HR Credentials: Evaluating Their Value

As the digital enterprise takes shape and the demand for talent grows, it’s increasingly clear that skills and knowledge are precious commodities. The ability to understand an increasingly complex business environment — and world — is nothing less than critical.

Within the human resources field, this has translated into a greater emphasis on certifications and graduate degrees. Today, it’s a widely accepted belief that obtaining advanced skills and knowledge positions a person and enterprise for greater success. HR certifications have a long history in this field, but some experts argue that an advanced degree is still preferable.

“A bachelor’s degree is a starting point for human resources. An advanced degree provides a huge foundation for knowledge and skills,” said Tamar Elkeles, who has a Ph.D. and is chief people officer at Quixey, a Mountain View, California-based software firm. “Most learning does not occur in a classroom within a few hours. It takes place on the job over longer periods of time.”

She said she typically ignores certifications when making hiring and other HR decisions. “Certifications, other than perhaps in the benefits and compensation field, have nothing to do with real-world business skills. For 20 years, we’ve been hearing about how HR has to become more business-focused, and it still hasn’t happened.”

Herman Aguinis, a management professor at the Kelley School of Business at Indiana University, added, “It’s no secret that there is a strong desire to elevate the status of HR and that credentials and degrees add value.” Yet, it’s also clear that “a lot of time and money goes into obtaining all of these certifications and degrees,” which can range from a few hundred dollars and a few classroom hours to tens of thousands of dollars and a couple of years at a university. Unfortunately, their actual value isn’t always measurable — for both the individual and the business, he said.

Things certainly haven’t gotten any simpler over the past few years. After the HR Certification Institute and Society for Human Resource Management parted ways in an acrimonious breakup in May 2014, SHRM began offering its own credentials. Today, HRCI offers seven credentials, including the Professional in Human Resources and the Senior Professional in Human Resources, and SHRM offers two: the SHRM Certified Professional for those in the early stages of their careers and the SHRM Senior Certified Professional for practitioners with at least six years of experience.

There’s a growing focus on HR practitioners obtaining certifications and degrees. But measuring their value remains elusive.

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A Matter of Values?

Amid a dearth of data about the value of HR certifications for organizations, a March 2016 report from the HR Certification Institute and the Top Employers Institute, “Emerging Evidence: Business Performance and the Validation of HR Best Practices,” offers some insight into the value of certifications. Among other things, it noted that companies that place a premium on HR certifications outperformed the stock indexes in their respective countries by an average of 51 percent over the same five-year period and outperformed the industry average by 14 percent over the same period.

In addition, stock prices of companies with more than five HRCI-certified professionals increased an average of 95 percent between 2011 and 2015, while the relevant stock indexes increased an average of 38 percent over the same five-year period. Meanwhile, companies with more than five practitioners holding HRCI certificates outperformed relevant stock indexes by 57 percent over the five-year period.

On an individual level, the study found that the average rating for Top Employers’ certified companies on German job site Kununu is 3.5 stars (out of 5) vs. the overall Kununu average of 3.1. The average rating for Top Employers’ certified companies rated on Glassdoor is 3.5 stars (out of 5) compared with the overall Glassdoor average of 3.2.

According to Top Employers Institute CEO David Plink, the findings deliver a “clear message that exceptional human resource management — from applying HR best practices to the competencies of the HR professionals who design and implement them — can demonstrably and positively contribute to the bottom line.”

—Samuel Greengard

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And in April, the HR Open Standards Consortium Inc., a 17-year-old nonprofit based in Windermere, Florida, announced a new certification program for HR tech professionals.

Amid all the upheaval and the resulting confusion about what career and hiring decisions to make, there’s a need for HR professionals to face some tough choices. Peter Cappelli, a management professor at the Wharton School of the University of Pennsylvania, said that in today’s business and HR environment, it’s vital to understand how, when and where credentials and degrees matter. “It certainly complicates things for HR people,” he said.

Paper Chase

Most HR executives believe certifications are a good thing — particularly early in a career. And there’s some evidence to support it. A 2015 HRCI-HumRRO study of about 12,000 practitioners holding certifications found that those with SPHR credentials earned $19,712 more annually than their peers while individuals holding a PHR pulled down $4,547 more than those without any certification. In addition, the report noted that 90 percent of people with PHRs and 87 percent of those with SPHRs were employed full time in an HR position compared with 69 percent of their noncertified peers. Finally, the report found that certified HR professionals reported greater income growth over time and higher career satisfaction.

While these results sound impressive, it’s unclear whether other factors and variables enter into the equation, such as whether those who pursue advanced learning and certifications are intrinsically more driven and productive. “Certifications definitely hold some weight. I would select a person with a certification vs. somebody who doesn’t have it,” said Deborah Gutman, human resources manager at Sierra Nevada Brewing Co. She holds an SPHR, SHRM-SCP and a master’s degree in HR management. “Basically, it means you have gone through a process and you have taken steps to gain a foundation of knowledge that is applicable to the field. It adds a level of credibility.”

Lupe Mujica, chief people officer at First Service Residential, a Dania Beach, Florida-based property management services firm, also said she believes certifications have value. “They provide an excellent foundation for HR,” said Mujica, who holds a bachelor’s degree in organizational development and is a longtime member of SHRM and the National Human Resources Association. “For someone who is at an entry level or new to HR — basically, someone who has little or no experience, it shows a certain level of proficiency.”

In addition, “there is a tangible benefit for the business,” mostly revolving around the individual understanding HR concepts and basic tasks and managing work more effectively, she said. Like others, Mujica said work experience and graduate degrees — particularly in areas such as business, psychology and information technology — are far more important for individuals as they work their way up the corporate ladder.

Of course, there’s also the issue of which organization to choose: HRCI or SHRM. While HR executives may have preferences — Mujica likes SHRM because of its global presence, and Gutman said HRCI holds a great deal of credibility — one of the problems is that there’s no exact way to compare the two certifications. “One of the challenges is that the SHRM certification is relatively new, and it appears they are trying to make the process very inviting in order to attract people,” Gutman said.

She points to the fact that SHRM’s pass rate is about 68 percent for its SHRM-CP program and 56 percent for its SHRM-SCP, compared with 53 percent for HRCI as a whole. Whether HRCI’s lower pass rate is a result of more rigorous standards or that it attracts a different group of people is debatable.

Not surprisingly, each organization believes its approach has advantages and that it is better aligned with the needs of today’s HR practitioner. “The primary difference,” said Linda Anguish, director of certification products for HRCI, “is that we are an independent certifying body with a core competency in the HR field. We have been doing this for 40 years and we have an accreditation from a third-party certifying agency.”

In addition, HRCI does not require a practitioner to take any particular program or learning track in college prior to taking a certification exam. Anguish holds SPHR and Global Professional in Human Resources certifications.

On the other hand, SHRM has adopted a competency-based model that more closely supports the way businesses and various organizations operate from an HR perspective, said Alexander Alonso, SHRM senior vice president of knowledge development, who holds a Ph.D. and a SHRM-SCP certification.

The 285,000-member organization relies on the SHRM Body of Competency and Knowledge, also known as the SHRM BoCK, as the foundation for these certifications, which center on eight key behavioral skills and 15 HR functional areas that it deems critical to the success of any HR professional. As a result, Alonso said, SHRM is equipped to address core skill requirements represented in Fortune 100 organizations and beyond.

About 12 percent of HR professionals in the U.S. hold a certification. HRCI boasts about 145,000 current certifications and SHRM boasts about 92,000. According to Cappelli, a certification delivers niche benefits while a “master’s degree and experience dominate any credentials.” Moreover, he said certifications serve partly to “compartmentalize” the profession and create “subfields.”

“In general, employers want to think of HR people more as ‘managers’ and ‘executives’ rather than ‘professionals,’ which is where credentials point them,” he said.

On top of all this, the HR Open Standards Consortium recently launched its training initiative geared toward HR tech professionals. “The HR Open Standards’ Individual Certificate provides an inaugural opportunity for HR Technology professionals to be recognized for their proficiency in and experience with HR-XML and HR-JSON data exchange standards,” said Suneel Mendiratta, president of the consortium’s board of directors, in a news release. Certificates are currently being offered in assessments, recruiting and screening with other tech certificates in the works for areas such as recruiting, benefits and performance management, according to the organization.

On the Money?

One of the problems with the current environment, Indiana University’s Aguinis said, is that while the goal of making HR practitioners more proficient is a good one, and any programs and activities that elevate the field are a positive, there’s never been any objective research conducted about certification programs and what precise value they provide for various stakeholders. This would require access to databases — something he said he hasn’t been able to obtain. Meanwhile, students and others collectively fork over millions of dollars for certifications. “Nobody knows if practitioners get hired faster, promoted faster or make more money than their counterparts,” he said.

HRCI’s SPHR exam, for example, costs $475 plus a $75 application fee and is good for three years. SHRM charges $300 for members to take the SHRM-CP or SHRM-SCP exam and $400 for nonmembers, and the certification is also good for three years.

Aguinis describes the situation as nothing less than a “conflict of interest.” He believes that greater transparency is essential. He would like to see research teams composed of both practitioners and researchers; conflict of interest disclosures that indicate whether these organizations paid a consulting firm or individual researcher to study a certification program; any findings from studies undergo a peer-review process; and data that are open to other researchers so that they can analyze and validate it.

“Now that SHRM and HRCI have split,” he said, “the situation is even more confusing. There are more choices and the question arises: ‘Do I need to be certified by both organizations?’ ”

Among other things, Aguinis would like to know whether job candidates with credentials are hired faster than others, and whether an HR certification equates to better job performance and value for the company. Quixey’s Elkeles agrees that there’s a dearth of impartial data about the value of certifications — and without a standards body in place, results are somewhat vague and relative. What’s more, she said she’s concerned about the quality of individual instructors and how well curriculum matches the skill sets required for a person to make the leap to an HR executive.

“These programs are huge moneymakers, and it’s in the best interest of these organizations to promote the concept that certifications are beneficial for practitioners and organizations,” Elkeles said. “The question is: Does the amount of time and money spent deliver a real-world return on investment?”

Whatever HR practitioners can do to advance their skills and knowledge is generally a good thing, HRCI’s Anguish said. In the end, “the most important thing is to make a commitment to personal development and the profession,” she said.

Editor’s note: This story was updated on June 15, 2016, after SHRM contacted us with the current number of people with SHRM certifications.

Samuel Greengard is a writer based in Portland, Oregon. Comment below or email editors@workforce.com. Follow Workforce on Twitter at @workforcenews.