all HR competencies, the highest contributions to a firm’s performance are strategic contribution and internal consultation.

Quinn and Brockbank (2006) examined BAE Systems that provided a comprehensive HR professional development program to enhance the competencies of its HR professionals in order to encourage better business performance. Pre- and post-program measures and extensive qualitative interviews about HR’s impact on business performance evidenced the effectiveness of this comprehensive approach to the development of HR professional competencies.

Research literature provides insights into the global culture competencies that human resource (HR) professionals should possess. Cultural competency is the ability of an individual to effectively communicate and interact with people from different cultures. She adds that HR professionals with cultural competency should learn one’s own and other people’s cultural background, preferences and biases. She explains the three areas of cultural competency, including self-awareness, second language acquisition and societal sensitivity (Tyler, 2011).

Payne (2011) examined the impact of gender on a rater’s perceptions of human resource (HR) managers’ competencies in their strategic roles. Raters were HR managers and non-HR managers of various organizations. Survey data indicated that male managers rated the competencies of male HR managers at a significantly higher level than those of female HR managers. Clardy (2008) studied the strategic role of Human Resource Development in managing core competencies. Three strategic roles for the HRD function in core competency management were proposed and discussed: participating in strategic planning, developing core competencies and protecting them.

Srimannarayana (2013) in a study of 594 HR professionals tried to find out the extent of demonstration of HR competencies by HR professionals while discharging their roles and responsibilities and the study led to the conclusion that the major strength of HR professionals in India is credible activist. HR practitioners are required to deliver results with integrity, build relationships of trust, foster and maintain effective interpersonal skills and communicate well both on paper and face-to-face. Ulrich, Brockbank, Younger, and Ulrich (2013) asserted that India’s organizations are shifting from competition based on scale and low cost to competition based on innovation and quality. Because of the country’s size, it is possible to turn scale and costs to competitive advantage. In addition, with an understanding of the required competencies, HR professionals in India are positioned to continue their substantive contributions to their individual careers, their organizations and their nation as a whole.

Global HR Competencies

Literature available on HR competencies indicates toward value-driven approach as suggested by the work of Ulrich and team. Human Resource Competency Study was conducted in seven rounds. For almost 30 years the HR Competency Study empirically defined the competencies of HR professionals and how those competencies impact personal effectiveness and business performance.

Ulrich, Brockbank, Yeung, and Lake (1995) worked on empirical assessment of human resource competencies with data from 12,689 associates of human resource (HR) professionals in 1500 businesses in 109 firms. The research work focused on an extensive assessment of HR competencies. It extended current HR theory and practice in two ways. First, it proposed specific competencies HR professionals may demonstrate to add value to a business. Second, it offered an empirical assessment of how these competencies affect the performance of HR professionals as perceived by their associates. The results indicate that when HR professionals demonstrate competencies in business knowledge, delivery of HR and management of change, HR professionals are perceived by their associates as more effective. At the University of Michigan’s Business School, they performed the longest and largest ongoing study of the competencies of HR professionals. This project has been conducted in four major waves over 16 years: 1987, 1992, 1997 and 2002. Via 360-degree surveys with thousands of HR professionals and over 28,000 HR clients (line managers and peers), plus extensive reviews of academic work, they evaluated every mainstream HR competency in companies representing a wide range of industries and sizes from Europe, Asia and Latin America as well as North America. The resulting insights were qualitatively different from most others in the literature. The key point revealed was that what HR professionals do best, that is, personal credibility, has only moderate influence on business performance. Meanwhile, what HR professionals do only moderately well, that is, making a strategic contribution, has almost twice the influence on the businesses where it occurs. Strategic contribution has a 43% impact on business performance, personal credibility was found to have 23% impact on business performance, HR delivery was found to have 18% impact, business knowledge was found to have 11% impact and HR technology was found to have 5% impact on business performance.

HR competencies are the factors that define successful performance of HR professionals in a business partner role. Strategic HR may lead to performance effectiveness of HR professionals as it fulfills the expectation of an ideal HR professional’s role. It has been increasingly felt that HR professionals are expected to be business partners who have the power to influence the business outcomes (Ulrich, 1997). Ulrich, Brockbank, Johnson, and Younger (2007) studied the high expectations faced by the Human Resources Department to meet the demands of global competitiveness. They presented a research about the guidelines that HR professionals can use to respond to the expectations and changes needed by the company. The business context requisites for HR professionals to build competencies that would affect business performance are reported. It is inferred that HR would be playing new and vital roles aimed to establish the human resource competency.

Ulrich, Younger, Brockbank, and Ulrich (2013) found that by upgrading their competencies in six domains, HR professionals can create sustainable value. The six HR competence domains, namely, strategic positioner, credible activist, capability builder, change champion, human resource innovator and integrator and technology proponent, come from assessment by HR professionals and their line associates (over 20,000 global respondents) to 139 specific competency stated survey item. They also found that effective HR department has more impact on a business’ performance (31%) than the skills of individual HR professionals (8%). HR professionals need to work together as a unified team to fully create business value.

The latest 7th round was completed in 2016. After seven rounds of major studies over 30 years with over total 100,000 respondents, it was found that every four to five years, 30–40% of HR competencies evolve. In recent rounds, HR technology and HR analytics evolved. Global HR competencies existed, but they also varied by geography, industry, size of organization, level in the organization, role in the organization, gender, time in role, but it was identified that 50–60% of HR competencies were essential to all circumstances; 40–50% of such competencies were found to vary by setting. Each of the seven rounds was independent, in that they represented a cross section of HR professionals (HR participants) who rated themselves on competencies and associate raters who rated them. In 1987, three domains were noticed: business knowledge, HR delivery and management of change. In 1992, four domains came up, in 1997 five domains were found, while nine domains emerged in 2016. The pattern was very clear for all competence domains and that was that HR professionals had considerably improved over the last 30 years.

Based on the findings, three of these competencies were core drivers of key outcomes:

  • Strategic positioner focused on the role of HR professional being able to position the organization to win in its marketplace and strategy. To serve the external stakeholders (customers, investors), HR professionals needed to be strategic positioners.

  • Credible activist meant HR professionals aimed at building relationships of trust with individuals. In order to gain access to business discussions, HR professional needed to be credible activists.

  • Paradox Navigator which involved HR professional’s vital competency of being able to manage tension (which enables change) as he needed to deliver business results.

Other three competencies were identified as Strategic Enablers:

  • Culture and change champion which meant HR professionals were being able to make change happen that creates new cultures.

  • Human capital curator involved the role of HR to be able to nurture talent and care for existing employees within the organization.

  • Total rewards steward involved HR professionals being able to manage the financial and non-financial incentives for work.

Further three competencies were identified as foundational enablers:

  • Compliance manager which involved HR manager’s roles and responsibility as compliance manager involves ensuring compliance with regulatory requirements.

  • Analytics designer and interpreter which meant HR professionals must be able to use data to make better decisions. HR analytics is not just a simple head count or employee score or attrition data (that HR was expected to do previously) but at the core of HR analytics lies data algorithms which are employed in making people decisions across an employee lifecycle. Organizations might not only match person-job fit in terms of competencies but also may check a potential hire for cultural fit.

  • Technology and socialmedia integrator meant that HR professionals must aim at using internal and external technology to make a difference. With the increase in technology leading to automation in a big way, HR systems used by employees were increasingly becoming self-service. Paper-based HR practices have all been becoming online. HR needs to use this technology to their advantage.

Theoretical Propositions

Based on the literature available, the following propositions may be put forward:

  • Proposition 1: Organizations who were managing their human capital effectively had a competitive advantage over others and were more likely to have a strong financial performance, therefore presence of HR systems in organizations is vital.

  • Proposition 2: HR professionals need to have not only knowledge of HR but knowledge of business and a high degree of cross-functional orientation.

  • Proposition 3: HR professionals need to use HR systems effectively as a strategic intervention and a competence-building and trust-building tool, aligning HRD with business and organizational goals.

  • Proposition 4: As strategic and functional HR competencies were found to be different, to sustain the transformation of human resource functions, HR professionals must develop and demonstrate a new set of competencies including core competencies, strategic enablers and foundational enablers to fulfill their changing roles and responsibilities.

  • Proposition 5: There has also been a growing concern that HR professionals need to possess high levels of moral and ethical standards, which are seen as critical in maintaining trust with employees and line managers.

  • Proposition 6: Non-HR professionals are connected with strategic HR roles. As a consequence there has been ambiguity in HR profession, professional boundaries and occupational identity; this ambiguity needs to be removed.

Conclusion

Organizations who were working on human capital development and management were found to have a competitive advantage over others and were more likely to have done financially well. HR professionals need to understand the context in which business operates. They need to understand, assess and work toward stakeholders’ expectations. They need to work toward HR as a strategic intervention and a competence-building and trust-building tool, aligning HR with business and organizational goals.

Timms (2018) asserted that individual acts of transformation are powerful when linked to others and a movement created, a movement to transform HR. This transformation of HR is for more effective HR of future. To accomplish any business goal, HR practitioners can contribute in design and delivery of talent as well as proactively anticipate requirement for organizational capability building, including issues such as leadership development. In organizational building HR professionals build organizations that deliver value to business, society and community at large. In contributing to leadership, HR builds organization for future success. However, this HR needs to achieve with high levels of moral and ethical standards and also with role clarity toward HR profession, professional boundaries and with requisite competencies and occupational identity.