Whatever you do, don’t mention the Ulrich model. “HR is not where it was 20 years ago,” sighs Dave Ulrich, the academic and author who gave his name to a way of organising and strategising around the function but who now compares his original ideas to a “cell phone in the 1990s” – fine at the time, but just a building block for what came next.
These days, says Ulrich, HR is about creating value for others, and managing talent, leadership and culture – the three areas that distinguish great organisations from the merely good. In the first line of his co-authored new book – Victory Through Organization – he makes the claim that “HR is not about HR… it begins and ends with the business”. People Management caught up with HR’s most famous thinker to ask exactly what that means in practice.
What do you see as the main disruptive forces that are impacting on HR?
You need to look outside the business and establish what are the major disruptors in society. We see a set of business conditions that are changing, as are social, technical and political conditions, and the pace of that change is incredible. There has also been a huge amount of uncertainty that nobody predicted – for example, with Brexit and Trump becoming president – and a sense that some people are feeling isolated and alienated. In addition to this, you see stakeholders, both inside and outside organisations, getting much more involved in and connected with what they do. I think all those conditions move HR centre stage. The people and organisational issues become central to what we have to do to create organisations that succeed.
You say HR is about business. How does that differ from its current role?
Traditionally, HR has made sure employees are competent, that they have a good experience and that they have wellbeing. That has got to continue, but we are adding to that a focus that connects to customers and investors outside the organisation. So when we talk about how HR is more involved in the business, we take employees and put them in the context of helping an organisation win in the marketplace. For example, we have found that employee engagement is a strong lead indicator of customer engagement. If the employees of a particular supermarket have a higher sense of commitment or dedication, the customer will sense it and will be more likely to shop there again.
Do companies focus too much on recruiting people based on individual qualities, rather than focusing on that bigger picture?
If you want to create an organisation that has an identity or that is known for something – for example, as a customer you might admire a company for its ethical stance – you need to hire people who demonstrate that. It sounds simple, but it’s often not thought of that way. We hire people without thinking about how they come together and form the organisation that succeeds. If you create that identity inside, that’s what customers are paying for. When there is a clear line of sight between recruiting the talent, the organisational culture, capability and the customer value, that’s where value is created. These principles apply no matter what type of organisation it is.
Our research shows that the quality of an organisation has four times greater an impact than its talent [alone]. In sport, talent means you have great players, but an organisation means you have great teamwork. An all-star team of great players will not generally beat a team of good players who play well as a team. The same is true in organisations. So you fight a war for talent, but you have victory through the organisation you create.
What sort of competencies does this require in the HR department?
The competencies that you need depend on the outcome you are trying to achieve, but they must have an impact on business results. In our research, we identified 123 behaviours that HR professionals can model, which were collected from a survey of 32,000 people. We then broke these down into nine sets of competencies, and looked at what makes people personally effective, what value you give to key stakeholders and what you need to know to make the business money.
Do business leaders trust HR to deliver those kinds of competencies?
Trust is about building predictability, dependability, reliability and a relationship based on consistent patterns of behaviour. A business leader needs to believe their HR representative is trustworthy, respect their opinion and advice and know they have the leader’s interests in mind. The best HR people have a discussion with the business leader around their goals. You don’t say: ‘Here is a training programme I’m going to implement – what do you think?’ You ask: ‘What do you need to achieve? What are you accountable for?’ Then you get the message across that you will help make that happen.