How do companies go about designing corporate cultures that are externally focused on the needs of the marketplace? There is a duality here. Company cultures tend to be very externally focused, flexible and adaptable with market needs. Or they can be more internally focused, where policies, rules and procedures tend to dominate and where efficiency is rewarded. And that's the question: how do you manage to be efficient on the one hand, and, on the other, be innovative?

Strategic HR Management has become a buzzword in organizations across multiple industries. There is an increased focus from the Top Management and the HR leadership to see how the human resource function can be more agile and market-driven to deliver better business value and create a sustainable competitive advantage for the organizations.

Let’s look at two recent HR thought-leaderships on the subject of HR’s strategic contribution to the business.

The Five Key Competency Model developed by Society for Human Resource Management (SHRM), University of Michigan Business School, and the Global Consulting Alliance:

Based on the years of research carried on by Prof. Wayne Brockbank and Prof. Dave Ulrich of University of Michigan Business School, this model identifies five key competencies human resource (HR) professionals must have in order to impact business financial performance. The HR Competencies Study included over 7,100 respondents from 241 diverse companies that were distributed globally across a variety of industries of all sizes. Data were gathered from three sources: HR professionals evaluating themselves; HR colleagues or associates evaluated the HR professional participating in the study; and third, non-HR associates, who were generally line executives, evaluated the participating HR professionals. The HR Competency Model is based on data from the non-HR associates.

Five major categories or domains of HR competencies emerged when the differences between HR professionals in both high-performing and low-performing organizations were analyzed. The domains are as follows: Strategic Contribution, Personal Credibility, HR Delivery, Business Knowledge, and HR Technology.

Brief definitions of these five competencies are given below:

Strategic Contribution
The study finds that strategic contribution accounts for nearly half of HR’s total influence on business performance. The four sub-categories or factors of strategic contribution are culture management, fast change, involvement in business decision making and leveraging customer information to create unified and customer focused organizations.

Personal Credibility
HR professionals must be credible to both their colleagues and the employees they serve. The research finds it critical that HR have effective relationships with key people inside and outside the organization. They must deliver results and establish a reliable track record. In addition, HR professionals must have effective written and verbal communication skills.

HR Delivery
This competency encompasses the HR activities that are traditionally associated with the HR function. There are six major factors within this domain—staffing, development, organizational structure, HR measurement, legal compliance and performance management.

Business Knowledge
The fourth competency domain is business knowledge. To become key players in the organization, HR professionals must understand their organizations and the industries in which they work. However, knowing this information is not enough. The study indicates that HR professionals in high-performing firms know as much about business as HR professionals in low-performing firms. The difference between the two is that high-performing HR professionals use this knowledge to make strategic contributions.

HR Technology
Technology is increasingly used as a delivery vehicle for HR services. The study finds that HR professionals need to be able to use HR technology and web-based channels to deliver services to employees. However, it also shows that the promise of HR technology to noticeably impact the overall financial performance of the firm has yet to materialize. Many companies who have moved aggressively into this arena are still “working out the bugs.”

“FIVE LEVELS OF HR CONTRIBUTION“ MODEL
by Dr. John Sullivan

There have been several attempts in the past to define a model for HR’s contribution towards business. The most successful of them probably is the “four quadrant” or “business partner” model developed by Prof. Dave Ulrich at the University of Michigan.

As an improvisation to the Business Partner model, Dr. Sullivan’s Five Level Model focuses more on the strategic planning process and describes both the basic and the strategic levels of HR contribution.

Level One –Information Management and Basic Transactions
Every HR department must provide basic information, answer employee and manager questions and complete operational level transactions. These most would agree are the oldest and most elementary of HR services and include:

• Processing of new-hire documentation, payroll, separations and benefits enrollment/changes

• Providing answers to employee and manager questions pertaining to policy, benefits, employment law

Level Two – Providing Functional Services
In addition to level one activities, a majority of HR departments provide several services that comprise what many would agree are the essential services that keep an organization staffed. This level incorporates many of the activities that create the standard functional areas within HR including staffing, compensation and benefits, employee relations, and training. Each functional department maintains its own goals and objectives and although there is some interaction, services are provided relatively independent of each other. Several examples of activities that exist at this level include:

• The formation of standardized processes and policies for requesting more staff, developing staff, compensating staff, and performance management
• Basic reporting on the status of talent management efforts

Level Three – Coordination of Efforts to Improve Productivity
In level three HR activities begin to fall under the umbrella of some larger planned contribution and take on more of a tactical emphasis. This coordinated effort exists to impact one of the primary goals of every major corporation, increasing productivity. In the case of HR that goal translates into increasing or maximizing workforce or employee productivity.

The traditional HR functional work that goes on in level 2 is to isolated and finite in focus to have any real impact on workforce productivity. In fact, typically none of the independent functional units in HR even have workforce productivity as a goal. Some of the non-traditional HR activities that are “added” to traditional functional offerings include:

• Development of tools and strategies to retain key employees
• The redeployment of employees from areas of low business impact to high
• The introduction of non-monetary motivation and recognition systems
• Usage of workforce analytics or metrics
• Coordinated efforts for knowledge capture, sharing, and management

Level Four – Development of Competitive Advantage through Talent
Level four signifies a major transition point as HR work begins to provide a strategic contribution. Increasing competitive advantage is a focused effort to ensure that each key HR program and service is best in class when compared directly to that of competing firms. In level four the focus of HR efforts takes on an external environmental component where prior to this every HR effort was internally focused. Rather than simply tracking what competitors do, the goal in level four is to identify and exploit weaknesses found in competing organizations. To date, only the most elite HR organizations have funded efforts in this level. Typical competitive advantage building efforts include:
• Competitive analysis of people programs found in competing organizations

• Workforce planning and productivity forecasting
• Employment branding
• Competitive intelligence gathering

Level Five – Develops Solutions to Strategic Business Problems and Opportunities
Level five represents the pinnacle of work providing strategic contribution in HR. Efforts in this level go well beyond influencing employee productivity. They attempt to address strategic business problems in areas such as product development, product/service quality, customer service and corporate position. Few HR organizations attain this level of strategic contribution, of those that do, most are found in performance driven cultures. Typical strategic business problem and opportunity efforts include:

• HR involvement in turnaround swat teams
• HR consultation in product design and development efforts
• Analysis of workforce management impact on time-to-market and innovation
• Management of performance culture
• HR involvement in merger and acquisition planning (prior to decision to M&

Compiled by Satyadeep Mishra
HR Generalist
Microsoft – Hyderabad