Shrm survey findings using competencies to achieve business unit success final

SHRM Survey Findings: Using Competencies to Achieve Business Unit Success—The Executive Perspective

February 25, 2016

Using Competencies to Achieve Business Unit Success: The Executive Perspective ©SHRM 2016 2

SHRM surveyed executives of business units other than HR (e.g., CEO, CFO, Vice President) to learn more about their views of what it takes for leaders to be successful across HR departments and different functional areas such as finance and accounting, sales and marketing, and IT. Specifically, this report focuses on the competencies needed now and in the future, including Business Acumen, Communication, Consultation, Critical Evaluation, Ethical Practice, Global and Cultural Effectiveness, Human Resource Expertise, Leadership and Navigation, and Relationship Management. The report also looks at which competencies are lacking in the labor pools of candidates for HR and other business units, and how to address those competency gaps.

Table of Contents

• Definitions• Key Findings• What These Findings Mean for the HR Profession• How Business Unit Executives View Competencies• Strategies for Filling Competency Gaps• Demographics• Methodology• Additional SHRM Resources• About SHRM

Introduction

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• Business Acumen: The ability to understand and apply information to contribute to the organization’s strategic plan.

• Communication: The ability to effectively exchange with stakeholders.• Competencies: Individual characteristics, including knowledge, skills, abilities, self-image,

traits, mindsets, feelings and ways of thinking, which, when used with the appropriate roles, achieve a desired result.

• Consultation: The ability to provide guidance to organizational stakeholders.• Critical Evaluation: The ability to interpret information to make business decisions and

recommendations.• Ethical Practice: The ability to support and uphold the values of the organization while

mitigating risk.• Global and Cultural Effectiveness: The ability to value and consider the perspectives and

backgrounds of all parties.• Human Resources Expertise: The ability to apply the principles and practices of human

resources to contribute to the success of the business. • Leadership and Navigation: The ability to direct and contribute to initiatives and processes

within the organization.• Relationship Management: The ability to manage interactions to provide service and to

support the organization.• Technical Expertise: The ability to apply the principles and practices of this specific

functional area to contribute to the success of the business.

Definitions of Competencies

Using Competencies to Achieve Business Unit Success: The Executive Perspective ©SHRM 2016


Key Findings

• Business unit executives believe that competencies are important for overall business success within their organizations. 93% believe competencies are important for success in their specific business units. Yet, only 72% are using competencies in their own business units’ processes and systems.

• An almost equal number of executives say that the use of competencies are important for HR as say that competencies are important for other functional business units. 88% of business unit executives are aware of whether their HR department uses competencies within the department. Of those, only 71% believe that their HR department uses competencies in its HR processes and systems.

• Business unit executives reported that the most critical competencies for their business units now and in 10 years are Leadership and Navigation, Communication, and Relationship Management. 39%, 40% and 32% say that candidates in the labor pool are lacking in these competencies, respectively.

• 10 years from now, Human Resource Expertise, Communication and Relationship Management will continue to be the top three competencies critical to HR professionals. Business unit executives perceived that for HR, there is currently a need to develop these competencies among the HR talent pool, as indicated by 28%, 36% and 33% of business unit executives, respectively. Business unit executives also believe the most lacking competency in the HR talent pool is Leadership and Navigation (37%).


Key Findings (continued)

• The most effective approach to closing Leadership and Navigation competency gaps is to hire/promote from inside the organization. 26% of business unit executives agreed that hiring/promoting from inside the organization would be the most effective method to fill competency gaps, followed by training/professional development (20%), hiring from outside the organization (20%), and coaching and/or mentoring (19%).

• The most effective approach to closing Technical (non-HR) or HR Expertise competency gaps is training/professional development. This was closely followed by hiring from outside the organization (27%) and hiring/promoting from inside the organization (19%).

• Most C-suite executives are familiar with HR departments’ use of competencies suggesting that they interface closely with HR and that more organizations have embraced competencies as a value add to the organization. CEOs/presidents (82%), COOs (80%) and CTOs (70%) are more likely than CFOs (35%) to report that their organization’s HR department uses a formally defined set of competencies in its processes and systems.

• Business unit executives who view the HR function as a strategic business partner are more likely than executives who view HR as a transactional/administrative business function to report that their organization’s HR department uses a formally defined set of competencies in its processes and systems.


• The use of competencies is now an established practice across industries, organizations and job families, and HR professionals will need to be able to work closely with business unit leaders to define what it takes to be successful in different types of roles.

• Many of the business units most likely to use competencies are technical in nature, and HR professionals will thus need to cultivate deep business acumen and technical knowledge to accurately define the knowledge, skills, abilities and ways of thinking that will lead to success for specific roles and functions.

• Though technical competencies are important, when it comes to the competencies considered most critical for success, leadership issues stood out, suggesting that HR professionals will have to pay particular attention to developing the Leadership and Navigation competency in its functional area.

• Because employee competency in Leadership and Navigation affects the entire organization, HR will not only have to work on developing this competency within specific business units including HR, but also need to develop organizationwide leadership development strategies and initiatives. The ongoing loss of leaders from the Baby Boom generation to retirement is likely to further emphasize the need to develop this area.

What These Findings Mean for the HR Profession


• Although Leadership and Navigation was the competency they most often identified as critical to the success of their business units, business unit executives also reported candidates lacked other needed competencies such as Communication and Critical Evaluation.

• Business unit executives identified several approaches as effective in bridging these competency gaps, and HR will continue to play a central role in each of them. The most critical competency gaps will demand attention through interventions such as professional development and mentoring for existing staff as well as enhanced talent acquisition strategies.

• Promoting from within was seen as the best approach to bridging the Leadership and Navigation competency gap. This is likely to lead to more focused efforts from HR to develop the next generation of leaders in their organizations.

What These Findings Mean for the HR Profession (continued)


How Business Unit Executives View Competencies


Note: n = 496.

Four out of five business unit executives are familiar with competencies and their use for business management.

Very familiar

Familiar

Somewhat familiar

Not familiar at all

44%

35%

14%

7%

Familiarity with using competencies for business management

Only 7% of business unit executives are

unfamiliar with using competencies for

business management.

93% of business unit executives believe that competencies are important for overall business success in their business units.


Note: Respondents who answered “unsure” were excluded from this analysis. Caution should be used when generalizing results when the sample size is less than 30 for any category. Respondents working for an organization not using a formally defined set of competencies were not asked this question. Total does not equal 100% due to multiple response options.

Very important to achieving goals

Important to achieving goals

Somewhat important to achieving goals

Not at all important

51%

42%

6%

1%

Among those using compe-tencies in their business unit:

(n = 456)

Business Units Using Competencies

Customer Service (n = 12) 100%Research & Development (n = 10) 90%

IT (n = 107) 84%Purchasing/Procurement (n = 10) 80%Productions/Operations (n = 56) 71%Finance & Accounting (n = 73) 66%Administrative/Executive (n = 118) 64%

Sales & Marketing (n = 53) 64%

Other (n = 17) 76%


IT functions are more likely to use a defined set of competencies in their processes and systems. Smaller organizations (100 to 499 employees) are less likely to use competencies.

Note: Only statistically significant differences are shown.

Comparisons by Organization Staff Size

500 to 2,499 employees (69%)2,500 to 24,999 employees (73%)25,000 or more employees (78%)

> 100 to 499 employees (51%)

Comparisons by organization staff size• Organizations with 500 or more employees are more likely than organizations with 100-499

employees to use a formally defined set of competencies in their processes and systems.

Comparisons by business unit• IT business units are more likely than administrative/executive, finance and accounting, and sales and

marketing business units to use a formally defined set of competencies in their processes and systems.

Comparisons by Business Unit

IT (83%) >Administrative/executive (61%)Finance and accounting (57%)

Sales and marketing (56%)

Three out of five executives view the HR function as being a strategic contributor in the organization.


As a combination of transactional and strategic

As a strategic partner

As a transactional/administrative business function

As an enforcement function necessary to oversee employment compliance

32%

28%

22%

18%

How executives view the HR function

(n = 510)

13

Nine out of 10 business unit executives believe that competencies are important for overall HR department success.

Note: Respondents who answered “unsure” were excluded from this analysis. Respondents working for an organization not using a formally defined set of competencies in their HR department were not asked this question.

Very important to achieving HR goals

Important to achieving HR goals

Somewhat important to achieving HR goals

Not at all important

53%

38%

8%

1%

Among those executives who per-ceive that their organization’s HR

department is using competencies:

(n = 363)


Other business

units (n = 458)

HR (n = 446)

72%

71%

28%

29%

Functional areas that have a defined set of

competencies:

Yes No


CEOs/presidents, COOs and CTOs are more likely to know if their HR department uses a defined set of competencies in its processes and systems. CEOs/presidents are also more likely to know this than SVPs or VPs.

Note: Only statistically significant differences are shown.

Comparisons by Current Title

CEO/president (82%)COO (80%)CTO (70%)

> CFO (35%)

CEO/president (82%) > SVP (53%)VP (56%)

Comparisons by current title• CEOs/presidents, COOs and CTOs are more likely than CFOs to state that their organization’s HR

department uses a formally defined set of competencies in its processes and systems.

Comparisons by business unit executives’ view of the HR function• Business unit executives who view the HR function as a strategic business partner are more likely than

executives who view HR as a transactional/administrative business function to report that their organization’s HR department uses a formally defined set of competencies in its processes and systems.

Comparisons by the View the HR Function

As a strategic business partner (67%) > As a transactional/administrative business function (50%)

15

Business unit executives see Leadership and Navigation as the most critical competency for their business units now and in 10 years; 39% say that candidates in the labor pool are lacking in this competency.


Competencies Lacking Now(n = 510)

Critical Now(n = 510)

Critical in 10 Years

(n = 510)

Change (Now to 10

Years in percentage

points)Leadership and Navigation 39% 58% 52% -6%

Communication 40% 41% 34% -7%

Relationship Management 32% 38% 33% -5%

Business Acumen 28% 35% 30% -5%

Technical Expertise 32% 33% 30% -3%

Ethical Practice 17% 29% 25% -4%

Critical Evaluation 39% 24% 23% -1%Global and Cultural Effectiveness 30% 14% 25% +11%

Consultation 16% 7% 12% +5%Note: Totals do not equal 100% due to multiple response options. Competencies are in ascending order based on the competencies viewed as critical now.

16

The Leadership and Navigation competency is critical now regardless of organization size, organization sector, and business unit.

Using Competencies to Achieve Business Unit Success: The Executive Perspective ©SHRM 2016Note: Totals do not equal 100% due to multiple response options. Caution should be used when generalizing results when the sample size is less than 30 for any category.

Business Units Viewing Leadership and Navigation as Critical Now

Administrative/Executive (n = 118) 67%

Research & Development (n = 10) 64%

Sales & Marketing (n = 53) 61%

Finance & Accounting (n = 73) 58%

Productions/Operations (n = 56) 53%

IT (n = 107) 50%

Purchasing/Procurement (n = 10) 42%

Customer Service (n = 12) 36%

Other (n = 17) 83%


Strategies for Filling Competency Gaps

18

Filling competency gaps: Leadership and Navigation

Promotion from inside the organization

Training/professional development

Hiring from outside the organization

Coaching and/or mentoring

Reassigning staff

Increasing compensation

Increasing or decreasing noncompensation rewards or recognition

26%

20%

20%

19%

9%

4%

2%

Best approach to filling competency gaps for Leadership and Navigation

(n = 510)Using Competencies to Achieve Business Unit Success: The Executive Perspective ©SHRM 2016

Note: Totals do not equal 100% due to multiple response options.

Business units(n = 193)

HR(n = 190)

39% 37%

Percentage of business unit executives who view this

competency as lacking in the labor pool of candidates

Leadership and Navigation

19

Filling competency gaps: Communication





Reassigning staff



30%

24%

22%

12%

8%

2%

2%

Best approach to filling competency gaps for Communication



Business units (n = 200)

HR(n = 184)

40%36%



Communication

20

Filling competency gaps: Relationship Management





Reassigning staff



28%

24%

20%

17%

9%

3%

1%

Best approach to filling competency gaps for Relationship Management


Business unit(n = 158)

HR (n = 168)

32% 33%



Relationship Management


21

Filling competency gaps: Consultation





Reassigning staff



32%

19%

18%

17%

7%

5%

2%

Best approach to filling competency gaps for Consultation



Business units (n = 81)

HR(n = 110)

16%

22%



Consultation

22

Filling competency gaps: Technical Expertise




Reassigning staff




28%

27%

22%

8%

8%

6%

3%

Best approach to filling competency gaps for Technical Expertise




HR(n = 142)

32%28%



Technical Expertise

23

Filling competency gaps: Global and Cultural Effectiveness





Reassigning staff



35%

22%

18%

12%

7%

4%

3%

Best approach to filling competency gaps for

Global and Cultural Effectiveness




HR(n = 136)

30%27%



Global and Cultural Effectiveness

24

Filling competency gaps: Critical Evaluation





Reassigning staff



27%

25%

21%

13%

8%

4%

3%

Best approach to filling competency gaps for Critical Evaluation




HR(n = 176)

39%35%



Critical Evaluation

25

Filling competency gaps: Business Acumen





Reassigning staff



25%

24%

21%

13%

9%

6%

2%

Best approach to filling competency gaps for Business Acumen




HR(n = 181)

28%

35%



Business Acumen

26

Filling competency gaps: Ethical Practice





Reassigning staff



32%

22%

19%

12%

10%

3%

2%

Best approach to filling competency gaps for Ethical Practice

(n = 510)




HR(n = 85)

17% 17%



Ethical Practice


Demographics


Demographics: Organization Industry

Note: n = 510. Percentages do not equal 100% due to multiple response options.

Percentage

Finance and insurance 28%Manufacturing 17%Professional, scientific and technical services 16%Educational services 9%Health care and social assistance 8%Government agencies 6%Retail trade 6%Accommodation and food services 6%Transportation and warehousing 6%Information 5%Administrative and support and waste management and remediation services 5%

Continued on next slide


Demographics: Organization Industry (continued)

Note: n = 510. Percentages do not equal 100% due to multiple response options.

Wholesale trade 5%Arts, entertainment, and recreation 3%Religious, grant-making, civic, professional and similar organizations 3%Real estate and rental and leasing 3%Construction 3%Repair and maintenance 3%Utilities 3%Mining, quarrying, and oil and gas extraction 3%Other industry 2%Agriculture, forestry, fishing and hunting 2%Personal and laundry services 2%


Demographics: Organization Sector

Privately owned for-profit

Publicly owned for-profit

Nonprofit

Government

44%

39%

12%

5%(n = 510)


Demographics: Organization Staff Size Throughout the World

100 to 499 employees

500 to 2,499 employees

2,500 to 24,999 employees

25,000 to 99,999 employees

100,000 or more employees

27%

28%

28%

11%

6%(n = 510)


Demographics: Region

Northeast

Midwest

West

South

29%

28%

22%

20%

(n = 510)


Demographics: Current Job Title

President, CEO, chair, partner or principal

Chief financial officer

Chief operating officer

Chief marketing officer

Chief technology officer

Other C-suite executive

Senior vice president or exectuive vice president

Vice president

22%

11%

7%

2%

8%

3%

15%

32%(n = 510)


Demographics: Number of Years in Current Organization

1 to 5 years

6 to 10 years

More than 10 years

22%

28%

51%

(n = 510)


• Response rate = 10%• The sample for the survey was obtained using an outside survey research

organization. The invitation was sent to 6,272 business unit senior executives in organizations with 100 or more employees.

• 510 business unit senior executives completed this survey in full. • Margin of error +/-5%• Survey fielded December 30th, 2015-January 4th, 2016

Survey Methodology

Project lead:Lindsay Northon, MPS, specialist, HR Competencies, SHRM Research

Project contributors:Joseph Jones, Ph.D., director, HR Competencies, SHRM ResearchJennifer Schramm, M. Phil., SHRM-SCP, manager, Workforce Trends and Forecasting, SHRM ResearchEvren Esen, MSW, SHRM-SCP, director, Survey Research Center, SHRM Research

Copy editor:Katya Scanlan, SHRM Knowledge Center

SHRM Survey Findings: Using Competencies to Achieve Business Unit Success— The Executive Perspective


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http://www.shrm.org/PeopleInSight

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Shrm survey findings using competencies to achieve business unit success final