HR field must respond and con- tribute are increasingly turbulent (Ul- rich & Brockbank, 2005). HR depart- ments that aspire to make unique and valuable contributions within the con- text of these changes must adapt their de- partmental capabilities and the competen- cies of their HR professionals to the dynamics that influence the human side of the business. Many companies are recogniz- ing this trend and are undertaking initia- tives to enhance the knowledge and abilities of their HR professionals. The purpose of this article is to analyze a case of an HR developmental initiative that sought to amplify HR professionals as- pirations to add greater value, impart knowledge of high-impact concepts and tools, apply knowledge through real-world projects, and measure results based on in- ternal customer feedback. The case we pres- ent comes from BAE Systems, which has made an intensive and extensive effort to build an HR function that delivers measur- able and high-impact business results. This case is useful because it illustrates how those who wish to develop HR profession- als can apply general criteria regarding which competencies enable HR profession- als to have the greatest impact on business performance (Ulrich & Brockbank, 2003 THE DEVELOPMENT OF STRATEGIC HUMAN RESOURCE PROFESSIONALS AT BAE SYSTEMS RYAN W. QUI NN AND WAYNE BROCKBANK Dynamic trends in the external business environment, in the challenges that companies face, and in the nature of HR itself demand that HR departments develop new capabilities and that HR professionals develop new competen- cies. This article examines BAE Systems (U.K.) as a detailed case study of a company that understands the demand for greater HR contribution to busi- ness value. BAE Systems acted on that understanding by providing a com- prehensive HR professional development program to enhance the compe- tencies of its HR professionals in order to encourage better business performance. Pre- and postprogram measures and extensive qualitative in- terviews about HRs impact on business performance evidences the effec- tiveness of this comprehensive approach to the development of HR profes- sional competencies. 2006 Wiley Periodicals, Inc. Correspondence to: Ryan W. Quinn, Darden Graduate School of Business, University of Virginia, 100 Darden Boulevard, P.O. Box 6550, Charlottesville, VA 22906-6500, E-mail: quinnr@darden.virginia.edu Human Resource Management, Fall 2006, Vol. 45, No. 3, Pp. 477494 2006 Wiley Periodicals, Inc. Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/hrm.20120 478 HUMAN RESOURCE MANAGEMENT, Fall 2006 <ZAQ;1>) to the specific needs and circum- stances of a particular organization. Contextual Demands for HR Development Investments External business dynamics, internal business dynamics, and trends in HR en- courage HR professionals to add greater value. For example, tech- nological innovations, the growth of global merchandise and service trade relative to global GDP, em- ployee-related regulations, broader trends of deregulation, a growing mandate for workforce productiv- ity, increasing service-sector jobs, an increased focus on intangibles for judging value creation, and shifting workforce demographics continually change the nature of the competitive landscape, requir- ing HR professionals to adapt or- ganizations and their members to meet these competitive demands (Americas Fortunes, 2004; Karoly & Panis, 2004; Ulrich & Small- wood, 2003; World Trade Organi- zation, 2003). Deregulation and globalization expose companies to increased competition from new market en- tries that heretofore had been pro- hibited from competing. HR pro- fessionals need to ensure that their companies are capable of respond- ing both to their customers and to the competition in order to per- form effectively in increasingly nontraditional geographical or product markets. Frequent merger, acquisition, restructuring, and out- sourcing activities require HR pro- fessionals to see <ZAQ;2> value- creating opportunities and to prepare for integration or separation before contracts are finalized. Technological imitability requires HR pro- fessionals to ensure that the right people are in the right places with the resources they need to achieve sufficient innovation for continued or- ganizational survival. Increasing turnover in senior executive positions may result in new directions for corporate portfolio composition, a shifting emphasis on different portions of the value chain (e.g., from manufacturing to serv- ice), corporate agendas (e.g., Six Sigma), and heightened performance expectations (e.g., high stock price). As owners demand greater re- turn on their investments, companies are under pressure to make the corporate whole worth more than the sum of the parts (Ulrich, Kerr, & Ashkenas, 2002). These changes each require HR professionals to increase their per- sonal aspirations and relevant skills. HR has been shifting its locus of activity and impact from transactional to transfor- mational (Brockbank, 1999). Indications of this shift can be found in the aspirational vo- cabulary for the HR field. Seldom does a major HR conference occur without a session addressing the issue of HR as business part- ner, business player, or business contributor. This vocabulary shift is supported by empiri- cal research that shows a decrease in HRs focus on operational HR and an increase in strategic HR work (Brockbank, 1999). As with every business activity, HR is sub- ject to the requirement of greater return for capital invested. To provide greater return, the HR field has moved aggressively to reduce low value-added HR work through outsourcing, automation, reengineering, elimination, and deflection (i.e., to line management). When low value-added work is reduced, major ques- tions assert themselves: What are high value- added agendas for the remaining HR profes- sionals? Do HR professionals have the personal competencies and collective capabil- ities to design and implement increasingly ambitious agendas around advocating for em- ployees, developing human capital, providing exceptional functional expertise, and strategic partners, and intellectual leaders (Ulrich & Brockbank, 2005)? How can these competen- cies and capabilities be developed? Criteria for HR Development Investments Given the general business and specific HR trends prevalent today, we suggest that HR What are high value- added agendas for HR professionals? Do HR professionals have the personal competencies and collective capabilities to design and implement increasingly ambitious agendas around advocating for employees, developing human capital, providing exceptional functional expertise, and strategic partners, and intellectual leaders? Human Resource Management DOI: 10.1002/hrm The Development of Strategic Human Resource Professionals at BAE Systems 479 professional development interventions should meet three criteria to be of optimal value: 1. Raise the aspirations of HR professionals to add greater value to the business; 2. Develop HR professional competencies that have greatest impact on business performance; and 3. Provide the opportunity to apply con- cepts, research, and tools in the context of raised aspirations. Raise Aspirations of HR Professionals Organizations that have powerful visions of their relevance for customers, shareholders, and society are more likely to create sustain- able and supernormal returns (Collins & Por- ras, 1994). This includes HR departments and HR professionals. In order to fully lever- age the competencies of HR professionals, a developmental initiative should provide a powerful and credible vision of HR. The vi- sion must convey the message that HR has the potential to deliver clearly identifiable business results and that HR professionals are in a profession in which ones career may grow and prosper (Huselid, Becker, & Beatty, 2005). HR has the potential to add value in re- sponse to every major business trend. A suc- cessful HR development program should em- phasize these trends, the ways in which these trends affect business strategy develop- ment, and the practices through which HR professionals can equip their organizations to adapt to these trends. Primacy should be given to those practices that have been shown, empirically, to enhance business per- formance. HR professionals must always keep in mind that to be full business con- tributors, they must create value for key ex- ternal stakeholders. Economic organizations do not exist for their own sake; they must create value for customers or customers will put them out of business. A business-focused development program for HR professionals will emphasize these fundamental principles and implications. HR professional development should focus HR professionals on business in gen- eral, and in particular, on the human side of business where HR has centralbut not soleresponsibility. In the same way that fi- nance has responsibility for the intellectual agenda around finance, for translating that agenda into the first draft of the financial strategy, and for bringing that strategy to the management team for approval and execu- tion, HR has responsibility for the intellec- tual agenda around people, for translating that agenda into the first draft of the people strategy, and for bringing that strategy to management for ap- proval and execution. That HR professionals should be the clear- est thinkers in the company about current concepts, research, and best practices about people and organization is a central idea that an HR development program should convey. HR professionals, then, should envision themselves as contributors to their firms com- petitive advantage. If product development professionals do not develop products and services that customers will buy, their work is irrelevant to the company. In a similar man- ner, HR professionals should also know how their activities contribute to customers buy- ing products or services and shareholders providing capital. An effective HR develop- ment program will instill in its participants a vision of HR professionals as creators of com- petitive advantage that meets the value re- quirements of customers and investors. Develop HR Competencies That Contribute Most to Business Results There is more knowledge in the HR field than can be effectively conveyed and inter- nalized in a single HR development program. A pervasive problem in HR development is that many HR departments, consulting firms, and academicians develop compe- tency models based on the question What are the competencies of HR professionals? rather than What are the competencies of HR has the potential to add value in response to every major business trend. Human Resource Management DOI: 10.1002/hrm 480 HUMAN RESOURCE MANAGEMENT, Fall 2006 HR professionals that have greatest impact on business performance? Given the limita- tions of time and money, it is important to focus HR developmental initiatives on creat- ing the HR competencies that add greatest value to short- and long-term business per- formance. We can use the results of the Human Resource Competency Study from the Ross School of Business at the University of Michigan (Brockbank & Ulrich, 2003) to answer this latter question and to guide de- cisions regarding what content should be in- cluded in HR professional training. 1 The competencies identified in the Human Resource Competency Study that con- tribute most to business results (as illustrated in Figure 1 and Table I) are strategic contribu- tion (i.e., managing the culture, fast change, involvement in business decision making, and creating an organization that is unified around market demands), personal credibility (i.e., keeping ones word, performing error-free work, exhibiting effective interpersonal skills, and communicating via written and verbal media), HR delivery (i.e., staffing, training and development, organization design, and per- formance management), and business knowl- edge (i.e., finance, marketing, supply-chain management, manufacturing, logistics, cus- tomers, competitors, capital markets, global- ization, and information technology). The ef- fect of HR technology (i.e., leveraging knowledge-management technology, using eHR to deliver services, designing Internet and intranet HR services, and using rigorous data analysis for HR decisions) on business per- formance is not statistically significant. The effectiveness with which HR profes- sionals exhibit these competencies, however, does not tend to mirror their importance to business results. As Table I reveals, HR profes- sionals are most effective at establishing cred- ibility, but this competency has limited influ- ence on business performance. On the other hand, even though strategic contribution has the greatest impact on business performance, it is not the competency that HR profession- als exhibit most effectivelysuggesting that it may be the most important competency to develop in HR professionals. The other four competency factors have relatively less im- pact on business performance. It may be the case that these other competencies are foun- dational to HRs strategic value-added. If HR professionals do not have them, they will not have the knowledge and legitimacy required to make strategic contributions. But they do not create strategic advantage; they simply provide the foundation to do so. Learning Through Application Learning by doing has long been accepted as an effective way to create, acquire, and inter- nalize professional knowledge. Effective devel- opment of HR professionals should provide ample opportunity for participants to learn through the processes of applying obtained knowledge. It is possible to differentiate four vehicles for learning through application. First, classroom application can occur in the context of case studies, role plays, planning simulations, and planning for back-home ap- plication. Second, team-based application ex- periences are useful to help participants ad- dress complex issues that require multiple perspectives and multiple-stakeholder involve- ment. Third, feedback from peers, coaches, and consultants in the context of real-time ap- plication can powerfully enhance the learning process. Fourth, the capstone component of an effective HR development program is the provision for on-the-job application of specific Human Resource Management DOI: 10.1002/hrm FIGURE 1. Competency Factors for HR Profession- als Based on the Human Resource Competency Study from the Ross School of Business at the University of Michigan The Development of Strategic Human Resource Professionals at BAE Systems 481 learnings. Such application projects may focus on HR-specific challenges (e.g., Define and implement a new compensation system) or on general business improvements (e.g., Cre- ate a process for leveraging synergy across business units). Studying Professional HR Development at BAE Systems Our analysis of business trends along with the HR competency research from the Uni- versity of Michigan suggests that an effective HR professional development program should raise the aspirations of HR profes- sionals, develop HR competencies that con- tribute to business results, and give HR pro- fessionals opportunities to apply the competencies they have learned. However, even though we can identify criteria that should be included in HR professional devel- opment by assessing global business trends and reviewing current HR literature, the ef- fective practice (Barnes, 2001) of designing and delivering development programs re- quires developers to craft programs that focus explicitly on business outcomes. HR leaders and consultants at BAE Sys- tems developed and implemented an inten- sive HR professional development program. We conducted a case study (Eisenhardt, 1989; Yin, 1994) of this HR professional de- velopment program to examine its design, delivery, and results. The case method has been applied in earlier descriptions of HR de- velopment programs (e.g., Adler & Lawler, 1999; Brockbank, Ulrich, & Beatty, 1999; Dyer, 1999; Heneman, 1999). This current article examines how a company develops HR professionals in-house, in ways that meet the specific needs of both the company and the companys HR professionals. BAE Systems BAE Systems is a global defense and aerospace company whose stated mission is to develop comprehensive defense systems for enabling countries to establish peace and safety: the business of protecting those who protect us. Headquartered in the United Kingdom, it is an international firm with operations in Eu- rope, the United States, and throughout the world. It has annual sales of over 12 billion, profit before interest of over 1 billion, and nearly 100,000 employees. There are three reasons why BAE Systems is an excellent site for examining the development of HR profes- sionals: (1) BAE Systems set conscious and ex- plicit goals to develop its HR professionals; (2) BAE Systems framed its developmental initia- tives in response to the external, internal, and HR trends discussed previously; and (3) one of the authors was involved in the design and delivery of the initiative. Data and Data Collection To situate our case study in its cultural and historical context, we used a collaborative Human Resource Management DOI: 10.1002/hrm Competency Category HR Effectiveness Percent of Business (1 = low; 5 = high) Performance (Column 1) (Column 2) Strategic Contribution 3.65 43% Personal Credibility 4.13 23% HR Delivery 3.69 18% Business Knowledge 3.44 11% HR Technology 3.02 5% Source: Brockbank and Ulrich (2003). T A B L E I Relationship of HR Competency Factors to HR Effectiveness and Business Performance 482 HUMAN RESOURCE MANAGEMENT, Fall 2006 approach for collecting and interpreting data. One author was an insidera consult- ant-trainer who participated in the design and delivery of the development program and kept notes while doing so (Lofland & Lofland, 1995)and the other was an outsideran in- dependent researcher who did not participate in any of the training or work of BAE Systems but focused entirely on data col- lection, analysis, and evaluation. Such inside/outside approaches generally yield a more complete description of the intervention (Bartunek, 1993, p. 1221). The independent researcher conducted over 20 semistructured interviews with a cross-section of BAE Systems corporate execu- tives, program designers, and pro- gram participants, and also col- lected corporate archival data concerning the design and deliv- ery of the program. The goal of these interviews was to under- stand how business pressures af- fected demands for and decisions made in HR professional develop- ment, how the program was de- signed and delivered, and how the developmental activities were related to improving HR profes- sional competencies and business results. Analysis We reviewed hundreds of pages of archived documents detailing the development of the program from its inception to its current status, in- cluding proposals, requests for proposals, e- mail exchanges, PowerPoint presentations, internal documents, assessments of partici- pants, descriptions of outsourcing arrange- ments, and so forth. We created an outline of key events in the background, design, delivery, and results of the development program. We then returned the outline back to key people involved in the design and development of the program so that it could be checked for accuracy. Alternating between our insider and outsider perspec- tives, we developed an historical account and explanation for how events unfolded by comparing notes, inducing and cri- tiquing concepts, and refining emerging insights (Yin, 1994). The Story of the BAE Systems Strategic HR Program Organizational and Functional Redesign The circumstances that gave impetus for BAE Systems to train its HR professionals began in the late 1990s. In November 1999, British Aerospace and Marconi Electronic Systems merged in order to create a more completely integrated systems business for the defense industry. In addition to the strategic and op- erational synergies prompted by the merger, executives at British Aerospace and Marconi Electronic Systems believed that they could achieve extensive cost savingsin part by creating shared services and eliminating re- dundant elements from the combined or- ganization. BAE Systems created synergy de- livery teams to achieve cost savings from the merger. One synergy delivery team consisted of HR professionals who were charged with eliminating redundancy and decreasing lay- ers of management through organizational restructure. As they proceeded with this task, the need to redesign the HR function itself became apparent. The executives responsible for redesigning HR decided that the HR re- structuring should: eliminate and streamline HR processes; bring commonality to the diverse and disparate HR policies, structures, and processes throughout the organization; create a single, unified information tech- nology system for HR to replace the di- verse and unrelated legacy systems; and increase the value added by each HR em- ployee (in part by bringing the existing ratio of one HR staff member per 75 em- ployees to the benchmark ratio of 1:125). The executives responsible for redesigning HR decided that the HR restructuring should: streamline HR processes; bring commonality to the diverse and disparate HR policies, structures, and processes; create a single, unified information technology system for HR; and increase the value added by each HR employee. Human Resource Management DOI: 10.1002/hrm The Development of Strategic Human Resource Professionals at BAE Systems 483 To meet these goals, managers responsi- ble for the HR function developed a model to describe the restructuring of HR. This model stipulated that approximately 80% of the employees in HR should be assigned to a shared services organization to do transactional (or back office) HR work; 15% of the HR employees would do trans- formational (or client-facing) HR work; and 5% of the HR employees would provide corporate-level expert services (e.g., corpo- rate strategy development, defining HR value, and assurance of global implementa- tion). Managers assigned HR employees to each of these categories and also began to develop a way to organize the transactional shared services organization. They decided to create a joint venture with a firm called Xchanging to provide transactional shared services. The Need for Higher Value-Added HR in BAE Systems During the creation of Xchanging, it became apparent that many of the client-facing HR professionals had not developed the knowl- edge and skills that would be necessary to meet the demands for the higher value- added HR agendas. The knowledge and ex- perience of the client-facing HR profession- als were diverse. Some were able to deal effectively with different business-unit chal- lenges, but few were able to handle all of the challenges well. Some professionals were ex- perts in traditional HR processes but had little or no experience in designing and de- livering HR strategies that were integrated with the business strategy. Others had train- ing in organizational change but had little training in business strategy development. And others acquired most of their experience in other business functions, knowing little about HR. One HR director described the ex- perience as follows: . . . the job when I took it was massive; it was huge . . . Id been doing an HR role, but nothing like the role that I was given. And in terms of creating that or- ganization, I didnt have a clue . . . I didnt have the tool kit; I didnt have a skill set in it. Developing a Competency-Based Training Program As corporate HR professionals finalized the creation of Xchanging, they began to recog- nize and articulate a need to train the client- facing HR professionals. As one HR executive described the situation: We had some quite senior peo- ple that when you looked at their . . . competencies as a business partner . . . their abil- ity to fulfill or to meet the com- petency levels for a rounded business partner was actually very narrow . . . And that, I think, was one of the drivers to saying, well, were going to have to put in a significant amount of development, be- cause one option might be to get rid of those people and re- place them with alternatives. But the issue is, because they do have the history and the knowledge of the organization and their business, even if theyre not really sure how the value flows through it, if you remove people like that theres a danger that, you know, short- term, youll have an adverse impact. And it may be that, you know, by developing them we can actually broaden their horizons. Leaders in the HR function, then, de- cided to train the client-facing HR managers, and BAE Systems HR Director of Resourcing and Development John Whelan received the responsibility for their development. Whe- lan segmented the development needs to focus specifically on client-facing HR work: . . . when we moved to the [new HR] model, we . . . defined what were trans- actional, administrative-type HR activi- During the creation of Xchanging, it became apparent that many of the client-facing HR professionals had not developed the knowledge and skills that would be necessary to meet the demands for the higher value-added HR agendas. Human Resource Management DOI: 10.1002/hrm 484 HUMAN RESOURCE MANAGEMENT, Fall 2006 ties. And we were able to define fairly well what were professional services. But, in many ways, we didnt define as well as we should have what we meant [by the client-facing] box. Whelan needed to define what the objec- tives and activities of the client-facing HR professionals would be, and what competen- cies would need to be developed so that the HR managers could meet their objectives. Whelan formed a small team with both young and experienced HR professionals and an external consultant. 2 They opted for a competency-based approach to development for three primary reasons: (1) competencies represent an effective link between having knowledge and skills on one hand and ap- plying knowledge and skills on the other; (2) competencies have been found to provide ef- fective frameworks for professional evalua- tion and development in many different set- tings; and (3) extensive work has been done over the past 20 years in applying compe- tency frameworks to the HR field. Whelans team then identified the com- petencies that client-facing HR professionals would need, along with the methodologies for assessing and developing the required competencies. The team drew on academic research, consultancy research, benchmark- ing from other firms, and their own experi- ence, an internal survey, and workshops with the consultant to develop an HR com- petency model that was customized for the companys client-facing HR professionals. As Figure 2 shows, these competencies first en- tailed delivering organizational design and development and consulting to businesses. To support the delivery of design, develop- ment, and consultation, HR professionals would also need business knowledge, knowledge of the basic HR functions, an ability to establish personal credibility, and the ability to move people and organiza- tions toward results. Human Resource Management DOI: 10.1002/hrm FIGURE 2. Original HR Competency Model for BAE Systems The Development of Strategic Human Resource Professionals at BAE Systems 485 To elicit their support and feedback, Whe- lan explained the HR competency model to key line and HR managers in one-on-one in- terviews. He explained that the new HR role was not limited to the traditional activities of recruiting, disciplining, training, and so forth in response to requests from line managers, but also involved development and execu- tion of the business and HR strategies. Whelan and his team next began to look for people to design and deliver the develop- mental program. They sent out a request for proposals to leading academicians and con- sulting firms. They focused on finding pro- gram providers who would develop a cus- tomized program that fit the needs and the desired competencies of BAE Systems, rather than just deliver a packaged, off-the-shelf program. Their primary goals for the training were to: develop the strategic, value-adding capa- bilities of the client-facing HR profes- sionals and shift HR professionals from highly effec- tive practitioners to strategic professionals. Whelan and his team received a number of proposals and had multiple consultants present their proposals to the team. Whelan gave two reasons for why they ended up choosing the second authors consulting firm. First, he said that the second author seemed to understand the role that they were trying to create for HR. The language he spoke, Whelan explained, kind of res- onated. He just seemed to talk our lan- guage. Second, however, was that the sec- ond authors consulting team challenged them. Their consulting group convinced Whelans team that they not only under- stood the programmatic needs of the com- pany but also were willing to deliver an ef- fective customized program. They challenged us in terms of what we wanted, Whelan explained. We . . . thought this would take quite a while and we thought itd probably be several months over time. [But they said] we can do it quicker than that and we can deliver you something on a much more punchy time scale. The second author also challenged Whe- lans team on their customized competency model, using the empirical research from the University of Michigan HR Competency Sur- vey <ZAQ;3> and other relevant research. This resulted in a modified and final version of the BAE Systems HR competency model (see Figure 3). The modified model breaks the six broad competencies down into sub- competencies that can be identified and more easily trained. In response to time constraints and the HR Competency Survey <ZAQ;3> results, the design team focused the training program largely on business knowledge, cultural capabilitybased HR strat- egy development (from organiza- tional design and development), change management, linking HR to external market requirements, and business and HR measure- ment. They wove the other ele- ments of the model into the pro- gram where appropriate. Whelans team then began thinking through the . . . ways the [busi- ness] projects [would] workas the business projects were central to the program and to participant development. They decided that they wanted participants to have online support during their proj- ects and requested the consultants to develop and provide the tech- nology they needed to give partic- ipants that support. All client-facing HR professionals partic- ipated in the assessment that included a 360-degree assessment using the University of Michigan HR Competency Survey <ZAQ;3> and a detailed assessment inter- view with a Q-Tab Consultant. The purpose of the assessment was developmental. How- ever, after reviewing assessment results, a small number of professionals reached an agreement with their supervisors that they would be better off pursuing careers in transactional HR. Several of these individu- als decided that they were not a good fit with the direction the company was headed Whelan and his team focused on finding program providers who would develop a customized program that fit the needs and the desired competencies of BAE Systems, rather than just deliver a packaged, off-the- shelf program. Human Resource Management DOI: 10.1002/hrm 486 HUMAN RESOURCE MANAGEMENT, Fall 2006 and decided to leave. This meant that most, if not all, of the client-facing professionals agreed with the decision to focus HR on strategic issues and had the desire to con- tribute to HR in a strategic fashion. The BAE Systems Strategic HR Program Whelans team assigned 63 senior HR profes- sionals into two different tracks of a six- month training program. A third track was subsequently added with an additional 22 participants. Following their assessment, participants proceeded through the Strategic HR Pro- gram. This program consisted of six mod- ules: prework, business and HR strategy de- velopment, an HR strategy development application project, organizational capabili- ties, an HR capability application project, and HR in the leadership role. Each module was supported by an e-learning environment that provided online summaries of program materials, tools for application, and a chat room for continual peer support. Prework The client-facing HR professionals who came to the development program were re- quired to read a set of documents that pro- vided an overview of the strategic direction of the company and the defense industry, including the companys annual report, a re- cent speech by the companys COO, and three analysts reports on the defense indus- try. Participants were also required to engage in a dialogue with at least three internal line clients about current and future directions for their respective businesses, specific changes they anticipated for their business units, the capabilities required for future success, the capabilities needing the most improvement, and the ways in which the HR function could add greater value to the Human Resource Management DOI: 10.1002/hrm FIGURE 3. BAE Systems HR Competency Model, Updated with Information from the Michigan Business School HR Competency Survey <ZAQ;3> The Development of Strategic Human Resource Professionals at BAE Systems 487 business. These activities were required of participants in order to send them a signal about what HR professionals would be ex- pected to know in the future and to help them begin to understand how HR could be used to add greater value to their respective businesses. Business and HR Strategy Development With the reading and interviewing complete, participants arrived for the first four-day classroom module to learn about business and HR strategy. The purpose of this module was to lay the groundwork of strategic knowledge and practices that HR profession- als need in order to create and deliver more powerful, business-driven HR strategies within BAE Systems unique environment. Leading thinkers on business strategy, as well as the BAE Systems director of corporate strategy, examined current trends in strategy formulation. These sessions were followed with train- ing on topics such as the relevance of human resource management in todays business en- vironment; the deliverables, channels, and competencies of HR in high-performing companies; the logic and process for inte- grating HR with the business strategy through competitive cultural capabilities; and organizational development consulting skills. These topics were selected on the basis of the empirical work on HR competencies from the University of Michigan (Brockbank & Ulrich, 2003). During this first four-day module, partic- ipants were given extensive exposure to the process and logic of (a) defining key cultural capabilities that are required in BAE Sys- tems specific market and business contexts and (b) designing and delivering HR prac- tices that focus on creating business-based cultural capabilities. As one HR manager who participated in the program said, this part of the program was a bit mind-bog- gling to start off, because it is complex, but as it developed he began to understand the business to a much greater extent, and it challenged him to think and maybe test your original thinking. Another reported that the strategy consultants training on identifying, measuring, and creating value and tying it to HR was interesting and re- freshing, but that it became practical for her when the HR consultant gave them the logic and language for discussing HRs busi- ness relevance with line managers and the specific tools for impacting business strategy through HR. Cultural CapabilityBased HR Strategy Development Application Project The core of the first classroom module covered the logic and process of integrating HR strategy into the business strategy by cre- ating and sustaining competitive cultural capabilities. Following the first classroom module, par- ticipants had ten weeks in busi- ness-unit-based teams to apply an eight-step process for linking HR into the business strategy through the mechanism of cul- tural capabilities (Brockbank & Ulrich, 2003, pp. 343344): 1. Define the business unit for which the HR practices are being designed. 2. Specify the key trends in the external business environ- ment for that business unit. 3. Identify and prioritize the re- quired sources of competitive advantage for that unit and determine the defining metrics for each source of competitive advantage. 4. Define the required culture (including specific behaviors) and technical capabil- ities that are required to create and sup- port the sources of competitive advan- tage that were identified in Step 3. 5. Identify the cultural characteristics that the firm should reduce or eliminate if it is to optimize its sources of competitive advantage. 6. Design the HR practices that will have the greatest impact on creating the de- sired cultural capabilities. The core of the first classroom module covered the logic and process of integrating HR strategy into the business strategy by creating and sustaining competitive cultural capabilities. Human Resource Management DOI: 10.1002/hrm 488 HUMAN RESOURCE MANAGEMENT, Fall 2006 7. Establish a detailed action plan for im- plementing the logic from the preceding six steps. 8. Specify the means by which the entire process is to be measured. By applying these steps in their own or- ganizations, participants began to develop the related HR strategy development skills in a disciplined way. For example, one participant described the process for learning how to frame and communicate management values and translate these values into leadership behaviors. As par- ticipants applied these steps, they were supported with access to program files, tools, handouts, Web links, and discussion boards in the e-learning space that had been created for the program. Ad- ditionally, during the ten weeks of the first application project, participant teams received con- sulting telephone calls from the program faculty. Organizational Capabilities After completing the on-the-job HR strategy application project, participants reconvened for the second four-day classroom module. This module focused on the identification and creation of key organizational capabili- ties. The senior HR leadership team selected key organizational capabilities, which in- cluded customer-focused organizational learning, cost-based competitiveness, high- performance accountability, innovation, col- laboration and synergy, fast change, and leveraging talent. In a traditional HR devel- opment program, the focus would have been on what HR does (i.e., staffing, performance management, training and development, etc.). But, in this case, the BAE Systems pro- gram focused on what HR delivers (i.e., key organizational capabilities). This portion of the program emphasized how each part of the HR function integrates with other busi- ness functions (such as marketing, product design, finance, information systems, and production) to create and sustain key organi- zational capabilities. These sessions con- cluded with an additional session on meas- uring performance of the human resource function. These sessions prepared partici- pants for the second action-learning project. HR Application Learning Project Project teams built on what they learned from their first application project and the second classroom content module by identi- fying and executing a second ten-week proj- ect designed to: impact business results; be framed within the context of the busi- ness strategy; qualify as a real-time and important HR challenge that requires short-term atten- tion; apply key elements learned in the devel- opment program; and be actionable within five months. Examples of these projects included: aligning business strategies and talent management in the Sea Systems busi- ness; measuring the impact of HR strategic in- terventions in Customer Solutions and Support; and defining and agreeing on a merger-and- acquisition process that includes capabil- ity, culture, people, structure, and leader- ship qualities; and measuring the impact of North American HR processes on collaboration and change management. Once again, support was given through e-learning and consulting calls, but project teams also had an internal BAE Systems project sponsor from the senior HR leader- ship team to help them with this second as- signment. The sponsor helped them to learn from the project. For example, one HR manager described learning the lead measures rather than the lag measures that were optimal for her application project By applying these steps in their own organizations, participants began to develop the related HR strategy development skills in a disciplined way. Human Resource Management DOI: 10.1002/hrm The Development of Strategic Human Resource Professionals at BAE Systems 489 and the competencies that her people would require to effectively complete the project. HR in a Leadership Role The Strategic HR Development Program ended with a two-day session on HR profes- sionals in their role as business leaders. Tra- ditional HR emphasizes HR in a support role. The HR professional development interven- tion at BAE Systems emphasized HR in a business partner role. This last module ad- dressed the ways in which HR professionals could be business leaders, moving beyond the roles of supporter or partner. A synthesis of these models was used to develop personal HR leadership agendas for their respective in- dividual areas of responsibility. Program Results 3 Survey and interview data indicate that BAE Systems HR professional development pro- gram had a positive and significant effect on the competencies of HR professionals. External HR Evaluation Survey BAE Systems hired an external auditor, Porter Novelli, to administer a survey on the satis- faction of internal HR customers at the be- ginning and end of the HR development pro- gram. The survey was designed to reflect the ability of the HR department to add value to BAE Systems business results. Over the time span of the HR development intervention, the results showed marked improvement in each of the five areas that were examined. 4 (See Table II.) HRs influence on business decisions and strategy increased 120%. The early stages of the intervention focused heavily on current thinking in business strategy that was supported by in-depth exposure to key individuals in the companys strategy department. The cultural capability HR strategy development process was the foundation of the first half of the pro- gram. This key element of the interven- tion required a rigorous analysis of the BAE Systems business environment and business strategy. It also emphasized the mandate for HR to focus on a highly con- densed and core set of business priorities. This logic was emphasized both in the classroom and during the first applica- tion project. HRs provision of innovative business so- lutions increased 85%. The program fo- cused heavily on improving business per- formance by addressing the issue, What are the key cultural and technical capa- bilities required to improve business per- formance? For six months, the client- facing HR professionals intensely examined the alternative paths through which HR would encourage innovative business improvements. In addition, in- novation was one of the key cultural ca- pabilities that received substantial atten- tion from several of the HR strategy application project teams. Human Resource Management DOI: 10.1002/hrm HR 2003 HR 2004 Percent Increase Influencing business decisions and strategy 30% 66% +120% Providing good general HR advice and support 51% 85% +67% Understanding key performance indicators 47% 79% +68% Providing innovative business solutions 33% 61% +85% Understanding my business and its needs 55% 80% +45% T A B L E I I Internal HR Customer Satisfaction Survey Results and Improvement Scores Between 2003 and 2004 490 HUMAN RESOURCE MANAGEMENT, Fall 2006 HRs understanding of key performance indicators increased 68%. The eight-step HR strategy development process re- quired the specification of key perform- ance indicators for each source of com- petitive advantage, followed by specification of the cultural and techni- cal capabilities required to impact the key performance indicators. The HR strategy sessions carried out as part of the first application projects involved senior line executives in examining how HR can directly influence key performance indi- cators. HRs provision of good general HR ad- vice and support increased 67%. State-of-the-art HR functional practices received substantial at- tention. The program examined these practices in the context of the key organizational capabili- ties that these practices were de- signed to deliver. Both applica- tion projects required that the HR application teams answer two questions: Which HR prac- tices are out of alignment with the targeted organizational ca- pabilities? and Which of those HR practices that are out of alignment would have the great- est impact if we brought them into alignment? This exercise encouraged HR professionals to examine all HR advice and sup- port in the context of the capa- bility deliverables required by their respective businesses. HRs understanding of the business and its needs increased 45%. Every step of the program reinforced the requirement for HR professionals to understand and focus on the business and its needs. Pre- work required familiarity with analysts and customers perspectives of the com- pany as well as those of line manage- ment. The presenters and faculty concen- trated on research and best practices related to the business knowledge that is most necessary for HR to add the greatest value to top-line growth. The application projects were completed in the context of full understanding of the business and its needs. Interviews with Program Participants and Their Supervisors 1. Virtually all of the interviewed HR pro- fessionals and their supervisors dis- cussed the importance of the develop- mental interventions emphasis on business strategy, HR strategy, and the linkages between the two. Their com- ments mentioned six specific benefits from the program. 2. It codified their tacit knowledge about the role of HR into explicit frameworks, which made their knowledge valid, de- fensible, and useable. For example, in one classroom exercise, the instructor asked participants to imagine a com- pany gathering in which a bright, in- formed, and results-oriented senior line executive or finance professional ap- proaches them and says, So you are in HR. We keep giving you folks lots of money. I just dont get it. I dont know why we should invest another cent in HR. The instructor then helped team members develop a script for what they would say. This exercise forced them to make explicit HRs value added in terms of business logic and language, empiri- cal research, and state-of the-art HR concepts. Participants gained the ability and desire to discipline themselves to think, speak, and act more strategically. They indicated that the program reinforced their roles in formulating strategy and thinking of the business first and how to apply HR expertise within that con- text. Without this clarity and rein- forcement, HR professionals had a ten- dency to drift in and out of doing HR work in traditional ways, rather than focusing on work that adds strategic value. As one participant stated, We now constantly remind ourselves, What is it that were here to do? To make sure that The presenters and faculty concentrated on research and best practices related to the business knowledge that is most necessary for HR to add the greatest value to top-line growth. Human Resource Management DOI: 10.1002/hrm The Development of Strategic Human Resource Professionals at BAE Systems 491 the HR services . . . improve the perform- ance of the business. We have to keep re- membering that. Thats the challenge, to keep that in front of us all the time. And another said, I bring myself back all the time to say, What is it that the [external] customer wants? What do we need to do to identify where the customers going? . . . How do we have to behave to deliver to that end goal? Finally, one HR director described a situation in which business was down and in which the traditional HR re- sponse would have been to start plan- ning for a redundancy program. Partly because of perspectives gained in the Strategic HR Program, he instead concen- trated on creating an organization with the support of the trade unions to lobby the government in support of two major contracts. As a result, his business ob- tained two contracts worth over 2 bil- lion. He concluded, And thats what I think . . . I have brought over the last 12 to 14 months from the [strategic HR] pro- gram. 3. The program demonstrated a balance be- tween conceptual richness and tools for application. Participants frequently ref- erenced the value of the HR strategy de- velopment process used in the first appli- cation project. This tool provided a disciplined process for enabling HR to provide its highest value-added contribu- tion to business performance. Almost all participants said that they have used the model since the program, and many claim to have used it repeatedly. 4. The program made it possible for partici- pants to enunciate and justify a more powerful vision of HR in their individual business units. One HR director shared how the program helped him to create a clear explanation of his vision for the HR function in his business unitsome- thing he had not been able to do before: We had [the VP of HR] here last week. We had . . . the sector-level HR vice president the week before. I asked my team members to explain to both of them what each of them was doing. And after both had gone, I sat down with the team and said, Listen to you guys. We didnt practice beforehand. Every one of you talked about changes that youre doing in terms of improv- ing business performance and your part of the business. A year ago, thats not what we would have done. 5. Participants described the program as having challenged their typical ways of thinking. On participant explained, You have ideas and you have be- liefs and you have philoso- phies about why things hap- pen. But if you dont get challenged, you believe what you do is the right thing. If you get the challenge, then you [have to] sit back and think about it. Two aspects of the pro- gram were frequently men- tioned as being especially challenging: (1) the logic and process for encouraging BAE Systems business units to work together as a total sys- tem so that the organizational whole would be more valu- able than the sum of the parts and (2) the process for shift- ing HR outcomes from HRs doables to HRs strategic value to the business. 6. The program enhanced the participants ability to con- tribute to their management teams. Several managing di- rectors told stories about their HR direc- tors enhanced effectiveness as a result of their participation in the Strategic HR Development Program. One managing director said that his HR director guided the top management team through two reorganizations involving restructuring, training, reward/recognition structures, and collective bargaining. As a result of such HR interventions, the employees in this managing directors business now We now constantly remind ourselves, What is it that were here to do? To make sure that the HR services . . . improve the performance of the business. We have to keep remembering that. Thats the challenge, to keep that in front of us all the time. Human Resource Management DOI: 10.1002/hrm 492 HUMAN RESOURCE MANAGEMENT, Fall 2006 ask him during his quarterly review meetings in the plants, So how are we doing against profit? This was a big change from their previous com- ments along the lines of Were not very happy because toilets dont work. The managing direc- tor stated, We were able to raise the level of conversation to where we were engaged in the business. It feels really good to be part of that. Another managing direc- tor observed, Our HR director fa- cilitated the integration of teams, conditions, and working practices across the business.. . . He was able to rapidly go through those issues, so that we had . . . a much more stable outlook in terms of the conditions that apply to our workforce than many other busi- nesses had. . . Having the HR di- rector on board and understand- ing the critical business issues makes a material business differ- ence. Continued Development Managers throughout BAE Systems consider that the Strategic HR Development Program has achieved its goals. As a result, the organ- ization not only continues to train HR pro- fessionals in strategic positions, but also is beginning to implement a similar program aimed at HR professionals in more junior programs that target mid-level professionals and recent college graduates. The intent is to ensure that the entire HR community is forg- ing ahead in the same business-focused di- rection. As BAE Systems completes the train- ing for its client-facing HR professionals and begins to provide similar training for HR pro- fessionals in lower-ranking positions, they have identified areas for improvement in the program as well. Four possible improve- ments have been proposed: 1. The program needs to occur in the con- text of structural role clarification. Sev- eral client-facing HR professionals and their line clients remain unclear on the full details of the new roles and responsi- bilities of the client-facing HR profes- sionals. They suggested more formal and detailed definitions of the new HR roles and their evaluation criteria. 2. There needs to be a more explicit linkage between the 360-degree competency as- sessments at the beginning of the pro- gram and each program component. 3. One participant suggested that it would be useful to have explicit discussions about how to keep from slipping back into the old habits of traditional HR. 4. There also needs to be greater emphasis on how to effectively manage relation- ships with the outsourced transactional HR operations in Xchanging. Summary and Conclusion The BAE Systems Strategic HR Development Program is an example of an effective devel- opmental program. The program occurred in the context of demands that HR add greater value to the business. The program was de- signed and delivered to meet the criteria for an effective professional development inter- vention. The business conditions of BAE Systems are highly dynamic. On the outside, the de- fense industries in the United Kingdom and the United States are becoming more global and more competitive. Defense technology is changing at a fast pace. Capital markets have been increasingly pressuring the com- pany for greater returns. At the time of this study, the company recently had gone through a major merger and was still work- ing through the cost savings as well as the synergistic mandates from the investment community. Its customers were becoming more demanding, requiring greater integra- tion and internal synergy. Its HR department had spun off much of the traditional HR transactional work into a service center, and pressures were on the remaining HR profes- sionals to add greater value to the business. In this high-demand context for greater return on HR investments, the BAE Systems As BAE Systems completes the training for its client-facing HR professionals and begins to provide similar training for HR professionals in lower-ranking positions, they have identified areas for improvement in the program as well. Human Resource Management DOI: 10.1002/hrm The Development of Strategic Human Resource Professionals at BAE Systems 493 HR professional development program was designed to supply higher value-added de- partmental capabilities and individual HR professional competencies. The initial phase of the program focused strongly on raising the aspirations of HR professionals by pro- viding a powerful vision of HRs potential as a central business contributor. It encouraged detailed discussions on current concepts and research concerning HRs impact on business performance; the emerging roles of HR rela- tive to key external stakeholders; the pri- macy of HRs responsibility for the human side of the business; and HRs mandate to create competitive advantage. Overall, the program focused on devel- oping those HR competencies that have been supported empirically as having the greatest impact on business performance. The pro- gram strongly emphasized team-based appli- cationboth in the classroom and on the job. Back-home application of key concepts was a critical element of the program. Fi- nally, external vendors with no involvement in the program measured its effectiveness. These vendors obtained empirical data re- garding key program elements from internal line clients along with extensive anecdotal results from program participants. Our purpose in this article was twofold. First, we described the design and delivery of an HR professional development program in- tended to increase the capabilities and com- petencies of an HR department in adding strategic value to a company. Second, we evaluated this program based on our knowl- edge of the most effective content and process for professional development. By ac- complishing these goals, we hope the HR profession will have a better idea of how to enhance its ability to add greater value to business results. Human Resource Management DOI: 10.1002/hrm RYAN W. QUINN is an assistant professor of leadership and organizational behavior at the Darden Graduate School of Business at the University of Virginia. He received his PhD from the University of Michigan. Professor Quinn studies high-impact conversations, ad- dressing topics such as coordination, change, social practices, energy, flow, power, and courage. He has published in journals such as Administrative Science Quarterly and Academy of Management Review and consults on topics related to change management. WAYNE BROCKBANK is a clinical professor of business at the Ross School of Business at the University of Michigan, where he serves as the director of the Center for Strategic HR Leadership and the number-one-rated senior HR executive programs. His research and consulting focus on linkages between HR and business strategy and emerging high value-added agendas of the HR profession. He has published widely in Human Resource Management, Human Resource Planning, and Personnel Administrator. He is a principal in RBL Consulting (www.rbl.net) and consults in his areas of expertise with major clients on every continent. NOTES 1. This current article is not intended to provide an in-depth review of the Human Resource Compe- tency Study. For a complete review of this study, see Brockbank and Ulrich (2003). 2. Kevin Greene, a strategic HR consultant from a firm named Qtab, is now the chief learning officer at Royal Mail. 3. The overall program was evaluated by partici- pants at 4.8 on a five-point scale with 1 = low and 5 = high. 4. We cannot claim that the relationship between the program and these results is causal; however, given that no other major development initiatives occurred during the same time period, causality is a strong possibility. 494 HUMAN RESOURCE MANAGEMENT, Fall 2006 REFERENCES Adler, P. S., & Lawler, E. E., III. (1999). Who needs MBAs in HR? 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Or should there be an Ulrich & Brockbank (2003) entry added to the References? Please advise. AQ2: Should see be seek? AQ3: Should Survey be Study, as earlier in the ar- ticle? AQ4: I did not find a citation for Fink (2003) citation in the text. Please add an appropriate citation or delete this entry. AQ5: I did not find a citation for Schn (1983) citation in the text. Please add an appropriate citation or delete this entry. AQ6: I did not find a citation for Schn (1990) citation in the text. Please add an appropriate citation or delete this entry. Human Resource Management DOI: 10.1002/hrm
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