How can HR contribute to an organization's bottom line?

The skills of a company's HR professionals are more critical than ever. A 2007 study conducted by the Ross School of Business at the University of Michigan revealed that 20 percent of an organization's business results are tied to that company's HR department.

HR already wants to contribute to the bottom line, but now they need to know how. To ensure that they bring the most value to their businesses, HR professionals must be adept in six major competency areas, according to the study. The vital competency areas are:

1. Credible activist. HR professionals must be both credible and active. They need to be trusted, respected, admired, listened to and, above all, have a point of view and take a position.

2. Culture and change steward. HR professionals recognize, articulate and help shape a company's culture. The authors of the study suggest that culture involves a pattern of activities, rather than a single event. It starts with being clear about the expectations of external customers, and then translates these expectations into internal employee and organizational behaviors.

3. Talent manager/organization designer. HR professionals master theory, research and practice in both talent management and organization design. Talent management focuses on how individuals enter, move up, across or out of the organization. Organization design focuses on the capabilities an organization has that are embedded in the structure, processes and policies that shape how the organization works. Good talent without a supporting organization will not be sustained, and a good organization will not fully deliver without good talent.

4. Strategy architect. HR professionals need to have a vision for how the organization can win in the future and play an active part in the establishment of the overall strategy to deliver this vision.

5. Operational executor. HR professionals execute the operational aspects of managing people and organizations, such as drafting, adapting and implementing policies. HR professionals also ensure that employees' basic needs-including pay, relocation, hiring and training-are efficiently delivered through technology, shared services and/or outsourcing.

6. Business ally. HR professionals contribute to the success of the business by knowing the social context or setting in which their companies operate. They know how the business makes money, who their customers are and why they buy the company's products or services. And they have a basic understanding of the functions of various corporate departments such as finance and marketing so they can help the business make money.