Dave Ulrich is professor of business at the Ross School of Business, University of Michigan and co-founder of The RBL Group. He has written several books to help the HR profession better integrate with the organisation's needs and is known for popularising and spreading the HR Business Partner model.
Jamie Lawrence, Editor, HRZone: You're increasingly recognising the importance of competency perception. Can you explore this a bit?
Dave Ulrich, Rensis Likert Professor, Ross School of Business, University of Michigan: Competencies are the Knowledge, Skills, and Attitudes (KSA) of an individual employee. Since individuals judge themselves by their intent and others judge them by behavior, competencies are best assessed by some sort of a 360 instrument.
Others’ perception of an employee’s competencies becomes reality because it influences both how the employee behaves and how others reinforce that behavior.
In our work, we care about what competencies an employee demonstrates, but we care more about how those competencies impact key outcomes.
In our recent work (see Victory Through Organization), we picked three outcomes:
- personal effectiveness
- stakeholder value
- business results.
We were interested in the extent to which having specific competencies impacted these outcomes. Competencies matter; but their impact on key outcomes matters even more.
Competencies can be changed. Research on nature versus nurture shows that about 50% of who we are and what we do (competencies) is nature or part of legacy DNA and 50% of who we can become is nurture and can be changed through learning. Learning comes mostly from experience, but also education.
Employee experience comes when employees push themselves outside their comfort zone. Education encourages learning from personal learning and classroom learning.
Competencies matter, drive important outcomes, and can be upgraded.
Jamie Lawrence, Editor, HRZone: Your book HR From the Outside In has been out for a few years now. Is HR changing effectively for the better?
Dave Ulrich, Rensis Likert Professor, Ross School of Business, University of Michigan: The general principles of change suggest that:
- Adopting new behaviors in a profession or job category has a normal distribution. About 20% already perform the desired changes or are early adopters; about 20% are laggards who may never change; and about 60% are in the process of improving.
- For the 60% who may improve, sustained change is slow and difficult. Recidivism exists (think weight loss, addiction recovery, or criminal recovery).
- For the 60%, change often follows a “tipping point” logic which means that the cumulative effect of small and simple things over time has greater likelihood of sustained change. In the short term, it may be difficult to see desired impact.
These principles apply to HR professionals creating value through delivering individual competencies (workforce, talent), leadership at all levels, and organization capabilities (workplace, culture) that anticipate and respond to:
- general business conditions (e.g., technology change) and
- specific stakeholders inside and outside (customers and investors) an organization
Perhaps 20% of HR professionals deliver value outside/in; and 20% probably never will.
Our data suggest that HR professionals in the 60% group are improving in the competencies required to deliver value. We have data in 2012 from over 20,000 total respondents and in 2016 from over 30,000 respondents.
Here are some of the changes in HR competencies:
- Strategic positioner: 3.89 to 4.13
- HR overall tools: 3.82 to 4.03
- Change and culture: 3.95 to 4.01
- Personal proficiency: 4.23 to 4.33
While not dramatic, these changes are in a positive direction. There is not a tipping point, but progress.
We have also found that HR professionals are their own worst enemies in accepting progress. Over seven rounds of data collection, HR professionals rate themselves worse that their associates (inside and outside of HR) rate them.
There seems to be a tendency for HR professionals and HR observers (those who write about HR) see more what is wrong than what is right.
Jamie Lawrence, Editor, HRZone: Why do you believe organisations must focus on re-defining organisational structures and capabilities to break the cycle of the constant war for talent?
Dave Ulrich, Rensis Likert Professor, Ross School of Business, University of Michigan:
In our research, because of a large data set with 1200 businesses and 32,000 individuals, we are able to measure the capabilities of a business and the competencies of the employees in the business.
We then are able to statistically show the relative impact of organization vs. individual on business results (a six item measure).
Our findings are dramatic and revelatory: organization has 4 times the impact on business results than individual. This data suggests that the war for talent (getting the right people in the right place at the right time with the right skills and motivation) is important, but getting the organization right matters more.
If organization matters, what makes a good organization?
For decades organization has been defined as morphology and structure and getting it right was downsizing, reengineer, rightsizing, and changing processes.
We think this image of organization should change to think of an organization as a set of capabilities. An organization’s capabilities are what it is known for and good at doing (e.g., Google does analytics; Amazon does distribution; Apple does innovation; Marriott does service; Unilever does social responsibility).
HR’s job is to help define and deliver the right organization capabilities which match general business conditions and increase value from specific stakeholders (customers or investors).
Once the right capabilities are articulated, all HR practices can be aligned and integrated to make them happen.
This includes people-related practices of bringing the right people into (sourcing, onboarding) the organization and moving them through the organization (career, promotions). It also includes performance-related practices of performance management and rewards. It includes communication throughout the organization.
And, it includes management of work with work policies, organization structure, and physical setting. When these HR practice align with capabilities, they offer integrated solutions to creating the right organization.
Jamie Lawrence, Editor, HRZone: What's your next area of focus?
Dave Ulrich, Rensis Likert Professor, Ross School of Business, University of Michigan: One of my personal passions is to continue to learn about how businesses win in the customer and financial marketplace through innovative organization practices.
I am working in three areas.
First, reinventing organizations that deliver sustained innovation. With Professor Arthur Yeung, the leading organization thinker in China, we are trying to figure out how to synthesize insights on new organizational forms that enable innovation. We are discovering that a market based network organization can exist when an organizations core capabilities can be allocated against market opportunities to ensure innovation. Leading global companies like Tencent, Alibaba, Haier, Google, Amazon, Apple and others are creating these rapidly changing organization forms.
Second, delivering leadership capital to build investor confidence. With Justin Allen, we are redefining how leadership improvement efforts can be perceived by investors. We have found that 25 to 30% of investor decisions (stock or debt) can be tied to quality of leadership, but there are not good ways to measure this investment. We have created a leadership capital index (book by same name) to offer investors a rigorous way to analyze leadership. We are also finding that this investor focus on leader changes how to build future leaders.
Third, I continue to focus on employee value. I got into this field because I felt a passion for helping people discover their strengths in organization settings. This employee experience work has influenced work on helping employees develop their personal competencies but shifted more to helping employees find meaning and purpose from work (see Why of Work).
I continue to believe that organizations have been and have the potential to do more for social and economic wellbeing than any other mechanism. But, to realize this potential, people have to find ways to find personal meaning from their interactions with organizations. So, I want to continue to help individuals find meaning from work and create work settings that encourage abundance.
Jamie Lawrence, Editor, HRZone: Since defining the HRBP model, what do you think is the most common misconception people have over it and how does this misunderstanding affect both implementation of the model and, once its implemented, its operational effectiveness?
Dave Ulrich, Rensis Likert Professor, Ross School of Business, University of Michigan: People often see the business partner as a role in the organization (e.g., a generalist in a business). This narrow definition is probably 10 to 20% of the overall model. Like defining a cell phone only by voice clarity. Smart phones today do SO much more! And, the HR business partner model is much more than a role.
Even in the structure/role area, too many define the business partner model today by yesterday’s version (like saying my cell phone with voice from the 90s won’t do data!). For example, the HR business partner structure (about 10-20% of the overall model) logic suggests that HR structure/roles should be aligned to the business. So in many cases, centres of expertise are NOT the right structure.
The HR business partner overall logic proposes that HR is not about HR. This is the first line of our new book Victory Through Organization. HR focus has evolved from administrative efficiency to functional innovation to strategic HR to outside in.
HR delivers unique value through talent, leadership, and organization. The HR structure should then match the business structure to deliver these outcomes. HR professionals should have the competencies to deliver value which we have researched and reported. HR practices should offer integrated solutions to creating the right organization capabilities.
One of my biggest conundrums is when someone critiques the HR business partner model then proposes the model as the solution.
In a recent essay, I read that the HR business partner model does not add value; the article then proposes the following:
“I think we as HR professionals need to develop critical expertise about organization performance and capability and then bring that to life in new and creative ways for the businesses we work in. Great BPs should be leading their businesses in understanding how to achieve optimal organization performance, developing a sense of where value is being created and lost in a business, and finding ways to increase value as core parts of the role.”
Huh? This is exactly what the HR business partner model implies! I think that the better message is business success today requires strategic, financial, and operational (technological) excellence, but the real differentiator is often quality of organization and people.
It is a great time to be in HR because HR delivers real business value to employees (meaning and purpose), customers (products and services), and investors (reputation and value).