comparing line and hr executives' perceptions of hr effectiveness: services, roles, and...

HR Effectiveness • 111

COMPARING LINE AND HR EXECUTIVES’PERCEPTIONS OF HR EFFECTIVENESS:SERVICES, ROLES, AND CONTRIBUTIONS1

Human Resource Management, Summer 2001, Vol. 40, No. 2, Pp. 111–123© 2001 John Wiley & Sons, Inc.

Patrick M. Wright, Gary C. McMahan, Scott A. Snell, andBarry Gerhart

This study compares HR and line executives’ evaluations of the effectiveness of the HR functionin terms of its service delivery, roles, and contributions to the firm. Survey responses from 44 HRand 59 line executives from 14 companies indicated that (a) HR executives consistently rated thefunctions’ effectiveness higher than did line executives, and (b) the greatest differences wereobserved on the more important and/or strategic aspects of HR. Implications for improving HReffectiveness are discussed. © 2001 John Wiley & Sons, Inc.

Introduction

“The constant worry of all personnel admin-istrators is their inability to prove that theyare making a contribution to the enterprise.Their preoccupation is with the search for a‘gimmick’ that will impress their manage-ment associates. Their persistent complaintis that they lack status”.

Peter Drucker, The Practice of Manage-ment, (1954), p. 205

“Nestling warm and sleepy in your company,like the asp in Cleopatra’s bosom, is a de-partment whose employees spend 80% oftheir time on routine administrative tasks.Nearly every function of this department canbe performed more expertly for less by oth-ers. Chances are its leaders are unable todescribe their contribution to value addedexcept in trendy, unquantifiable and

wannabe terms....I am describing your hu-man resource department, and have a mod-est proposal: Why not blow it up”?

Thomas A. Stewart, Fortune, 1/15/96, p.105

The search for status and respect withinthe organization has plagued the field of Hu-man Resources for over 40 years. During theera of downsizing, reengineering, andoutsourcing, it became apparent that HR ex-ecutives’ intuitive belief that the services, roles,and contributions of the HR function werecritical to firm success, may not be shared bytheir line colleagues. In the face of calls forblowing up the HR function (Stewart, 1996),HR executives increasingly have become con-cerned with being able to demonstrate the HRfunction’s value to the firm (Ulrich, 1997).

The challenge of this task is to convinceline executives that HR is providing a value-

The search forstatus andrespect withinthe organizationhas plagued thefield of HumanResources forover 40 years.

112 • HUMAN RESOURCE MANAGEMENT, Summer 2001

added contribution to the firm in order to gainequal footing with other functional areas inthe decision-making process. While a num-ber of techniques, measures, and models havebeen proposed, it seems that it might first beimportant to gather actual data on how theHR function is being evaluated by these linecolleagues, and to determine if their percep-tions are consistent with those of HR execu-tives. By analyzing the level of agreement ordisagreement, it may be possible to strategizemore effective ways to provide, document, andcommunicate the value-added of HR. Thus,the purpose of this study was to explore howboth line and HR executives perceived the ef-fectiveness of the HR function.

Evaluating HR’s Contributions

Attempts to demonstrate the value of HR havefocused in a few areas. First, HR executiveshave sought empirical evidence tying HR to firmperformance with divergent results. Consider-able progress in demonstrating that HR prac-tices can contribute to firm performance hasbeen made as recent research shows signifi-cant returns from investments in HR practicesthemselves (AMJ Special Issue, 1996; Becker& Gerhart, 1996; Becker, Huselid, Pickus, &Spratt 1997). For example, Huselid (1995)found that HR practices were related to turn-over and to corporate financial (both account-ing and market) performance measures. Delery& Doty (1996) found evidence that certain HRpractices were consistently related to the finan-cial performance of banks, while others wereonly related under certain strategies.

Less satisfying, however, are a numberof studies which have found that the HRfunction’s involvement in strategic planningexhibits no relationship with firm perfor-mance. For example, Bennett, Ketchen, &Schultz (1998) found that the extent to whichHR was linked to strategic business planningwas related to turnover but was unrelated toperceived effectiveness of the HR depart-ment, perceived profitability, and sales peremployee. Wright, McMahan, McCormick,& Sherman (1998) found a strong relation-ship between HR’s involvement in strategicplanning and the evaluation of HR functioneffectiveness, but in a sample of petrochemi-

cal refineries, neither of these was related tooperating performance.

A second approach has been to demon-strate the value of HR through theoreticalmodeling. For example, Wright, McMahan, &McWilliams (1994) used the resource-basedview of the firm to analyze how HR can pro-vide human resources that are valuable, rare,inimitable, and non-substitutable, thus fulfill-ing the criteria of a source of sustainable com-petitive advantage. Lado & Wilson (1994) alsorelied on the resource-based view of the firmto examine how HR practices could createcompetitive advantage. Heskett, Sasser, &Schlesinger (1997) described the Service-Profit Chain which highlights the importanceof people (and consequently HR) in generat-ing profits. Yeung & Berman (1997) provideanother model showing how HR practicescontribute to employee satisfaction and orga-nizational capability which are then related tocustomer and shareholder satisfaction.Boudreau & Ramstad (1997) similarly discussthe relationships among what HR does (ac-tivities), what HR makes happen (attitudes,behavior, capability) and business success(customer value-added, financial perfor-mance). While these models provide extensivetheoretical rationale for the value-added ofHR, they only describe the potential ratherthan observed value.

A third approach is to use actual HRmetrics as a means of showing where the HRfunction stands in performing its tasks rela-tive to either other firms or its own past per-formance on these metrics. For example,Fitz-enz (1980, 1984, 1990) at the SaratogaInstitute has done extensive work in gather-ing efficiency indicators for a large number ofHR activities. While models are quite usefulfor both internal analyses of areas of poten-tial improvement in service delivery and docu-mentation of actual improvements, they maynot provide line executives with convincingevidence of any actual value added.

Finally, one could assess HR effectivenessthrough surveying its customers. For example,Tsui (1990) examined how managers and su-pervisors, line executives, and human resourcemanagers and executives rated the importanceand effectiveness of the HR function. Ulrich(1997) has suggested conducting an HR au-

Heskett, Sasser,& Schlesinger(1997) describedthe Service-Profit chainwhich highlightsthe importanceof people (andconsequentlyHR) ingeneratingprofits.


dit as part of a balanced scorecard approachto evaluating the effectiveness of the HR func-tion. Huselid, Jackson, & Schuler (1997) ex-amined how HR effectiveness related to firmfinancial performance and assessed effective-ness by surveying HR and line executives. Theydistinguished between “technical” and “stra-tegic” HRM effectiveness and found that thesurvey measures of strategic, but not techni-cal HRM effectiveness, were consistently re-lated to measures of corporate performance.

Balanced scorecards assess performancewith regard to the three major organizationalstakeholders: investors, customers, and employ-ees. The HR audit can assess the practices, pro-fessionals, or department/function. One aspectof this audit is the customer value survey, whereemployees as user/customers of the HR pro-grams and practices indicate their evaluationsof the value of these practices. Ulrich notes thatone weakness of such an approach is that whileemployees may know what they want, they maynot know what is best for the firm.

This problem is alleviated, however, if thesurvey is conducted among top line executives.For a number of reasons these executives maybe the best source of evaluative information.First, they are users of the services both asindividuals who are subject to them, and asmanagers who have a vested interest in theseservices/practices having the maximal positiveimpact on employees. Second, they have moreextensive knowledge of what might be best forthe firm and are in a unique position to evalu-ate the tradeoffs between services that mightbe desired by employees but would put thefirm at financial disadvantage. In fact, theseindividuals are in the ideal position to makedecisions regarding how to balance the desiresof and returns to shareholders, customers, andemployees.2 Finally, while employees are animportant customer group, ultimately, for thereasons cited above, top line executives serveas HR’s most important customer. Thus, weapproached evaluating the effectiveness of theHR function by surveying the top line and HRexecutives within our sample of firms.

Evaluating HR: Services, Roles, andContributions

The previous discussion points to the value ofattempting to evaluate HR via a high level

customer survey. One must next decide theaspects of the function to assess. Ulrich (1997)noted that the HR audit could evaluate theHR practices, professionals, and/or the depart-ment itself. Given the nature of our sample,we decided to evaluate three aspects of HR:services, roles, and contributions.

One major aspect of HR is the delivery ofHR services (or practices) such as staffing/succession planning systems, compensationsystems, and training and development sys-tems. These systems form the main architec-ture of the HR system and consist of thepractices through which the firm seeks to cre-ate a skilled, motivated, and committedworkforce. They resemble the items that com-prise Huselid et al.’s (1997) measure of “tech-nical” HRM effectiveness.

For this reason we went beyond evaluat-ing just the effectiveness of HR with regard tothese services. Given the current talent wars(Fishman, 1998) and the increased recogni-tion that people can be a source of sustain-able competitive advantage (Barney & Wright,1998; Pfeffer, 1998; Ulrich, 1998), we wantedto assess the extent to which executivesthought that the various HR services were im-portant to their firm’s competitive advantage.Thus, with regard to each of the HR services,we assessed both the importance of the ser-vice and HR’s effectiveness in delivery.

In addition to the specific HR services,one could evaluate HR’s effectiveness in per-forming various roles. A number of research-ers have sought to classify the various rolesthat HR plays (e.g., Foulkes & Morgan, 1977).Most recently, Ulrich (1998) has proposed thatHR plays four basic roles.

1. “Management of Strategic HumanResources” consists of aligning HRstrategies and practices with the stra-tegic needs of the business.

2. “Management of Firm Infrastructure”deals with the delivery of efficient HRprocesses such as staffing, training, ap-praisal, and reward systems.

3. “Management of Employee Contribu-tion” concerns keeping close tabs onemployees’ needs and problems andseeing that these needs are met andproblems are solved.

… whileemployees are animportantcustomer group,ultimately, forthe reasons citedabove, top lineexecutives serveas HR’s mostimportantcustomer.


4. “Management of Transformation andChange” refers to HR’s role in chang-ing both the culture of the firm andthe processes used within the firm.

In this study we broke the roles down indifferent ways, but they are ways that capturethe essence of the roles proposed by Ulrich(1998).

1. The “Strategic Partner” role focuseson HR’s participation in and influenceover the formulation of strategy.

2. The “Tailoring Practices” role high-lighted the role of HR in strategyimplementation. It deals with tailor-ing HR practices to support the busi-ness strategy once it is formulated.

3. “Providing HR Services” encompassesHR’s role in providing the basic ser-vices discussed in the HR Servicesdiscussed above.

4. “Providing Change Consulting” refersto HR’s role in helping line executivesto effectively manage cultural and or-ganizational change.

5. “Developing Organization Skills andCapabilities” deals with HR’s role inidentifying and/or developing criticalorganizational core competencies orcapabilities.

In large part, these roles more closelyresemble the kinds of activities that com-prise Huselid et al.’s (1997) “strategic” HRMeffectiveness.

The last aspect to HR we chose to as-sess in this study was its contributions, andthis served as more of an overall evaluationof the function. The HR contributions com-ponent sought to evaluate how executivesfelt the HR function was being run and howit was contributing to the firm on differentdimensions. For example, the executivesrated how HR contributed to the firm’s com-petitive position, bottom line, core compe-tence, and human capital.

As the opening quotes illustrate, HR haslong held a reputation for being a functionthat entirely attends to administrivia and pro-vides little value to the firm. The numerousanecdotes regarding how HR budgets get

slashed during financially challenging times,as well as recent appearance (and by no meansuniversal) of HR executives on top manage-ment teams indicate that for all the effort, HRstill seldom receives internal recognition as avaluable function to the business. On the otherhand, the fact that some firms have integratedHR into strategic planning, and the increas-ing recognition of the potential importance ofHR services due to the skill shortage/talentwars, might lead one to believe that HR hasattained a more respectable reputation. Thus,in this study we sought to answer the follow-ing questions:

Research Question 1: How important doline and HR executives think HR ser-vices are to the firm’s competitive ad-vantage?

Research Question 2: How effective doline and HR executives think the HRfunction is in terms of delivering ser-vices, fulfilling its various roles, andcontributing to the firm?

Research Question 3: Are there differencesbetween HR and line executives intheir evaluations of the HR functionalong these dimensions?

Given the popular perception alluded toin the quotes at the beginning of the paper,we expected to find considerable differencesbetween HR and line executives on all thesedimensions. Our working hypotheses were thatHR executives would give significantly higherratings than would line executives on both theimportance of HR services and all of the ef-fectiveness measures.

Method

The survey results were part of a larger in-depth study of how firms use people as asource of competitive advantage and the roleof the HR function in doing so. Firms thatwere corporate sponsors of either the Centerfor Effective Organizations at the Universityof Southern California, the Center for Hu-man Resource Management at Texas A&M,or the Center for Advanced Human ResourceStudies at Cornell University (a total of ap-proximately 100 different companies) were

The “StrategicPartner” rolefocuses on HR’sparticipation inand influenceover theformulation ofstrategy.


invited to participate in the study. At least twomembers of the research team visited each of14 participating United States firms and spentone to two days on site interviewing the topHR (Vice President [VP] and his/her directreports) and line (all corporate VPs or VP/GMsof a strategic business unit) executives. Theinterview lasted between 30 and 60 minutes.At the end of the interview we distributed asurvey and asked the interviewees to completeit and mail it back in a self-addressed postagepaid envelope. The HR survey differed fromthe line survey only in the addition of somescales regarding the integration of HR prac-tices; however, the items reported here wereidentical across the two surveys.

The 14 firms in the sample were all large(mean number of employees was approxi-mately 46,000; median approximately 42,000)and represented a variety of industries includ-ing banking, energy, processed food, insur-ance, computers, food service, transportation,chemicals, and pharmaceuticals. Twelve of thefirms were publicly traded, and on averagewere in the top quartile of their industries interms of revenues, market share, and profit-ability. Two of the firms are on the Fortune1998 “100 Best Companies to Work For” list,and five of the firms ranked in the top 100 onthe Fortune’s 1997 “Most Admired Compa-nies” list.

Measures

HR Services. HR service delivery consisted of15 items displayed in Appendix A. These itemsdescribed the services delivered by the HRfunction such as “Maintaining an equitablecompensation system which controls costswhile ensuring that top performers are re-tained,” “Maintaining performance-basedincentives to motivate individuals to focus onachieving strategic goals,” and “Maintainingeffective staffing systems and succession plansto ensure a steady supply of managerial tal-ent.” These items were generated with thehelp of two Senior VPs of HR based on theirexperience in evaluating and communicatingHR services to line executives.

Respondents were to answer to each ofthe items on two different scales. First, theywere to indicate the relative importance of

each of the HR functions in terms of theirimportance in “maintaining and/or improv-ing this organization’s competitive position.”Coefficient alpha estimates were .85 and .90for HR and line respectively. Second, theywere asked to rate the “current performance”of the HR department for each of the func-tions. The coefficient alpha reliability of thescale was .87 for line and .79 for HR respon-dents. Both ratings were made on 1 (VeryUnimportant/Ineffective) to 7 (Very Impor-tant/Effective) scales.

HR Roles. HR roles were those assessedby McMahan, Mohrman, & Lawler (1996) intheir scale. Respondents were asked to ratethe effectiveness of the HR function in termsof the roles “Providing HR Services,” “Pro-viding Change Consulting Services,” “Being aBusiness Partner,” “Developing OrganizationSkills and Capabilities,” and “Tailoring Prac-tices to Fit Business Needs.” These roles wereassessed on a 1 (Not Meeting Needs) to 10(All Needs Met) scale. Coefficient alpha esti-mates of .87 and .89 were observed amongthe line and HR respondents, respectively.

HR Contributions. HR contributionswere assessed by asking respondents to ratetheir agreement with 10 statements regard-ing HR’s contribution using a 1 (Not at All)to 7 (To a Great Extent) scale. The itemsare displayed in Appendix A, but sampleitems include: “This department has helpedto enhance the firm’s competitive position,”and “This department contributes to build-ing and/or maintaining the firm’s core com-petence.” These items were generated bythe researchers. The internal consistencyreliability of this scale was .90 among theHR and .91 among the line respondents.

Results

The basic research questions dealt with therated level of importance and effectiveness ofthe HR function and differences between HRand line executives in these ratings. Figures1–4 illustrate the actual ratings which assessthe level of effectiveness. To examine differ-ences between HR and line executives, weused a number of multivariate and univariateanalyses. First, we conducted a MANOVA withall four of the scales. This analysis revealed a

The 14 firms inthe sample wereall large (meannumber ofemployees wasapproximately46,000; medianapproximately42,000) andrepresented avariety ofindustriesincludingbanking, energy,processed food,insurance,computers, foodservice,transportation,chemicals, andpharmaceuticals.


significant difference between the two groupson a linear composite of the four scales (F =4.96, df = 4, 98, p < .001). We then con-ducted MANOVA’s for each of the scales,using the items as the multiple dependentvariables. These analyses revealed significantdifferences for service delivery importance (F= 2.21, df = 15, 82, p < .01); service deliveryeffectiveness (F = 1.79, df = 15, 80, p < .05);HR role effectiveness (F = 3.78, df = 5, 96, p< .01); and a marginally significant effect forHR Contributions (F = 1.79, df = 10, 90, p =.07). We then chose to conduct a series of t-tests to assess the differences between lineand HR executives in these ratings for eachitem. In addition, we used correlational analy-ses to look at agreement in relative ratingswhich are discussed below.

With regard to the HR services, as canbe seen in Figure 1, there were few signifi-cant differences between line and HR ex-ecutives in the rated importance of thevarious services. In fact, where significantdifferences were observed (compensation,user-friendly benefits, and legal issues; allt-values > –2.12, p’s < .05), line executivesrated the services as more important than

did HR executives. In addition, correlatingthe mean ratings from each group acrossitems resulted in a correlation of .77 (p <.01). These results are quite promising intwo ways. First, they demonstrate that theline executives view a number of HR activi-ties as being critical to the firm’s success.Second, they indicate that HR and line ex-ecutives tend to agree on both the actualimportance and relative importance of vari-ous HR services.

Only a few significant differences betweenresponses from line and HR executives wereobserved on the effectiveness ratings (see Fig-ure 2). HR executives rated HR’s effectivenesssignificantly higher on 4 (training, employeecommitment, HR initiatives, and responsiveness,all t-values > 2.11, p’s < .05) items and higher,although not significantly, on another 9 of theremaining 11. A significant difference betweenline and HR executives existed in the averageratings across the whole set of services. On theother hand, the correlation between the aver-age ratings of line and HR across the items was.89 (p < .01). Thus, these results seem to indi-cate that HR executives provide higher actualratings overall, but agree considerably with line

FIGURE 1. Importance of HR Service Delivery Areas.

5.8

6.4

5.6

6.1

4.7

5.1

5.75.8

5.45.6 5.6

5.1

5.8

6.2

5.0

5.3

6.05.7

4.85.0 5.1

5.35.5 5.6

4.7

5.24.9

5.4

5.0

5.4


executives with regard to the relative effective-ness of HR in providing a variety of HR services.

Finally, we noticed a trend for the activi-ties deemed to be most important to also bethose on which HR was deemed to be leasteffective among both groups. Thus, we corre-lated the mean importance and effectivenessratings across the various items. We foundcorrelations of –.19 and –.21 among the lineand HR executives, respectively. This indicatesthat both line and HR executives perceive HRas being more effective at delivering the lessimportant services and vice versa.

As can be seen in Figure 3, HR and lineexecutives also differ with regard to theirperceptions of the extent to which the HRfunction is adequately fulfilling its variousroles. Again, the results indicate consensusregarding the relative effectiveness, but di-vergence regarding the absolute effective-ness across these roles. Line and HRexecutives agreed with regard to what roleHR is best fulfilling (HR Services) and leastfulfilling (Change Consulting). Significantdifferences were observed, however, for allfive roles (t-values all > 3.27, p’s < .001),with HR executives giving between .8 and1.6 scale points higher ratings on these items

relative to the line executives.Finally, and most troubling, Figure 4 il-

lustrates that HR and line executives also dif-fer in their ratings of HR’s contributions tothe success of the firm. In this case, there waslittle agreement regarding either the relativeeffectiveness or the absolute effectiveness.Regarding the absolute levels of effectiveness,HR executives gave significantly higher rat-ings than did line executives on seven of theten items (t-values all < 2.28, p’s < .05). Non-significant differences were observed only for“providing useful information,” “providing acoordinated set of practices,” and “practicesthat support the business plan.” In addition,great gaps were observed on the three mostimportant firm performance criteria: enhanc-ing competitive position (1.2 scale points),providing a value-added contribution (.9 scalepoints), and building core competence (.6scale points). Finally, regarding the relativeagreement, HR executives gave the highesteffectiveness ratings on the items of value-added contribution, enhancing competitiveposition, and responsive to customer needs (allat 5.0 after rounding), while the first two itemsreceived two of the three lowest ratings (3.8and 4.1) from line executives.

FIGURE 2. Effectiveness of HR Service Delivery Areas.

4.8

4.5 4.54.3

4.94.7

4.6

4.1 4.1 4.04.2

3.8 4.0

3.6

5.5 5.4

4.5

3.8 3.8 3.9

4.3

3.8

4.2

3.6

4.7

5.0 4.94.8

3.8 3.8


Discussion

In light of both the increasing importanceof a firm’s human resources in today’s com-petitive environment and recent calls for“blowing up” the HR function, we examinedhow line and HR executives viewed the im-portance and effectiveness of the HR func-tion. Our study reveals some interesting in-sights regarding the perceived effectivenessof HR within our set of firms. While the re-sults may at first glance seem disheartening

for HR executives, we believe that they arequite promising.

On the positive side, first, our study dem-onstrates that top line executives believe thata number of HR activities are critical to thefirm’s competitive advantage. Line executivesgave average importance ratings above 6 on a7-point scale to the equitable compensationsystem, performance-based incentives, andstaffing/succession planning system items.These ratings indicate that line executivesincreasingly believe that the attraction, selec-tion, retention, and motivation of employees

FIGURE 3. Effectiveness of HR Roles.

FIGURE 4. Effectiveness of HR Contributions.

7.3

6.1 6.1

4.7

6.6

5.3

6.5

5.2

6.9

5.3

4.5

3.9

5.1

4.4

4.8

4.3

5.0

3.8

5.0

4.1

4.8

4.2

4.8

4.2

4.7

4.34.6

4.44.7

4.4


(particularly managerial talent) are critical totheir firm’s future success and that the effec-tive delivery of services provided by HR areintegral to the firm’s competitive advantage.

In addition, the high levels of agreementbetween line and HR executives regarding therelative importance and effectiveness of thevarious HR services indicate that HR execu-tives seem well aware of where they should bedevoting effort. They share with line execu-tives the beliefs regarding both what are themost important HR services, and what are theareas of HR service delivery in greatest needof improvement. These quantitative results,along with the interviews we conducted, re-veal that HR executives are focusing consid-erable resources toward developing and/orimproving systems aimed at the attraction,motivation, and retention of top performers.

On the somewhat negative side, while lineexecutives see HR services as important andagree with HR executives regarding the rela-tive importance and effectiveness of these ser-vices, there seems to be less agreementregarding the absolute effectiveness of thefunction in delivering HR services. We ob-served four significant differences between HRand line executives across the 15 items. Inaddition, the overall mean across services wassignificantly higher for HR relative to the lineexecutives. Even more problematic is the factthat the items on which significant differenceswere observed were the ones that dealt withthe issues of major import, i.e., the attraction,development, and retention of people (com-munication, training, and commitment) andHR’s strategic involvement (HR initiatives,responsiveness). Thus, it appears that line ex-ecutives do not evaluate the performance ofthe HR function as being as effective as doHR executives.

The results with regard to roles elicit con-siderable concern as well. In this case, all fiveroles (described on page 19) saw line execu-tives giving significantly lower ratings than HRexecutives. The good news is that the highestratings from line executives came on the “Pro-viding HR Services” role, results somewhatconsistent with those discussed above; how-ever, over a full scale-point difference existedon all of the other items, each of which dealtwith the more modern strategic responsibility

of HR (Ulrich, 1998). Thus, it appears thatline executives seem to view HR as being bestat providing basic HR services but are not quiteas impressed with HR’s effectiveness in con-tributing to the business.

In fact, the HR contributions results sup-port this interpretation. HR executives gavesignificantly higher ratings than did line ex-ecutives on 7 of the 10 items as well as acrossthe summed scale. Additionally, the largestdifferences between the two groups were onratings regarding HR’s contributions to thefirm’s competitiveness and its value-addedcontribution. Less difference was observedon items such as “providing useful informa-tion,” “providing a coordinated set of HRpractices” and “providing practices that sup-port the business plan.”

In sum, the results of this study seem toprovide support for the notion that HR ex-ecutives and line executives differ somewhatin their perceptions of the effectiveness ofthe HR function. More importantly, the dif-ferences are greatest regarding HR’s effec-tiveness in playing a strategic role thatprovides a value-added contribution to thefirm. These results should not elicit despair,however, but rather analysis and action. Thefact that line executives give lower ratingsthan do HR executives may be due to one orany combination of four factors, and theseare discussed below.

First, the most obvious explanation couldbe that the HR function simply is not deliver-ing on the services, roles, and contributionsexpected. Few would argue that this is not atleast partially true in their organization—thereis always room for improvement. The impli-cation of this factor is to focus on improvingthe skills of HR employees and on improvingthe delivery of HR services. All firms in ourstudy indicated that this was a major empha-sis within their HR function. In fact, the firmsin our sample were interested in participatingin this study because all were well into effortsto transform their HR functions to be morestrategically focused, and while they recog-nized that they had room to improve, they feltthat they were farther along than most firms.

This quest to become strategic actuallypresents a dilemma for HR executives. By pro-moting a strategic, value-added role for HR,


HR professionals may be raising expectationsfor line executives that are difficult to meet.In fact, in the firm with the lowest differencebetween HR and line executives in their evalu-ations of effectiveness, our interviews withexecutives there indicated that the similarityof ratings stemmed not from HR executing astrategic role better, but rather from line ex-ecutives expressing lower expectations (i.e., ofa more adminstrative role).

Second, the differences may be symptom-atic of the traditional line/staff conflict. Lineexecutives seldom view staff functions as hav-ing as critical a relationship to firm success asdoes the line function. In addition, our inter-views with the line executives indicated thatsome were not thoroughly familiar with all ofthe activities in which HR was engaged, norall of the ways in which it was contributing.Given this, it is not surprising that they wouldhave a tendency toward evaluating any stafffunction (e.g., accounting as well as HR) asnot being overly effective. One would expectthat were the data to have been with regard tothe accounting function, we would observesimilar (if not worse) results.

To the extent that this is causing differ-ences in perceptions of effectiveness, it im-plies that HR executives need to do a betterjob of internally marketing the activities of HRand demonstrating their contributions to thefirm’s success. At the cynical end of this mar-keting recommendation was one HR execu-tive who said, “When line executives don’tunderstand the importance of what we pro-vide, I want to suggest that our function juststop working on anything for one day and seehow the organization runs.” A more positiveapproach might be to invest in the develop-ment of some metrics to tie HR activities tothe value creation process and to ensure thatperformance on these metrics becomes regu-lar feedback to line executives.

Third, it is important to note that HR ser-vices or programs often fail to meet optimumperformance not because the systems devel-oped by HR are poor, but because line man-agers fail to implement these systemseffectively. In fact one line executive in oursample pointed out that line executives in hisorganization criticized the compensation sys-tem and blamed it on HR, when in reality the

problem was line executives reluctance or fail-ure to implement it properly (i.e., to make thetough calls on variations in individual bo-nuses). This may stem from a fundamentalattribution error. Attribution theory posits andresearch has supported that individuals tendto attribute success to themselves or internalcauses and failure to others or external causes(Weiner, 1995). Thus, it is entirely possiblethat when line executives fail to properlyimplement HR systems, they attribute the fail-ure to the HR system, rather than to their ownefforts. To the extent that this is causing theseobserved differences, it implies that HR needsto devote more effort to working with line ex-ecutives through influence, training, and com-munication to help them effectively implementthe systems developed by the HR function.

Fourth, these results may stem from lineexecutives lack of ownership over HR servicesif they are not involved in their design. “Buy-in” from executives increases to the extent thatthey participate in both the development andimplementation of a number of HR services.Our results indicate that line executives ratethe highest importance on activities in whichthey are involved in the delivery of the actualpractice (e.g., staffing, performance manage-ment, etc.), but also rate these low in effec-tiveness. Their participation in the deliverymay raise their standards or cause them to zeroin on flaws and weaknesses that stem frompoor or inadequate design. Thus, involvingthem in the design may be one way of ensur-ing that they are satisfied with the practice onthe delivery end. For this reason, firms suchas Halliburton Energy Services have createdoversight committees made up of a numberof line executives to have input into the de-sign and delivery of major HR services suchas training and development.

Conclusion

Our study examined the importance and ef-fectiveness of HR from the viewpoints of bothtop level line and HR executives. The resultsindicate that both line and HR executives rec-ognize the potential importance of HR activi-ties to the firm’s competitive advantage, andthat both groups agree regarding HR’sstrengths and weaknesses in delivering those

Line executivesseldom view stafffunctions ashaving as criticala relationship tofirm success asdoes the linefunction.


services. The results also point to the fact thatline executives do not give nearly as high marksas HR executives do when it comes to evalu-ating HR’s effectiveness.

These results should not send HR execu-tives into a state of depression, but rather beused as the basis for action plans. Given thatline executives recognize the potential impor-tance of HR, the key issue is whether or not

HR functions can more effectively deliver onthe services, roles and contributions, or moreeffectively demonstrate and communicatetheir already existing effectiveness in theseareas. This is a challenge that while difficultis certainly attainable in our field. In light ofboth the historical and recent criticisms of HRnoted at the outset and in the results we ob-served, the time for action is now.

PATRICK M. WRIGHT is Professor of HR Studies, Chair of the HR Studies Department,and co-director of Executive Education in the School of ILR, Cornell University. Heteaches and conducts research in the area of Strategic Human Resource Management.He has published over 40 refereed articles and over 20 book chapters, coauthored twotextbooks, and coedited two special research volumes on Strategic HRM in the 21stCentury. He currently serves on six editorial boards and has consulted or conductedexecutive education programs with over 30 organizations.

GARY C. MCMAHAN is currently Vice President, Chief People Officer and CorporateSecretary of Builder Homesite, Inc. while on leave from the faculty of Management atthe University of Texas at Arlington. His Ph.D. in Management is from Texas A&MUniversity, his M.B.A. with a concentration in Human Resource Management is fromThe George Washington University, and his B.S. in Administration and Policy is fromOakland University. Dr. McMahan’s primary research interest is on the strategic role ofhuman resources in organizations. In addition, Dr. McMahan has consulted or con-ducted research in over 40 organizations.

SCOTT A. SNELL is Professor of Management in the Smeal College of Business Admin-istration at Pennsylvania State University. He also serves as Research Director for PennState’s Institute for the Study of Organizational Effectiveness. He teaches in the area ofstrategy and human resource management and is a frequent speaker at conferencesand executive education programs. Professor Snell is coauthor of two books, ManagingHuman Resources (2000), and Management: Competing in the New Era (2001), as wellas several articles on the strategic management of human resources.

BARRY GERHART is Professor of Management and Human Resources and the Dean’sResearch Scholar, School of Business, University of Wisconsin-Madison. His majorfields of interest are human resource management and strategy, compensation, andbusiness performance. He serves or has served on six editorial boards and, in 1991 hereceived the Scholarly Achievement Award from the Human Resources Division, Acad-emy of Management. Professor Gerhart has published numerous refereed publicationsand book chapters, is coeditor of the recent book, Compensation in Organizations, andco-author of Human Resource Management: Gaining a Competitive Advantage, now inits 3rd edition.


HR Services1. Maintaining an equitable compensation

system that controls costs while en-suring that top performers are re-tained.

2. Maintaining performance-based incen-tives to motivate individuals to focuson achieving strategic goals.

3. Providing labor relations and preventa-tive labor support to business partnersand front-line managers.

4. Providing training and developmentprograms to enable front-line manag-ers to maximize their performancepotential.

5. Providing performance managementprograms to develop and motivatebusiness partners and front-line man-agers.

6. Communicating and marketing keybusiness and human resource initia-tives to business partners and frontline managers.

7. Maintaining effective staffing systemsand succession plans to ensure asteady supply of managerial talent.

8. Controlling benefit costs, particularlyhealth care and sick leave.

9. Developing HR initiatives that contrib-ute to achieving current and futurebusiness goals.

10. Tracking important measures andtrends (e.g., productivity, turnover,sick leave) to identify potential prob-lem areas.

11. Developing HR initiatives to respondto potential problem areas as notedabove.

12. Developing initiatives that help buildemployee commitment.

13. Maintaining employee/user friendlybenefits administration programs.

14. Maintaining programs and providingsupport to business partners and front

line managers to ensure compliancewith legal regulations (OSHA, EEO,etc.).

15. Developing initiatives to exploit thevalue of a diverse workforce.

HR Roles1. Providing HR Services2. Providing Change Consulting3. Being a Business Partner4. Developing Organization Skills and

Capabilities5. Tailoring Practices to Fit Business

Needs

HR Contributions1. The HR department is performing its

job the way I would like it to be per-formed.

2. This department is very responsive tomeeting customer (front-line manag-ers and employees) needs.

3. This department provides me with use-ful and timely information regardingHR issues.

4. This department has helped to enhancethe firm’s competitive position.

5. This department provides value-addedcontributions to the firm’s bottom line.

6. This department contributes to build-ing and/or maintaining the firm’s corecompetence.

7. This department contributes to building thefirm’s human capital (employees/manag-ers) as a source of competitive advantage.

8. The policies, practices, and procedurescoming from the HR department helpfront-line business partners in their jobs.

9. The HR department has developed a well-coordinated set of policies, practices,and procedures.

10. The HR policies, practices, and proce-dures help support the firm’s businessplan.

APPENDIX A


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1. This study was partially funded by grants fromthe Society for Human Resources ManagementFoundation, Human Resource Planning Society,and the Center for Advanced Human ResourceStudies (CAHRS) at Cornell University. Interpre-tations, conclusions, and recommendations, how-ever, are solely those of the authors and do notnecessarily represent those of the SHRM Founda-

REFERENCES

tion, HRPS, or CAHRS. All correspondence regard-ing this manuscript should be addressed to the firstauthor.2. We do not mean to argue that top line executivesalways make good decisions regarding these tradeoffs;in fact, often they make terrible ones. They do, how-ever, have both ultimate responsibility for these deci-sions and are in a position to make them.

ENDNOTES

comparing line and hr executives' perceptions of hr effectiveness: services, roles, and...

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