O

ver the past decades, scholars in the

HRM field have conducted a range
of conceptual and prescriptive work
regarding the competencies of
human resource professionals. Pub-
lications have focused on the types of com-
petencies that HR managers should hold to
be effective (e.g., Burke, 1997; Ulrich, Brock-
bank, Yeung, & Lake, 1995), the roles that
HR managers play in organizations (Beer,
1997; Mohrman & Lawler, 1997), and the
sources of HRM competencies (Buckley &
Monks, 2004). The purpose of the current
article is to explore the relationships be-
tween HR competency and HR effectiveness
in a sampling of Taiwanese high-technology
firms.
The issue of what comprises a particular
competency is ubiquitous within the HRM
literature, and the construct is not defined
consistently. Hoffmann (1999) provided a
recent overview on the various meanings of
competency. He cited three definitions: (1)
observable performance (Boam & Sparrow,
1992; Bowden & Masters, 1993); (2) stan-
dard or quality of the outcome of the per-
sons performance (Hager, Athanasou, &
Gonczi, 1994; Rutherford, 1995); and (3) un-
THE HR COMPETENCIESHR
EFFECTIVENESS LINK: A STUDY IN
TAIWANESE HIGH-TECH
COMPANIES
JI AN HAN, PAUL CHOU, MI NSTON CHAO, AND
PATRI CK M. WRI GHT
This article explores the relationship between HR competencies and HR ef-
fectiveness as perceived by line managers and employees within 39 surveyed
Taiwanese high-tech firms. The data were collected from multiple constituen-
cies in the form of four targeted surveys, and the analysis was conducted at
the firm level. Respondents included 182 high-level executives, 152 HR man-
agers, 320 line managers, and 1,262 employees. Results suggest that in the
Taiwanese high-tech context, HR competencies of field expertise and change
management are strongly related to HR effectiveness as perceived by line
managers and employees, while business knowledge is not. Managerial im-
plications and future research direction are also discussed in the article. This
study contributes to a better understanding of HRM competencies and HR ef-
fectiveness within an international context. 2006 Wiley Periodicals, Inc.
Correspondence to: Jian Han, Department of Organizational Management, Guanghua School of Manage-
ment, Peking University, Beijing, China 100871, Phone: +86 1062756275, Fax: +86 1062751463, E-mail:
jianhan@gsm.pku.edu.cn
Human Resource Management, Fall 2006, Vol. 45, No. 3, Pp. 391406
2006 Wiley Periodicals, Inc.
Published online in Wiley InterScience (www.interscience.wiley.com).
DOI: 10.1002/hrm.20114
392 HUMAN RESOURCE MANAGEMENT, Fall 2006
derlying attributes of a person (Boyatzis,
1982; Sternberg & Kolligian, 1990). He also
argued that the rationale for the use of com-
petencies could determine the definition
given to the term in a particular instance.
In this article, we define and measure HR
competency using Hoffmans third perspec-
tive. In this view, we relate competency to a
persons underlying attributes,
such as their knowledge, skills,
or abilities. This definition fo-
cuses on the efforts required by
individuals in order for them to
be competent or effective in
their workplace performance.
This definition differs from the
other definitions of competency
in which the term is treated as a
measure of individual output
(Hoffmann, 1999).
The approach that defines
competency as individual knowl-
edge, skills, and/or abilities is not
new. American scholar David Ul-
rich and his University of Michi-
gan colleagues (i.e., Wayne
Brockbank, Dale Lake, and
Arthur Yeung) have taken similar
approaches when defining and
measuring competencies (e.g.,
Becker, Huselid, & Ulrich, 2001;
Ulrich et al., 1995). From 1988 to 1998, they
continually developed and empirically
tested dimensions of HR competency. Their
resulting data supported at least three com-
petency domainsknowledge of business,
field expertise, and change management. Be-
cause this competency stream is so far the
most comprehensive within the literature,
we chose to adopt it as our framework to as-
sess HR competency in the study we con-
ducted in Taiwan.
HRM and HR Competency Research
in Taiwan
For the past two decades, the fast-changing
business marketplace in Taiwan has forced
companies on the island to increasingly ex-
hibit dynamic capabilities to maintain their
edge. These attributes include agility, flexi-
bility, self-renewal, and the ability to quickly
develop and learn new commercial applica-
tions. While Taiwan has become an impor-
tant source for a variety of products and serv-
ices in the global marketplace, the nation
has faced keen competition from other de-
veloped and developing countries. In order
to maintain its competitive advantage, Tai-
wanese firms have increasingly recognized
and emphasized HRMs importance in meet-
ing their objectives.
HRMs history as a major profession in
Taiwan is not long. Its emergence there has
been driven by environmental changes such
as globalization and the rapid pace of tech-
nological change. Since multinational com-
panies, including RCA, General Instruments,
and Motorola, entered Taiwan in the 1970s,
the nations enterprises began practicing in-
dustrial relations (IR) management. Al-
though such foreign firms brought knowl-
edge of employee relations into Taiwan,
most HRM over the past decade simply fo-
cused on traditional personnel administra-
tion practices (Zhu, Chen, & Warner, 2000).
However, continuing technological ad-
vancement moved the Taiwanese economic
structure from a labor-intensive to a more
technology- and/or capital-intensive market-
place. Enterprises gradually began to realize
they could not compete in world markets
without maintaining competent human cap-
ital. Consequently, companies have become
more willing to invest in people and have
utilized HRM practices to enhance their
human capital (Huang, 2003).
Winning the war for talent has become
a pragmatic issue of survival, and as this
need has become more critical, well-trained
HRM professionals have moved from for-
eign-invested companies to local firms.
This movement has accelerated the diffu-
sion of HRM knowledge and practices
within the Taiwanese business community.
In addition, some leading universities such
as the National Central University and Na-
tional Sun Yat-Sen University moved to es-
tablish HRM graduate programs in the early
1990s. The programs have provided a
steady supply of HRM professionals to Tai-
wanese firms.
For the past two
decades, the fast-
changing business
marketplace in
Taiwan has forced
companies on the
island to
increasingly exhibit
dynamic capabilities
to maintain their
edge.
Human Resource Management DOI: 10.1002/hrm
The HR CompetenciesHR Effectiveness Link: A Study In Taiwanese High-Tech Companies 393
The field has also become of far greater
interest to the management research com-
munity, indicating its importance to both
academia and business. Liu, Pang, and Lin
(2003) analyzed Taiwanese HRM trends by
reviewing 117 HRM articles from seven
local management periodicals (five of them
are listed in the Taiwan Social Science Cita-
tion Index) from 1993 to 2002. Results in-
dicate that the number of HRM articles
more than tripled, growing from seven in
1993 to 23 published in 2002. This dramatic
increase within a decade reflects HRMs
prominence within the management field
in Taiwan.
We have developed our study with the
following factors in mind. First, while the HR
function has become an important factor in
helping organizations achieve a competitive
advantage (e.g., Becker & Huselid, 1998;
Wright & Snell, 1998), the knowledge, skills,
and capabilities of professionals who de-
velop and implement HRM practices have
not been thoroughly studied within Asia.
HRM as a management field is in its rela-
tively early stages in Asia compared to its
Western counterparts.
Second, we acknowledge that HR effec-
tiveness is a very broad construct, and con-
ceptually it should reflect diverse needs and
desires. Most related studies offer HR effec-
tiveness ratings only from high-level execu-
tives and not from other organizational con-
stituencies. In this study, we take a different
perspective and use HR effectiveness rated
by line managers and employees as the de-
pendent variables. In other words, we assess
the performance of HR professionals as in-
ternal service providers to employees and
line managers.
Third, in practice, Taiwanese companies
have learned and adopted considerable HR
knowledge, techniques, and methods from
Western counterparts and multinational
firms to formalize their HR practices since
the 1970s (Zhu et al., 2000). Yet there is lim-
ited evidence that Western HR competency
models are transferable to the Taiwanese
context. These Western models may have
limited implications for recruiting, selecting,
and educating Taiwanese HR professionals.
Finally, our study design has some
methodological advantages in that we have
directly collected HR competency and HR ef-
fectiveness data from multiple sources. They
include executives, HR managers, line man-
agers, and employees. This provides a more
balanced and less biased view, with the aim
of providing incremental insights into the
research and development of Taiwanese HR
professional competencies.
Hypothesis Development
Our study analyzes the relation-
ship between HR competencies
and perceived HR effectiveness
within Taiwanese firms. The hy-
pothesized relationship is based
on both scholarly studies and
practical considerations. In previ-
ous strategic HRM research, sev-
eral studies considered the effec-
tiveness of HRM professionals in
enhancing business planning
processes and organizational ef-
fectiveness.
For example, based on institu-
tional theory, Huselid, Jackson,
and Schuler (1997) argued that
HRM could gain legitimacy and
acceptance from stakeholders by
meeting or exceeding expecta-
tions. Specifically, organizations
can maximize HR effectiveness by
having HR professionals who pos-
sess field expertise such as recruit-
ing, training, and compensation
in order to provide the best possi-
ble internal services to employees
and line managers. HR profes-
sionals should also have business
competencies that enable them to design a
series of internally consistent HR policies
and practices that contribute to their firms
business objectives.
Furthermore, drawn from theories of or-
ganizational life cycles, structures, power,
population, and ecology, Welbourne and her
colleagues measured HRs value in part by ex-
amining whether firms had human resource
departments (Welbourne & Andrews, 1996)
the knowledge,
skills, and
capabilities of
professionals who
develop and
implement HRM
practices have not
been thoroughly
studied within Asia.
HRM as a
management field is
in its relatively early
stages in Asia
compared to its
Western
counterparts.
Human Resource Management DOI: 10.1002/hrm
394 HUMAN RESOURCE MANAGEMENT, Fall 2006
and whether such firms had HR executives
who directly reported to CEOs (Welbourne &
Cyr, 1999). Their study results suggest that
firms in actively changing or fast-
growing companies most likely
benefit from having HR depart-
ments or by having senior HRM
executives reporting to a firms
CEO, thus implying that HRM
may serve as a catalyst to add
value for such organizations.
The relationship between HR
competency and HR effectiveness
is also of great concern to corpo-
rate executives and HR profes-
sionals. As the strategic role of
HRM is emphasized and invest-
ment in HRM practices is in-
creased, organizations begin to
seek answers about the effective-
ness of their HR departments.
Questions remain regarding
whether HR functions respond
adequately to help organizations
adjust to changing business envi-
ronments, conduct business ef-
fectively, and/or provide services
that meet internal customer
needs. Because the function is
made up of a number of HR pro-
fessionals, one would expect
competencies to be related to HR
effectiveness.
Any profession consists of a
body of knowledge and/or a set of
skills by which the profession is
defined, and the field of HR is no
different. Again, HR competency
in this study is defined as HR staff
members knowledge, skills, and
capabilities that directly influ-
ence HR functions and perform-
ance. As noted, Ulrich et al. (1995) identified
three general competencies required of HR
executives: business knowledge, field expert-
ise, and change management. In our study,
we discuss how these three competencies af-
fect HR effectiveness perceived by HR inter-
nal customers: line managers and employees.
If, in fact, the human capital within Tai-
wanese businesses is becoming more and
more important to success in a competitive
marketplace, then one would expect that
those tasked with the responsibility for de-
signing, developing, and, in some cases, de-
livering the systems that attract, select, train,
motivate, and retain human capital would
be a critical resource. As such, others within
the organization would develop reasonably
strong opinions regarding the performance
of the HR function.
In forming these evaluations of how well
HRM contributes to business success, HR
stakeholders would likely consider general
acquisition, motivation, and retention of
employees an important part of the HR func-
tion. Thus, the extent to which stakeholders
believe that systems and processes for ac-
complishing such objectives are effectively
developed and implemented strongly relate
to their beliefs of HR effectiveness.
Hypothesis 1: Firm-level HR staffs field expert-
ise is positively related to HR effectiveness as
perceived by employees and line managers.
Second, while the general acquisition,
motivation, and retention of talent is impor-
tant, these processes must be aligned with
business needs. In one sense, this step deals
with fitting practices to strategy, but more
generally, it entails respondents believing
that HR professionals understand the impor-
tant levers of the business (e.g., product de-
mand cycles, cost concerns, and other fac-
tors) and are acquiring, motivating, and
retaining people in ways that enable the
business to achieve its operational and fi-
nancial objectives. Accordingly, the extent to
which respondents believe that those in the
HR function have knowledge of the busi-
ness will rate them more favorably in terms
of effectiveness.
Hypothesis 2: Firm-level HR staffs knowledge of
business competency is positively related to
HR effectiveness as perceived by employees
and line managers.
Third, drawn from scholarly and practi-
tioner literature (Lawler & Mohrman, 2000,
2003; Ulrich et al., 1995), HR change-man-
Questions remain
regarding whether
HR functions
respond adequately
to help organizations
adjust to changing
business
environments,
conduct business
effectively, and/or
provide services
that meet internal
customer needs.
Because the
function is made up
of a number of HR
professionals, one
would expect
competencies to be
related to HR
effectiveness.
Human Resource Management DOI: 10.1002/hrm
The HR CompetenciesHR Effectiveness Link: A Study In Taiwanese High-Tech Companies 395
agement competency must include knowl-
edge of and being sensitive to the organiza-
tions internal and external environment, in-
volvement in organizational planning,
design and development of strategies, and
being able to apply HR information systems
to gather and analyze employee data in ways
that contribute to forming and implement-
ing organizational development or change.
Rapid economic development in the wider
Asia Pacific region and increasing competi-
tion beyond this region has prompted Tai-
wanese firms to continue to develop their
dynamic capabilities such as flexibility, self-
renewal, and the ability to learn quickly. As a
consequence, Taiwanese firm HR stakehold-
ers expect the HR function not only to fulfill
their traditional administrative role, but also
to perform as an internal change agent or
leader to support strategic initiatives, to help
upgrade employee skills and knowledge, and
eventually to help to create an overall capac-
ity to change and develop the organization.
Hypothesis 3: Firm-level HR staffs change-man-
agement competency is positively related to
HR effectiveness perceived by employees and
line managers.
Methods
Survey Procedure and Sample
Using a survey, we collected data from 39
companies in Taiwan during the fall of 2004.
We began by sending invitations and mak-
ing phone calls to executives in 65 compa-
nies. Forty companies agreed to participate.
At the time of data analysis, 39 companies
returned their documents.
More than 90% of participating compa-
nies are local firms in the technology sector.
The firms produce a diverse array of products,
including computer software, computer
hardware, semiconductors, telecommunica-
tions, and bio-tech products. More than 65%
of the firms have survived more than a
decade, while 35% are less than ten years old.
Fifty-one percent of the firms have more than
500 employees, 41% have 100500 staffers,
and 8% employ fewer than 100 people.
We asked company contacts to estimate
the surveys required and sent packets con-
taining appropriate numbers of four survey
versions to be distributed to four sets of re-
spondents within each firm: executives, HR
managers, line managers, and employees. HR
competency data were collected from execu-
tives and HR professionals, because we be-
lieved these groups held the best under-
standing of HR knowledge, skills, and
abilities. HR effectiveness ratings were col-
lected from line managers and employees,
since these groups are internal HR
customers with the most to say
about its effectiveness.
To better separate the survey
versions for analysis, we used sep-
arate titles and different paper
colors to distinguish each. We
also provided sealed envelopes to
help ensure confidentiality of re-
turned documents.
We sent 2,281 surveys.
Among the 1,916 returned, 182
were completed by high-level ex-
ecutives, a response rate of 73.4%;
152 were from HR managers (re-
sponse rate of 87.4%); 320 were
line managers (response rate of
77.3%); and 1,262 were nonman-
agerial employees (response rate
of 87.4%). The final overall sam-
ple included 39 firms and more than 1,900
observations at the individual level. These re-
sponse rates are unusually high in strategic
HRM research.
Our survey design allowed us to avoid
single-response bias and ensured more reli-
able measures by collecting data from multi-
ple respondents in each group (Gerhart,
Wright, McMahan, & Snell, 2000). Two is-
sues have plagued much of firm-level HRM
research. First, a number of studies have used
single respondents for all study measures
(both independent and dependent vari-
ables), resulting in the possibility of com-
mon method or percept-percept bias in ob-
served relationships. Second, using only
single respondents has been demonstrated to
result in unreliable organizational-level
measures (Wright, Gardner, et al., 2001). In
Our survey design
allowed us to avoid
single-response bias
and ensured more
reliable measures
by collecting data
from multiple
respondents in each
group.
Human Resource Management DOI: 10.1002/hrm
396 HUMAN RESOURCE MANAGEMENT, Fall 2006
our study, the average numbers of execu-
tives, HR managers, line managers, and em-
ployees who returned the survey from each
firm were five, four, eight, and 32, respec-
tively. These numbers allowed us to examine
relationships without concern for common
method variance, and to provide more reli-
able measures than would have been possi-
ble with single respondents. In later sections,
we will assess firm-level variable reliability
and discuss related issues.
Instrument and Measures
Whenever applicable, we use established
measures. As noted, most HR competency
items were adapted from the established
measures of Ulrich et al. (1995). The instru-
ment was first independently translated into
Chinese by three HR researchers. They met
to discuss their translations and provided a
single version of a Chinese inventory. Two
bilinguals who had no knowledge of the
original English inventories then independ-
ently translated the Chinese inventory back
into English. They met for a discussion and
provided a single version of the translation.
A native-English speaker then examined the
two versions of the English inventories. Any
discrepancies between the two versions were
verified in the Chinese translation for accu-
racy. These procedures were followed to en-
sure the translated versions were comparable
to the originals in English (Brislin, 1970).
HR competency measures were included
in the surveys provided to executives and HR
managers. HR effectiveness measures were
included in the executive surveys, the line
manager surveys, and employee surveys. All
four versions consisted of company and in-
dividual profile items.
HR Competency
HR competencies measured 33 items adapted
from the HR professional competency items
developed by Ulrich et al. (1995). These
items cover three aspects of HRM competen-
cies, including business knowledge, field ex-
pertise, and change management. These
items are listed in Appendix A.
HR Effectiveness
HR effectiveness was assessed by ten items
(see Appendix B) generated by Wright,
McMahan, Snell, and Gerhart (2001). These
items were used to evaluate line-manager
and employee perceptions of HR effective-
ness.
Results
Our analyses consisted of two phases. In the
first phase, we used confirmatory factor
analysis (CFA) to reveal three-dimensional
structures of the HR competency construct.
CFA was conducted at the individual level.
In the second phase, we aggregated individ-
ual responses from each firm at the firm level
and conducted regression analysis to verify
the hypothesized relationships between HR
competency and effectiveness.
Confirmatory Factor Analysis of
HRM Competencies
Since our survey items on HR competency
were adapted from the HR professional com-
petency items by Ulrich et al. (1995), we
used CFA to confirm that our dataset col-
lected from Taiwanese firms exhibited a
three-dimensional structure. We first com-
Human Resource Management DOI: 10.1002/hrm
Chi-square (CMIN) DF CMIN/DF NFI RFI IFI CFI RMSEA
Three-factor
correlated model 1662 492 3.38 0.958 0.952 0.970 0.970 0.086
T A B L E I
Model Fit of CFA Model on HR Competency Data Collected from Executives and HR
Managers (Analysis Conducted at Individual Level)
The HR CompetenciesHR Effectiveness Link: A Study In Taiwanese High-Tech Companies 397
bined the survey results from executives and
HR managers to form a single dataset in
which each firm contained survey results
from an average of eight individuals. We
then used AMOS 4.0 to conduct CFA at the
individual level over the 33 items on HR
competency. Goodness-of-fit indices are in-
cluded in Table I. The discrepancy/df
(CMIN/DF) index is 3.38, which is marginal.
Usually between 2 and 3 is considered ac-
ceptable (Carmines & McIver, 1981). The
normal fit index is 0.96, which is acceptable
(Bentler & Bonett, 1980). The relative fit
index (RFI) and incremental fit index are
0.95 and 0.97, respectively. Both values are
close to 1 and are reasonable. The compara-
tive fit index (CFI) compares the model with
the baseline independence model and is
0.97, above the 0.90 acceptable range. The
root mean square error of approximation
(RMSEA) of the model is 0.086, which is
weakly acceptable (Browne, Cudeck, Bollen,
& Long, 1993). Overall, we felt that the
model fit of the HR competency with three-
dimensional data were acceptable, but the fit
was not so strong.
We further looked into reasons why the
model fit is not strong. We found that one
particular reason is that the field expertise
factor has strong correlation with the
change management factor (r = 0.797, p <
0.001) from the CFA result (Table II). Further
analysis using exploratory factor analysis
(EFA) from the executive data, and then CFA
with data from the HR manager and staff,
show that a two-factor structure in which
field expertise and change management
were combined into one factor had a better
fit, but the advantage was not substantial.
Therefore, for hypothesis testing, we still
used the three-factor structure with existing
items developed by Ulrich et al. (1995). The
results for the above EFA and CFA on two-
factor structure are available from the au-
thors but are omitted from this article.
Relationship Between HR
Competency and Perceived HR
Effectiveness
To test the main hypotheses, we needed to
regress perceived HR effectiveness measured
from line managers and employees on the
HR competencies measured from executives
and HR managers. Since these measures were
collected from difference sources, our regres-
sions needed to be completed at the firm
level. Thus, as a first step, we aggregated in-
dividual-level measures on the three HR
competency dimensions as well as perceived
HR effectiveness to the firm level. The aggre-
gation process is displayed in Figure 1, with
dotted arrow lines indicating the data aggre-
gation from individual level to firm level and
the solid arrow lines indicating the positive
relationship between HRM competencies
and HR effectiveness.
We assessed the reliability of the data ag-
gregation by analyzing the intraclass correla-
tions (ICCs) of each measure. Results are re-
ported in Table III. For our purposes, ICC(2)
is a direct measure of aggregation reliability,
since it reflects the reliability of the means of
the firm-level measures aggregated from in-
dividual-level values. The results show that
perceived HR effectiveness has excellent ag-
gregation reliability (ICC(2) = 0.83), while
HR competency measures have marginal reli-
ability. The main reason is that perceived HR
effectiveness is aggregated from an average
Human Resource Management DOI: 10.1002/hrm
Factor 1 Factor 2
Factor 1. Field expertise
Factor 2. Business knowledge 0.542***
Factor 3. Change management 0.797*** 0.458***
*** p < 0.001
T A B L E I I Correlation Matrix from the CFA Analysis
398 HUMAN RESOURCE MANAGEMENT, Fall 2006
of 40 individuals in each firm, while the HR
competency measures are only aggregated
from an average of eight individuals. An-
other possible reason is that the survey data
do not reflect strong enough rater agreement
within each firm and strong enough hetero-
geneity between the firms (as shown by low
ICC(1) values), which is consistent with past
research (Gerhart, Wright, McMahan, &
Snell, 2000a).
After aggregating individual-level meas-
ures to the firm level, we computed descrip-
tive statistics of the measures (shown in
Table IV). The Cronbachs alphas show the
reliability of measures when averaged among
all survey items used to develop the corre-
sponding measure. All measures have good
reliability, indicating that the measures de-
veloped from survey items are reliable. We
also tested the normality of the measures,
which indicates whether the data distribu-
tion of a measure is normally distributed, a
requirement needed for regression analysis.
All four measures passed the normality test.
The correlations among HR competency
measures match the analysis from CFA (Table
II): all three measures positively correlate,
with field expertise and change management
highly correlated (r = 0.856, p < 0.001). The
correlations between the HR competency
measures and perceived HR effectiveness
show that field expertise and change man-
Human Resource Management DOI: 10.1002/hrm
FIGURE 1. Aggregation of the Individual Variables to the Firm-Level Variables
Within-Firm Between-Firm K = Number of
Variance
2
Variance Raters per Firm ICC (1) ICC(2)
Field expertise 0.638*** 0.093* 8.31 0.13 0.55
Business knowledge 0.666*** 0.088* 8.31 0.12 0.52
Change management 0.728*** 0.068* 8.31 0.09 0.44
Perceived HR effectiveness 0.847*** 0.104*** 39.90 0.11 0.83
a
* p < 0.05, ** p < 0.01, *** p < 0.001.
ICC (1) = /(+
2
), ICC(2)= K * ICC1 / [ 1 + (K-1)* ICC1].
T A B L E I I I Intraclass Correlations for Competency and Effectiveness Measures
a
The HR CompetenciesHR Effectiveness Link: A Study In Taiwanese High-Tech Companies 399
agement are positively correlated, while the
correlation between business knowledge and
perceived HR effectiveness is not significant.
To test Hypotheses 1 to 3, we regressed
the measure of perceived HR effectiveness on
each of the measures of HR competency. For
each regression, we added firm size as a con-
trol variable since the difference in a firms
size may affect its HR profile and compe-
tency. Results are reported in Table V.
Our results also show that field expertise
and change management have strong posi-
tive relationships to perceived HR effective-
ness after adding controls based on a firms
size. The F-values of the regressions are 9.37
with p < 0.001 and 5.91 with p < 0.01, and
the regression weights are 0.49 with p <
0.001 and 0.40 with p < 0.01. However, busi-
ness knowledge has an insignificant relation-
ship with perceived HR effectiveness (both
the F-value and the regression weight are in-
significant). Therefore, our regression results
strongly support Hypotheses 1 and 3 but re-
ject Hypothesis 2.
Furthermore, we put all three HR compe-
tency measures together in a regression to
test their combined effects on HR effective-
ness. Results show that the effects are signif-
icant (F-value = 4.86 with p < 0.01), and
among the three HR competencies, field ex-
pertise has a positive and significant effect
on perceived HR effectiveness (regression
Human Resource Management DOI: 10.1002/hrm
Cronbachs Correlations
Mean S.D. alphas 1 2 3
1. Field expertise 4.827 0.432 0.95
2. Business knowledge 5.228 0.435 0.91 0.614***
3. Change management 4.908 0.445 0.89 0.856*** 0.395*
4. Perceived HR effectiveness 4.829 0.363 0.94 0.572*** 0.092* 0.483**
* p <0.05, ** p <0.01, *** p < 0.001.
N = 39.
T A B L E I V Descriptive Statistics, Correlations, and Reliability Measures for the Constructs
Model 1. Field Model 2. Business Model 3. Change Model 4. All
expertise to knowledge to management to competency measures
perceived HR perceived HR perceived HR to perceived
effectiveness effectiveness effectiveness HR effectiveness
Field expertise 0.488*** 0.678*
Business knowledge 0.223 0.168
Change management 0.401** 0.095
Firm size 0.041 0.014 0.041 0.054
Adjusted R-square 0.306 0.025 0.205 0.289
F-value 9.367*** 1.490 5.914** 4.856**
a
* p < 0.05, ** p < 0.01, *** p < 0.001.
T A B L E V Regressions of the Measure of Perceived HR Effectiveness on HR Competency Measures
a
400 HUMAN RESOURCE MANAGEMENT, Fall 2006
weight = 0.68 with p < 0.05). The effects of
business knowledge and change manage-
ment are not significant. Business knowledge
is not correlated with perceived HR effective-
ness, while change management holds a
high correlation with field expertise, and
thus there is high collinearity in the regres-
sion.
Discussion
The data analysis of this study
reveals several results. First, the
HR competency of field expertise
was a strong predictor of per-
ceived HR effectiveness. Within
this sample, the results suggest
that in the minds of two major
constituencies, line managers
and employees, the most effec-
tive HR operations are those with
professionals who are well skilled
in HR basics.
Second, business knowledge
was virtually unrelated to per-
ceived HR effectiveness. This re-
sult runs counter to the basic HR
paradigm within the United
States, which presupposes that
business acumen among HR pro-
fessionals is one of the most critical factors
necessary for HR success. However, several
possible explanations exist for this result.
From the ICC analysis (Table III), we notice
that business knowledge has low ICC(2) val-
ues, indicating that data aggregation is not
reliable for firm-level, individual ratings of
this competency. The correspondent be-
tween-firm variances are insignificant, im-
plying that there is little within-firm agree-
ment on the ratings. Such disagreement may
be due to differing perceptions among indi-
viduals on HR business knowledge or simply
difficulty in observing such knowledge in
daily practice.
Further, our stakeholder groups, line
managers and employees, may not truly be
in a position to evaluate HR business knowl-
edge, because this competency is unlikely to
be observed by them directly, and this
knowledge would have an impact only at
higher organizational levels. One could hy-
pothesize that had we assessed effectiveness
from the standpoint of executives, we might
have found a stronger relationship between
such business knowledge and effectiveness.
Finally, the nonsignificant result be-
tween business knowledge and HR effective-
ness may indicate that HRM in Taiwan is
mostly a personnel management function
rather than a strategic partner in firm opera-
tions. If HR staff mainly deals with field-spe-
cific functions such as recruiting and train-
ing without gaining much knowledge of the
companys operations, business knowledge
would be perceived as less important. The
HR function in Taiwanese firms has a shorter
development history than its American
counterparts, and it may take more time for
Taiwan HR professionals to become strategic
decision makers.
In addition, the change-management
competency in HR demonstrates mixed re-
sults across single and multiple regressions as
a predictor of perceived HR effectiveness.
Two insights might be drawn from these re-
sults. On the one hand, the analysis may in-
dicate that the dimensional construct of HR
competency distinctions, such as between
the factors of field expertise and change
management, may require further explo-
ration. Second, the significant result of the
single regression shows that items measuring
change management may be a strong predic-
tor of perceived HR effectiveness. Therefore
knowledge, skills, and abilities included in
this dimension should also be considered as
required competencies for successful HR pro-
fessionals in Taiwan.
Practical Implications
For practicing managers in Taiwan and for-
eign firms who are willing to have business
relationships with Taiwanese firms, our
study results may bolster the argument that
HR field expertise may be the most impor-
tant factor in pleasing HR internal cus-
tomers. As a consequence, our study suggests
that professional training and education for
such professionals should focus on basics
such as field knowledge. This knowledge in-
The HR function in
Taiwanese firms has
a shorter
development history
than its American
counterparts, and it
may take more time
for Taiwan HR
professionals to
become strategic
decision makers.
Human Resource Management DOI: 10.1002/hrm
The HR CompetenciesHR Effectiveness Link: A Study In Taiwanese High-Tech Companies 401
cludes recruiting, staffing, training, and
compensation, all of which are perceived as
strong predictors of HR effectiveness by line
managers and employees.
Further, although change management is
not a significant predictor of HR effective-
ness in the multiple regression due to multi-
collinearity, the significant result of the sin-
gle regression between change management
and HR effectiveness suggests that HR pro-
fessionals in Taiwan are also likely to in-
crease their effectiveness if they master the
skills and abilities necessary to support a
companys strategic planning and change
management. Specific skills in this regard
may include applying human resources in-
formation systems to collect and analyze
data in ways that support strategic decision
making; adapting HR activities to internal
and external change; and building relation-
ships necessary for change.
Limitations and Future Research
It is important to address our studys relative
strengths and weaknesses. First, with regard
to sample size, the 39 firms we surveyed pro-
vide limited power for testing relationships
at the firm level. However, despite limited
statistical power, significant results were still
observed. In addition, while the N of 39
seems small, it actually reflects the aggrega-
tion of more than 1,900 responses.
Second, although we took great effort to
increase reliability through the aggregation
across multiple respondents, some reliability
problems remained. As Gerhart, Wright,
McMahan, and Snell (2000) and Gerhart,
Wright, and McMahan (2000) have demon-
strated, single-respondent measures of orga-
nizational phenomena are sometimes unreli-
able, and the use of multiple respondents
can result in more reliable findings. In this
study, we intended to increase the reliability
of the study by using multiple responses
from multiple sources within organizations.
This intense data-collection effort enabled us
to gather information from an average of
five executives per firm, four HR managers,
eight line managers, and 32 employees.
However, the effort may have resulted in less
than ideal data-aggregation reliability (i.e.,
ICC(2)).
Future research could improve reliabil-
ity from two perspectives. First, the ques-
tionnaires could be designed more carefully
to improve within-firm agreement. In our
survey, we asked about business knowledge
among HR professionals. This factor may
have been difficult for raters to assess as a
competency dimension if they had not di-
rectly observed relevant behaviors during
daily contact with HR professionals. There-
fore, ratings are likely to be in-
consistent across different raters
from one organization, leading
to low data-aggregation reliabil-
ity. Second, although we col-
lected data from multiple
sources within an organization,
we need to include additional
respondents from each of the
sources to achieve greater relia-
bility. And, in future studies, we
may need to include both per-
ceptual and objective measures
(cost per hire, time to hire,
and/or turnover) to better meas-
ure HR effectiveness.
Third, to some extent, our
data confirmed the three-factor
construct of HR competency de-
veloped by Ulrich et al. (1995)
namely, knowledge of business, field expert-
ise, and change management. However,
additional EFA and CFA show that a two-fac-
tor construct, with business knowledge as
one factor and a combination of field ex-
pertise and change management as another
factor is a better fit for our dataset. This re-
sult may be due to the raters in our sample
perceiving that both HR field expertise and
change management represent the people
side of the organization, whereas business
knowledge in general represents the strat-
egy side. We remain uncertain.
Finally, a related issue is that in this study
we used some items created in the Western
context a decade ago to measure HR compe-
tencies. Additional items should be included
to measure current HR professional compe-
tencies in Taiwan, in part to see whether the
although we took
great effort to
increase reliability
through the
aggregation across
multiple
respondents, some
reliability problems
remained.
Human Resource Management DOI: 10.1002/hrm
402 HUMAN RESOURCE MANAGEMENT, Fall 2006
construct is bound by social or cultural con-
cerns. In addition, it would be useful to have
some objective, non-questionnaire-based
measures of HR effectiveness to gauge the va-
lidity of the perceptual measures.
Conclusion
While HRM has become more important in
the increasingly competitive business envi-
ronment that characterizes Taiwan, our
study reveals that the strategic side of HRM
may currently be of limited value. Impor-
tant HR stakeholders seem to consider effec-
tiveness of HR as consisting of delivering
traditional HR services and programs. This
situation certainly existed in the United
States up until 10 to 15 years ago. We expect
that such a transformation in Taiwan may
mirror that of the U.S. situation, with an in-
creasing emphasis on business knowledge
and the strategic side of HR being ob-
served by HR professionals within the not-
so-distant future.
Human Resource Management DOI: 10.1002/hrm
JIAN HAN is an assistant professor of human resource management and organizational
behavior in the Guanghua School of Management, Peking University, China. She earned
her PhD in human resource studies from the School of Industrial and Labor Relations,
Cornell University. Dr. Hans research interests include strategic human resource man-
agement, employee recruitment, employer brand, diversity management, human re-
source competency, and multilevel analysis. Her research has been accepted for publica-
tion in journals such as Personnel Psychology, Organizational Research Methods, and the
Academy of Management Best Paper Proceedings. Dr. Han is also one of the key investi-
gators in a strategic HRM project funded by the National Science Foundation of China.
PAUL CHOU is a doctoral candidate in human resource management in the School of
Management, National Central University, Taiwan. He has worked as an HR practitioner
for 28 years in several multinational companies, such as Arthur Andersen, Payless Shoe
Source, Dow Chemical, Motorola, and General Instruments. Before enrolling in the PhD
program in 2002, he was senior HR vice president of Compal Computer Co., a local Tai-
wanese company that is ranked fifth in the manufacturing section in Taiwan. His current
research interests include human and social capital development, competency-based
management, performance management, and leadership development. He has pub-
lished two articles in Chinese about social capital and community development.
MINSTON CHAO is a PhD candidate in human resource management at National Sun
Yat-Sen University, Taiwan. He was a visiting student at the School of Industrial and
Labor Relations, Cornell University. He has authored numerous articles and conference
papers on strategic human resource management and labor relations. He has worked
for multinational companies as an HR manager for many years. Now he is an associate
director at KPMG Taiwan. His current research interests include strategic human resource
management, competence management, and labor relations. He has worked with or-
ganizations in the areas of staffing, performance management, compensation manage-
ment, training and development, organizational survey, 360-degree feedback, compe-
tence management, labor-management relations, and labor laws. He has taught HRM in
the Health Care Department at Chang Gung University, Taiwan, since 1997. An award-
winning teacher and trainer, he is active in consulting and executive development activ-
ities for corporations and health care organizations.
The HR CompetenciesHR Effectiveness Link: A Study In Taiwanese High-Tech Companies 403
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The HR CompetenciesHR Effectiveness Link: A Study In Taiwanese High-Tech Companies 405
Human Resource Management DOI: 10.1002/hrm
Knowledge of Business
1. The HR professionals in our company are knowledgeable about our companys business model.
2. The HR professionals in our company are knowledgeable about our companys profit chain.
3. The HR professionals in our company are knowledgeable about our companys organizational structure.
4. The HR professionals in our company are knowledgeable about the high-tech industry in Taiwan.
5. The HR professionals in our company are knowledgeable about our companys short-term strategy.
6. The HR professionals in our company are knowledgeable about our companys long-term strategy.
7. The HR professionals in our company are knowledgeable about the functional roles and responsibilities of
other departments within this company.
8. The HR professionals in our company are knowledgeable about the companys external environment (e.g.,
customers, government legal regulations, competitors, third-party business partners, etc.).
9. Overall, our companys HR department has strong knowledge in our companys business operation.
HR Functional Expertise
10. The HR professionals in our company are effective in recruiting, promoting, and placing appropriate peo-
ple who fit the job description and requirements.
11. The HR professionals in our company are effective in recruiting, promoting, and placing appropriate peo-
ple whose values match the organizations values.
12. The HR professionals in our company can develop and organize training programs that meet the needs of
other functional departments.
13. The HR professionals in our company can offer career planning services to employees in need.
14. The HR professionals in our company can develop a competitive compensation system with line man-
agers to improve on recruiting and retention objectives.
15. The HR professionals in our company can design a nonfinancial motivational system with line managers
to improve recruitment and retention of internal and external talented individuals.
16. The HR professionals in our company can design an employee benefits system.
17. The HR professionals in our company can develop a performance evaluation system that assists other de-
partments in achieving their business goals.
18. The HR professionals in our company can assist in establishing and communicating clear performance
standards to employees.
19. The HR professionals in our company can develop performance appraisal systems that differentiate be-
tween employee performance levels (good vs. bad?).
20. The HR professionals in our company can work with managers to communicate clear and consistent mes-
sages for internal communication.
21. The HR professionals in our company can explain why business practices exist.
22. The HR professionals in our company can provide line managers with valuable insights or advice to im-
prove management of their staff.
23. The HR professionals in our company can help line managers handle problem employees.
24. The HR professionals in our company can assist in facilitating the process of restructuring the organization.
25. The HR professionals in our company can assist in facilitating the integration of different business functions.
26. Overall, the HR staffs in our company have strong HR field expertise.
Managing Change
27. The HR professionals in our company can use up-to-date methods and technologies to accomplish my
functional goals (e.g., online recruiting, e-learning).
28. The HR professionals in our company can adapt HR practices and services in response to changes in in-
ternal conditions (e.g., structural change, strategy change, size, mergers and acquisitions).
29. The HR professionals in our company can adapt HR practices and services in response to changes in ex-
ternal conditions (e.g., labor market conditions, competitor retaliation, labor laws and regulations).
30. The HR professionals in our company can use information data as a source to influence colleagues.
31. The HR professionals in our company can take a proactive role in bringing about change.
32. The HR professionals in our company can establish relationships necessary for change.
33. Overall, the HR department in our company has strong skills to cope with various changes within the or-
ganization.
A P P E N D I X A HR Competency Measures (Items Adapted from Ulrich et al., 1995)
406 HUMAN RESOURCE MANAGEMENT, Fall 2006
Human Resource Management DOI: 10.1002/hrm
1. Overall, I am satisfied with the service and support provided by the HR professionals in our company.
2. The HR professionals in our company are efficient (i.e. timely, cost-efficient) when recruiting candidates
needed for business development.
3. The HR department is performing its job the way I would like it to be performed.
4. The HR department is very responsive to meeting line managers and employees needs.
5. The HR department provides me with useful and timely information regarding HR issues.
6. The HR department has helped to enhance the firms competitive position.
7. The HR department provides value-added contributions to the firms bottom line.
8. The HR department contributes to building the firms human capital as a source of competitive advantage.
9. The policies, practices, and procedures coming from the HR department help line managers and employ-
ees perform their jobs well.
10. The HR policies, practices, and procedures help support the firms business plan.
A P P E N D I X B Perceived HR Effectiveness Measures