Dave Ulrich, Wayne Brockbank,

I Arthur K. Yeung, and Dale G. Lake -

With data from 12,689 associates of human resource (HR) professionals in 1500
businesses 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 specific
competencies HR professionals may demonstrate to add value to a business. Second, it
offers an empirical assessment of how these competencies affect the performance of HR
professionals 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.
0 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 door
status; they were often perceived as second team players trying to gain
access to key decision making forums. In more recent years, many HR
professionals have successfully become business partners, have new
opportunities for professional growth, and have greater opportunities to
be active builders of their firms’ competitive advantage (Schuler & Mac-
Millan, 1984; Ulrich, 1994).
While the transition in HR roles and responsibilities has been well
discussed (see Tichy et al. 1984, Schuler & MacMillan, 1984; Ulrich, 1986,
1994), much less discussion has occurred about what Competencies are
required for HR professionals to fulfill their new role. This article (1)
proposes a model for HR competencies, then (2) tests the model with
information collected from 12,689 individuals in 1500 businesses in 109
firms. The proposal and testing begin to answer the overall question:
What are the competencies required for successful H R professionals? We in-
tend for this article to be a milestone in moving beyond the call for a
new role for HR professionals to actually specifying specific competen-

Human Resource Management, Winter 1995, Vol. 34, Number 4, Pp. 473-495
Q 1995 by John Wiley & Sons, Inc. CCC 0090-4&48/95/040473-23
cies that HR professionals must demonstrate to become full business
partners.

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 for
effective HR departments (Boudreau, 1983; Tsui, 1984; Cascio, 1987;
Ulrich, 1989a), little work has been done to conceptually or empirically
identify competencies required of HR professionals.
Competencies for HR professionals may be defined either by the
insights 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 a
number of senior managers and other internal customers, then categor-
izes these interview data into a competency model. While tailored to the
needs of a particular firm, this approach does not develop a broader
perspective of HR competencies across firms.
An alternative approach to defining competencies builds a theory, or
logic, as to what competencies are necessary, then collects data to test
against that theory. We propose a simple theory of HR competencies
which suggests that HR professionals demonstrate competence when
they add value to their business. They add value by ensuring that they
deliver ideas, programs, and initiatives to their business which helps the
business compete. Thus, the value of HR professionals resides in their
ability to create competitive advantage thereby positively influencing
bottom-line metrics (Ulrich 198%; Pfeffer, 1994).
This value-added reasoning is based on a five step causal logic which
results in the defining competencies of HR professionals: (1) business
conditions are changing dramatically; (2) organizations, to respond to
turbulent conditions, must focus resources on sustained competitive
advantage; (3) competitive advantage comes from generating sources of
uniqueness not easily replicable by competitors; (4) organizational capa-
bility is a unique set of organizational attributes that provides values to
buying customers and may not easily be replicated; (5) HR practices are
central to the creation and maintenance of organizational capability. If
HR professionals develop the competencies to design and deliver prac-
tices which build organizational capability, they create and sustain
unique sources of competitive advantage. HR professionals demonstrate
competence when they help their firms compete.

A FRAMEWORK FOR HR COMPETENCIES

For the last decade2 debates on HR competencies have been consis-

tent with the value-added framework we propose. Walker (1988) sug-

474 I Human Resource Management, Winter 1995

 KNOWLEDGE OF HR FUNCTIONAL
BUSINESS EXPERTISE

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 complexity
and 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 resultant
discussions2 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 to
HR professionals.
Consistent with previous discussions on HR competencies and based
on our view that HR professionals must add value, a three-domain
framework for conceptualizing HR competencies is proposed: knowl-
edge of business, delivery of HR, and management of change processes
(see Figure 1).

Knowledge of Business

HR professionals add value to an organization when they understand

how the business operates because it helps the HR professional adapt
HR and organizational activities to changing business conditions. Know-
ing the financial, strategic, technological, and organizational capabilities
of an organization is a necessary condition of entry to any strategic
discussion. HR professionals who are knowledgeable exclusively in in-
dustrial, employee, or human relations may be fully competent in their
discipline, but may fail to understand the essentials of the business in
which their firms compete. Some HR professionals know the technology
of human resources but are unable to adapt that technology to business
conditions. 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 understand
them.

Delivery of HR Practices

HR professionals, like any other staff function, must be experts in

their specialty. Knowing and being able to deliver state-of-the-art, inno-
vative HR practices build credibility of HR professionals. As described
by 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 professional
respect evolve from HR professionals being seen as competent in their
unique area of expertise. Competence in the “delivery of HR practice”
goes beyond knowledge and requires that the HR professional be able to
deliver 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 adaptive
change is commensurate with that of the external environmental. Busi-
nesses with a greater capacity for change will be more competitive over
time. Individual resistance to change often keeps organizations from
adapting a s quickly as desired. By having competencies to manage
change processes, HR professionals can help other organizational mem-
bers manage change, thus creating an overall organizational capacity for
change as a key source of competitive advantage. HR professionals who
have competencies to manage change processes demonstrate the attri-
butes of an outstanding change agent (Tichy, 1983); they are able to
diagnose problems, build relationships with clients, articulate 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.3 The competencies exhibited in
the 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 their
firm, we hypothesize that HR professionals who demonstrate compe-
tence in each of these three domains (knowledge of business, delivery of
HR, and management of change processes) will be perceived by their
work Associates as more effective. (See Figure 1.)

476 I Human Resource Management, Winter 1995

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

OVERALL RESEARCH QUESTION:

What are the most critical competencies for H R 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 to
be gathered from more than one organization so that idiosyncratic orga-
nizational demands do not bias the data. The test also requires that
perceptions of the competencies and effectiveness of HR professionals
should 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 (1988/1989and 1991/1992)which are
reported here were conducted. The data were collected by asking Asso-
ciates of HR professionals4 to rate their perceptions of the HR profes-
sionals’ competencies in each of the three domains. Associates were
defined to include those individuals within the Participants’ companies
who were familiar with the Participants’ functioning as HR profession-
als. This definition included Participants’ internal customers and other
business associates (e.g., members of the Participants’ departments).
This 360 degree approach provided extensive information about HR
competencies 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

Ulrich et al.: Human Resource Competencies / 477

.
Table I. Sample and Data Collection.
3
R Survey %
2
0
Packets HR Participants Associates Response Firms Businesses
s! Sample Selection Criteria Sent Returned Returned Rate Represented Represented
3
Time 1 (1) Most admired companies in 2,100 1,407 8,884 70 % 91 1,200
(1988/ Fortune
ss
?? 1989) (2) 50 largest US employers
2 (3) Firms with relationships
\Z with research team
G
5 Time 2 (1) Orginal 91 firms (57 1,400 751 3,805 52 % 75 441
1
B (1991/ participated)
c 1992) (2) Research team contacts
u)
u
u
l) with firms outside US
(3) Requests by firms to join
data base

Total 1,928 12,689 109 1,500

(230) partici- (firms in (businesses in
pated in total data total data
both rounds) set) set)
Table 11. Characteristics of the Data Set (All Associates).
~ ~~

Time1 Time2
- -
N (total sample) 10,291 4,556

Respondent
Associate 8,884 3,805
Participant 1,407 751
Sex
Male 77% 78%
Female 23 22
Functional Specialty of Associates
General management 11% 12%
Financelaccounting 5 5
Manufacturing/ production 8 8
Marketinglsales 6 6
Planning 1 2
R&D 2 2
HR 60 56
Other 7 9
Relationship of Associate to Participant
Supervisor 12% 12%
Peer 42 41
Subordinate 28 26
Client 18 21
Primary Role of Participant
Individual contributor 20% 24%
Manager of ind. contribs. 36 42
Director of managers 36 29
General manager 8 6
Primary Function of Participant
Affirmative action 2% 1%
Benefits 5 4
Compensation 5 5
Communication 0 1
HR Planning 4 7
LaborIIR 6 8
Medicallsafety 1 1
Org. Development 2 3
Org. Research 0 2
Recruiting 3 6
Training 7 13
Generalist 61 45
Education of Participant
High school 3% 7%
Associate college 5 7
Bachelor degree 48 43
Graduate degree 44 43

Ulrich et al.: Human Resource Competencies I 479

substantial data set with 12,689 Associates and 2,148 HR professionals
spread over the four year time horizon of the study. We believe this is
the most comprehensive data available on competencies of HR profes-
sionals. The characteristics of the sample are in Table 11. This table indi-
cates that the Associate sample is more male than female (78% to 22%),
predominantly from respondents with the HR function (56%),generally
management level (76% managers and above), responding to questions
about 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 step

process 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 professionels, 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 was
administered to 23 HR professionals and 190 Associates. Based on these
three steps, we derived our final instrument for assessing HR compe-
tencies.5
For the knowledge of business domain, 16 business activities or functions
which 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).6
Organizational capabilities-which included a demonstrated knowl-
edge of human resources practices and organization structure-were
included in the business knowledge category for two reasons. First, and
most obvious, these are essential elements in any business operation.
Second, including them in the business domain serves as a validation of
the instrument. If Associates do not perceive Participants high in these
items and if these items are not seen as important, then the instrument
has been misinterpreted.
For the delivery of HR practices domain, 21 total HR practices were
identified 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 about
hiring, 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

480 I Human Resource Management, Winter 1995

diverse organizational units. The extent to which HR professionals dem-
onstrate competence in each of these 21 choices is an overall measure of
their HR ~ o m p e t e n c e . ~
For the management of change processes, 30 behaviors that reflected
ability to manage change processes were identified. The ”management
of change” domain is probably the most elusive. The 30 items identified
in this domain were drawn from research on managing change by Warn-
er Burke and his associates.8 The conceptual model used to develop
these 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 three
domains (knowledge of business, delivery of HR, and management of
change processes) were measured. We acknowledge that these 67 items
are not inclusive of all the competencies which HR professionals may
require and hope that future research refines and extends this initial
list.
To measure the overall performance of the HR professional, a 20-item
scale was used that asked the Associate to respond to the following:

Overall, compared with other HR professionals you have known, how

does the participant compare?

The response categories were in increments of 5%-from bottom 5% to

top 5%.9

RESULTS

Our results answer the questions we proposed. They help us identify

overall competencies of HR professionals, how competencies vary by
organizational 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 job?

Figure 2 summarizes the overall findings from all 12,689 associ-

ates. The statistic used throughout this paper is multiple regression. A
regression score reports the amount of explained variance (R2)by each

Ulrich et al.: Human Resource Competencies / 481

Knowledge H R Functional
of Business Expertise

>
M a n a g e m e n t of C h a n g e
Figure 2. Overall results relative competencies for HR professionals as
business 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 in
explaining the overall performance of HR professionals.10 For example,
the results of Table I11 indicate that knowledge of business competencies
explain 18.8%of the overall performance of HR professionals; functional
excellence 23.3%; and management of change 41.2%.
These data suggest that effective HR professionals have all three sets
of competencies in the indicated proportionality. The R2 for Knowledge
of Business suggests that effective HR professionals will have substan-
tial knowledge of a wide variety of business areas. Through follow-up
interviews with selected participants, we concluded competencies in the
business domain are prerequisite for HR professionals to join the man-
agement team. Without knowing the language and activities of business
success, HR professionals are unlikely to be invited to the team. Func-
tional expertise enables HR professionals to discern best practice. Knowing
good from bad HR practices helps HR professionals implement best
practice. This is significant because of a number of firms have attempted
to hire key HR professionals who have little or no experience in HR.
These data suggest that these hires would have difficulty being effective
in 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 the
price 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 of
the organizational change capability in a way that encourages adapta-
tion to key changes in the business environment. The high R* in managing

482 I Human Resource Management, Winter 1995

change suggests that this competence is the most important predictor for overall
competence 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 1and time 2 (3 years),
overall expectations of HR professionals went up. Table IV shows that
knowledge of business went up the most (16.9% to 25.4%) followed by
delivery of HR practices (22.5% to 27.8%), then management of change
(41% to 45%). These data suggest that as time progressed from the late
1980s into the early 1990s, HR professionals were expected to know
more about business.
The specific items listed in Table I11 are statistically significant and
listed 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 business
competence in 1991. The majority of the explained variance increase
between time 1and time 2 was accounted for by knowledge of financial
management. In the ”delivery of HR practices” domain, outsourcing
became a critical competence during the three to four year time frame.
This is probably due to the large number of outsourcing activities which
occurred during this time in response to the deep recession of the early
1990s. The lack of any items in the performance appraisal practice may in
time 2 reflect a shift away from “hard practices” of measurement and
appraisal and a shift toward more attention being paid to the ”softer
practices” of communications and feedback (Deming, 1988). Also of note
are 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 different

industries?
Table IV reports only the R* on each of the three competence domains
by 10 industry groups (specific competencies within each industry
group are available from the authors). Without this data base of over
12,000 Associates, such reports by industry would be impossible. At the
macro level, the results across different industries are remarkably simi-
lar. Regardless of industry, the pattern for HR competencies is similar
(except for automotivel*). Management of change is most important and
is followed by the delivery of HR practices which is, in turn, followed by
knowledge of business. We are surprised by these results. They imply
that while industries may have very different technologies, competitive

Ulrich et al.: Human Resource Competencies / 483

Table 111. Human Resource Competencies over Time.
Time 1
Knowledge 16.9%
of Business
Human resource practices
Customer relations
Computer/Information
systems
Competitor analysis
Production capability
Globalization
Organization structure
Marketing & sales
Delivery of Human 22.5%
Resource Practices
Staffing: Attract appropriate people
Promote appropriate people
Development: Design development pro-
grams that facilitate
change
Offer career planning ser-
vices
Performance Design feedback processes
Appraisal: Design performance ap-
praisal systems to dif-
ferentiate performance
Reward: Design benefit systems
Communication: Work with managers to
send clear and consis-
tent messages
Organization Help create reporting rela-
Design: tionships
Facilitate the integration
of different business
functions
Management of 41.0%
Change
Establishes trust and credi-
bility in relating to 0th-
ers
Is visionary
Expresses effective verbal
communication
484 1 Human Resource Management, Winter 1995
Time 2
25.4%
Human resource practices
Financial management
Organization structure
Customer relations
Competitor analysis
Globalization
27.8%
Attract appropriate people
Promote appropriate people
Out place appropriate
people
Offers development pro-
grams that facilitate
change
(none significant)
Design benefits systems
Work with managers to
send clear and consis-
tent messages
Help explain why busi-
ness practices exist
Facilitate the process of
restructuring the orga-
niza tion
45.0%
Establishes trust and credi-
bility in relating to oth-
ers
Expresses effective verbal
communication
Is visionary
(continued)
Table 111. (Continued)

Time 1 Time 2

Management of 41.0% 45.0%

Change (cont.)
Puts specific problems in
context of the larger
system
Takes a proactive role in
bringing about change
Builds supportive relation-
ship with others
Encourages others to be
creative
Uses reasoning to
influence others
Identifies problems central
to business success
Engages in constructive
problem solving with
client
Clarifies roles and
responsibilities
Expresses effective written
communication
Clarifies business goals
Takes a proactive role in
bringing about change
Encourages other to be
creative
Builds supportive relation-
ships with others
Expresses effective written
communication
Uses reasoning to
influence others
Articulates outcomes of
change
Engages in constructive
problem solving with
client
Clarifies business goals
Puts specific problems in
context of the larger
system
Clarifies roles and
responsibilities

infrastructures, customer requirements, and other processes, the core

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

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

Knowledge Delivery Management

Industry of Business of HR of Change

Aircraft 22.2 26.1 53.6

Automobiles 24.9 17.5 39.3
Chemical, pharmacy 15.5 21.8 45.6
Electronics, computer 18.8 26.0 49.2
Finance 24.0 24.4 53.4
Misc. Manufacturing 22.0 27.5 48.0
Petroleum, gas, coal 21.9 24.4 49.2
Services 25.1 27.5 45.8
Utilities 23.7 25.4 42.8
Wholesaling, retailing 19.9 30.8 44.2

Ulrich et al.: Human Resource Competencies I 485

also suggest that in the chemical/pharmacy industries, HR professionals
have fewer expectations about knowing their business, perhaps due to
the technology drivers of these industries; while in the service industry
where labor is a larger percent of operating budget, HR professionals
need greater knowledge of the business.

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

respondent?
Table V reports expected competencies based on the title of the Associ-
ate. Again, at the overall level, these results indicate that regardless of the
respondent’s relationship to the HR professional, the order of importance
of competencies are: management of change, delivery of HR, and knowl-
edge of business. In a more detailed view, General Managers are different
from other groups. These scores are generally lower for the General
Managers than for all other groups. These lower scores suggest that while
the 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 to
require less knowledge of the business than did respondents in other
functions, particularly marketing/sales and human resources (human
resources respondents were generally subordinates, supervisors, or
peers 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) and
Participant scores. Participants, when assessing what they think makes
them more effective, suggest that the three competence domains are
relatively equal (9.5%, 6.8%, and 13.6%).The R* is also smaller than all
other 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 in
non-HR functions. The fact that some HR professionals have knowledge

Table V. Competencies by Respondent (Overall Results-All Associates).

Knowledge Delivery Management

Respondent Title of Business of HR of Change
~ ~~ ~ ~~ ~ ~

General Management 7.8 15.9 29.1

Finance1Accounting 19.2 26.9 46.8
Human Resources 23.9 24.4 42.3
ManufacturingIProduction 15.5 25.1 42.7
MarketinglSales 23.1 26.2 49.3
Planning 13.3 36.4 53.7
R&D 16.3 20.5 40.4
Participant 9.5 6.8 13.6

486 I Human Resource Management, Winter 1995

Table VI. Competencies by Level of Participant (Overall Results-All
Associates).
~~

Knowledge Delivery Management

Role of Participant of Business of HR of Change

Individual contributor 19.0 21.5 43.3

Manager of individ- 21.2 24.5 45.4
ual contributors
Director of managers 22.4 29.8 48.6
General managers 19.3 25.3 51.9

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

Sub question 4: Primary role: Are required competencies different by primary

role of the HR participant?
Table VI shows that as HR professionals move up the hierarchy from
individual contributor to Director of Managers more is expected of them
in 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 of
business and delivery of HR competence but expected to have greater
ability in managing change. There are two possible explanations. Perhaps,
HR professionals who are most adroit at managing change are promoted
to the most senior roles in the organization. Alternatively, at the General
Manager level, the position itself requires greater ability in managing
change as opposed to knowing the business or HR functional expertise.

Sub question 5: Geography:Are required competencies different by county in

which HR professional works?
Table VII reports how competencies of HR professionals vary by geo-
graphical location. We formed two geographic groups because of
data restrictions. More refined ”non-United States (US)’’ distinctions

Table VII. Competencies by Geographic Region

(Overall Results-All Associates).

Knowledge Delivery Management

Geographic Region of Business of HR of Change

United States 17.1 22.3 41.1

Non-US 26.9 26.9 34.8

Ulrich et al.: Human Resource Competencies / 487

(e.g., by country) would have been desirable, but our data analysis
requires a minimum respondent to variable ratio of 5 to 1. With 63
competency items, we were forced to group the non-US sample. Even
with this broad grouping, however, some interesting findings arise. Not
surprisingly (given the large US sample), US results are consistent with
the overall data set; however, non-US HR professionals have somewhat
different scores. Successful non-US HR professionals need to be more
balanced in their overall competencies. Their pattern of competencies
implies that they must be stronger in business and delivery of HR and
less strong in management of change than US HR professionals. After
sharing these results with many non-US HR professionals, their expla-
nation is that non-US HR professionals often serve on management
committees. In some countries (e.g., Japan and Germany), senior HR
professionals are very active and powerful within their companies. They
often come to senior HR positions having worked in a number of other
functions and are primarily business partners who happen to have HR
titles. As a result, their knowledge of the business naturally will be
higher, and the change management agenda will be shared with other
members of the management team rather than being primarily the con-
ceptual agenda of HR.

Sub-question 6 : Size of business: Are required competencies different by size of

business?
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 professionals
occur. The only unique finding is that very large businesses (with over
20,000 employees) score lower in all three domains. One possible expla-
nation is that market dominance is a central element of business success
rather than being a functional competency. In addition, other competen-
cies not measured in our research may help explain the success of HR
professionals 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 Management

Business of Business of HR of Change

up to 1000 20.6 28.1 46.5

1001-5000 21.2 20.9 46.3
5001-2oooO 21.5 29.7 46.2
Over 20000 16.5 20.1 34.9

488 I Human Resource Management, Winter 1995

 Table IX. Overall HR Competence and Business
Performance over Time.

Change in Overall Competency Competitiveness Change

Decrease .004
Same .037
Increase .080

business performance (not the effectiveness of the HR professional). In

an 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 business
results. The competencies of HR professionals may be far down the list
of critical success factors for a business.
Nevertheless, we were able to give an indication of the relationship
between competencies of HR professionals and business competitive-
ness through the following test. First, we used the 1,400 businesses as
the 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 were
involved in the study in both time 1 and time 2. Third, for these 200
businesses, we examined the change in overall competency of HR pro-
fessionals within the business relative to the change in competitiveness
of the business itself between time 1 and time 2. The change in overall
competence of HR professionals was calculated by averaging the compe-
tence scores for all HR professionals and Associates in the business (At
minimum this included one HR professional and 3 Associates; at maxi-
mum, it included six HR professionals who serve a business and all their
Associates within the business) at both time 1 and time 2. We then
calculated a difference score between scores at time 1 and time 2. The
competitiveness change score is merely time 1time 2 on the competitive-
ness items by the individual in the business most qualified to provide
this score12.
Table IX reports the overall results of this analysis. This table indicates
that when overall HR competency increases, a subsequent increase in
competitiveness also occurs. While the increase in competitiveness
numbers 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 in
the other direction, e.g., because businesses are more competitive, they
have 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

Ulrich et al.: Human Resource Competencies / 489

 Table X. Specific HR Competencies
and Business Performance over Time.

Change in
Knowledge Competitiveness
of Business Change

Decrease - .054
Same -.lo5
Increase .255
Change in
Delivery Competitiveness
of HR Change

Decrease - .019
Same .087
Increase ,054
Change in
Management Competitiveness
of Change Change

Decrease - .098
Same .081
Increase .137

domains of HR competencies. We find, for example, that when HR

professionals increase their competence in knowledge of the business,
business competitiveness goes up extensively (.255) as contrasted to
when HR professionals decrease or stay the same in knowledge of busi-
ness competence. Likewise, management of change competencies are
highly related to change in competitiveness, while delivery of HR are
less related.
These results suggest that the competencies of the HR professionals
within a business vary with business competitiveness. Such results are
clearly tentative and need to be further pursued over time.

IMPLICATIONS FOR HR PROFESSIONALS

This research is important for two reasons. First, it extends thinking

about HR as a competitive advantage and focuses on specific competen-
cies required of HR professionals to deliver their new role. It identifies
three 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” these
issues, we have created an extensive national data base to test the model
proposed. These findings demonstrate that what HR professionals
know and do affects how they are perceived by Associates.

490 I Human Resource Management, Winter 1995

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

become important?
2. What is the impact on business performance of different sets of HR
competencies?
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 a
first step at moving beyond the talk toward a systematic assessment of
how HR professionals may become strategic business partners.
Additional and more precise research needs to explore some of these
overall findings. For example, in this research, knowledge of mergers
and acquisitions did not emerge as a significant predictor of overall HR
effectiveness. The conclusion should not be drawn that this competence
is unimportant. Obviously for businesses which have experienced
mergers or acquisitions, such a competence might be critical. Our data
set does not allow examination at this level of subtlety. A more refined
analysis needs to examine the specific business challenges and to identi-
fy HR competencies relative to those strategies. Based on our analytical
results 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 and
development of HR professionals. As companies wish to expand the
talent of their HR professionals, these findings may indicate areas in
which to invest time and money. Making sure that HR professionals
know the business, can deliver state of the art human resources, and
have the capacity to manage change processes appears to be an essential
element in developing more competent HR professionals. Competence-
based training and education of the HR professional have rarely oc-
curred. Often HR professionals are so involved in developing training
experience for other managers that they fail to invest in their own devel-

Ulrich et al.: Human Resource Competencies / 491

opment. The conceptual framework and research reported in this article
may serve to inform thinking and discussion as to how to better develop
HR professionals.
In addition, as companies seek to identify, replicate, and extend “best
practices,” this study may offer a benchmark for HR professionals. We
have already seen companies use these data to benchmark the compe-
tencies of their HR professionals against industry norms and against the
competencies of businesses facing similar strategic and cultural profiles.
We have also seen companies use this data to compare themselves
against the ”best competencies” in an industry or against businesses
with 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 a s sources of competitive advantage, HR
professionals’ role a s business partners may increase. To fill that role,
however, better understanding of the knowledge, skills, and abilities
required of the HR professionals needs to be generated. This study is
one step along a path which may lead to such understanding.
This research was partially sponsored by a research grant from the School of
Business, University of Michigan.

Dave Ulrich is a Professor of Business Administration at the University of

Michigan. He has published over 80 papers on culture change, strategic human
resources, H R 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 of the top 10 educators in the world in manage-
ment education. His consulting focuses on building organizational capabilities
through aligning organizational activities with customers. He has helped over
200 of the Fortune 500 change culture, improve HR functions, build leadership
depth, and organize to serve customers.
Wayne Brockbank (Ph.D., UCLA) is a Clinical Professor of Business at the
University of Michigan. He directs Michigan‘s Advanced Human Resource Ex-
ecutive Program, Human Resource Executive Program, and Strategic Human
Resource Planning and sewes as the Director of Global M B A programs. His
current research and teaching focus on (1) conceptual and process linkages be-
tween HRM and business strategy, (2) creating customer focused organization
cultures and structures, (3) executive leadership, and (4) competency develop-
ment for H R professionals. He consults worldwide on these topics. He has
published in Human Resource Management Journal, Human Resource
Planning, and Personnel Administrator and has contributed numerous book
chapters.

Arthur K . Yeung is on the faculty of the University of Michigan’s School of

Business Administration. He is also the founding Executive Director of the
California Strategic Human Resource Partnership, a consortium consisting of

492 I Human Resource Management, Winter 1995

 marketing focus, production focus, and cost focus. These three factors are
consistent with the conceptual framework used in developing this construct.
7. The 21 items were scaled into each of the six domains. The alpha values for
each of the six domains were very high (above .75) (see Ulrich, Brockbank, &
Yeung, 1990).
8. The research conducted by Warner Burke and his associates analyzes a series
of dimensions of management change. While the results of this research
have not been published, they have been applied both to general managers
and to HR professionals.
9. In our pilot study, we had a more traditional 5-point Likert scale to assess
overall HR performance. Unfortunately, 100%of the respondents responded
with a "4" or "5." This left u s little variance in the performance measure. The
20-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 the
dependent variable, then the competencies within each competence domain
as the independent variables. The authors have more specific information on
the BETA weights for each regression reported in the manuscript. We use
multiple regression analysis because of ease of interpretation. We only re-
port the R2 because it allows for comparisons across regression models.
11. The reasons for the substantially lower R2 for functional expertise may be
due to the absence of questionnaire items which capture labor relations. The
lower R2 for managing change may be likewise explained by the heavy labor
focus in automotive firms and lack of the flexibility which may be imposed
by 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 to
evaluate the competitiveness of their business relative to their direct compet-
itors.

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494 I Human Resource Management, Winter 1995

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ENDNOTES

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

the authors.
2. We highlight the word, “discussions.” In our experience, most organizations
have falked about HR competencies, but little writing on the subject has
occurred; to our knowledge, this is the most extensive published research on
HR competencies.
3. Our use of Associates’ perceptions of HR effectiveness is not completely
consistent with a selection argument. A selection argument would examine
a 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 competencies
would be replaced by those who demonstrate the competencies. Using As-
sociate rating of effectiveness is a viable, but not complete, substitute for
survival 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 replace
those HR professionals.
4. The specific instructions given to survey participants for the selection of
Associates are as follows: “Send the Associate surveys along with the mail-
ing envelopes to individuals who are familiar with your work as a Human
Resource 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:

Ulrich et al.: Human Resource Competencies / 493

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