Redefining HR

University of Michigan Professor Dave Ulrich discusses some of the key themes of his latest book, including the need for an increased emphasis on the organization.

Monday, October 2, 2017
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The scope of HR continues to evolve.

So contends Dave Ulrich, David Kryscynski, Mike Ulrich and Wayne Brockbank in their recent book Victory Through Organization: Why the War for Talent is Failing Your Company and What You Can Do About It.

HR has historically been associated with talent and all the ways people are brought into an organization and managed, Ulrich and his colleagues say. But more recently, they add, "HR has expanded from a nearly exclusive focus on people and how individuals think, behave and act to an additional emphasis on the organization."

So what does such an emphasis entail? The book's authors suggest it means focusing on the workplace as much as the workforce, work processes as much as people and an organization's capabilities as well as individuals' competencies.

At the end of the day, they point out, "HR helps deliver both individual competence and organization capability to solve business problems."

Over the summer, Human Resource Executive® Editor David Shadovitz spoke with Ulrich, professor of business at the University of Michigan's Ross School and a partner at the RBL Group in Provo, Utah, about his firm's latest research, key themes cited in his most recent book, and what these mean for HR leaders going forward. Excerpts from that interview follow.

In your new book, you talk about the importance of the organization in relation to talent. Can you elaborate on this?

I'm going to need to give you three answers.

First, I think the organization and building strong organizations may be now at the beginning of the next S curve. I'm not discounting talent, but I'm saying we've kind of learned how to do that the same way we've learned how to do quality circles and supply chain management.

The second reason [has to do with] data and analytics. [Based on our research of] 1,400 businesses and 32,000 people, we have statistics about the quality of the people within businesses and data about how good the businesses are [at what they do].

When we did the statistics of those two factors on outcomes, it was just shocking. Organizations have four times the impact on business results [that talent does].

Third, we began to say, "Okay, that's just our data set." Then we started looking elsewhere. In sports, 20 percent of the time the leading scorer is on the team that wins the championship. This is the case in every sport: hockey, basketball, soccer. In movies, 20 percent of the time the winner of the best actor or best actress award is the movie that wins movie of the year.

The data is telling us that the organization has much more impact than the individuals. An individual can be a champion, but the team wins the championship. So how do you then build the organization that helps you win?

Much of the book's second part focuses on a topic you and your colleagues have studied and written extensively about: competencies. How has your thinking on this subject evolved?

We studied [competencies] for 30 years, over seven rounds of data. So we have an incredible amount of data from about 90,000 people. My first insight: It's not about competency. It's about the impact competency has on the outcomes we care about. This is one of the dilemmas around competency models. They do a little bit of . . . "Mirror, mirror on the wall, what's the fairest competence of them all?"  The real question isn't, "What do I think as an HR person, but what's the impact of the skill set I have?"

There may be others, but there are three outcomes we care about. One outcome is personal effectiveness. What gets me as an HR person invited to the table? What gets me to be engaged in a business dialog? What we found is that it is the competence domain called credible activist. "I've got to build trust, I've got to have a relationship and I've got to have a point of view." It's not just [saying] "trust me" and I get in. I'm trusted because I bring something unique to the discussion.

The second outcome is, "Now that I'm engaged in the discussion, who do I represent?" Hypothetically, I'm at a business table [having a] business discussion. If I represent the employees, which is legacy HR, the credible-activist skill has the most impact. But if I represent the investors and the customers -- the business stakeholders -- it's the strategic positioner.

So the skill that we need as HR people varies based on who we're representing when we're [engaged in] a business dialog.

The third outcome is business results. To deliver a business results, I have to be able to navigate paradox.

You devote a chapter of the book to this concept of navigating paradoxes. What does this entail and are there specific skills HR leaders need to master it?

One of the fun questions we love to ask people is, "Should a company be top down or bottom up?" The answer is yes. Should we be building on our past or creating our future? Yes. Should we be long-term or short-term [in our focus]? Yes. Local or domestic? Yes.

The answer today is we've got to navigate between paradoxes.

I love to think about guardrails. In almost every business decision, there's a set of guardrails we can manage. Do I make [something] myself or do I use a team? Those are two different guardrails. Am I long-term or am I short-term? Am I top down? Am I diverse or am I inclusive? What HR people need to do is have the judgment to know when to manage which guardrail.

One of the more fascinating ones is diversity and inclusion. Should we have a diverse workforce? Absolutely, but that's a guardrail. If all we do is manage diversity and never [achieve] inclusiveness, we're probably not going to help the company succeed. If we're inclusive without diversity, we're also not going to succeed. So the job of HR professionals is to know where they need to manage between those two guardrails to help get the business to make the right decisions.

Paradox [helps us] manage the inevitable tension that leads to better dialog.

VUCA [volatility, uncertainty, complexity and ambiguity] is reality, but [the challenges] go well beyond that. They're about how we manage in this new world. Paradox leads to tension and this leads to dialog. We can have discussions [and disagree] without being disagreeable. HR needs to make sure that we raise issues so that, through that dialog, we are able to end up with better results.

How difficult a skill is that to learn?

I don't know. One of the conundrums . . . is that those who navigate paradox are not always popular. Everybody walks into the room. There's one idea. There's one consensus. We're ready to go forward. What HR might need to say is, "Ladies and gentleman, before we go forward, I wonder if we've really looked at all the options."

Good HR people are able to navigate those inherent tensions to help [organizations] move forward.

In the last seven or eight years we've been very excited about learning agility, resilience, grit and growth mind-set. I think we're now moving into the period of the paradox era, when we're going to see leaders begin to live in this inherent world of tension and learn how to [navigate it]. They'll know how to zoom in and zoom out. They'll know how to converge and diverge. They'll know how to manage disagreements without being disagreeable.

Are there certain kinds of paradoxes that HR departments should be playing particularly close attention to?

Two or three come to mind. There's freedom versus control, which is how one is structured. Or loose or tight. This is one kind of bucket of paradoxes.

Then there's inside or outside. Who are we? What are our values? What are our norms? Outside, what do our customers want us to be known for? Managing that tension between inside and outside [is important].

The other one that comes to mind that we're seeing in some of our recent work is agility and discipline. Agility is speed, transparency, speed, transformation, flexibility and moving quickly. Discipline is making sure that we move quickly without too many errors.

In your book, you also write about HR as strategic positioners. What does being a strategic positioner mean and how can HR get better at it?

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I think we've seen four [steps].

The first is you have to know the business. That's the business literacy test -- finance, marketing, strategy and just being business literate. We used to call this skill set -- the extent to which HR knows the business -- a competence.

To be a strategic positioner, you have to go to the next step, which is strategy. How do we make money? How do we differentiate? How do we win in the marketplace?

Then you have to go to the third step: Who are the stakeholders we serve? We win with customers. We win with investors. We win by differentiating from competitors.

The fourth step is the context. What's the setting in which business is occurring? Strategic positioners have to work up those four levels so that they're able to position their firms to win in the future.

We're now a few years into the Society for Human Resource Management's entry into the certification market. What are your thoughts on certifications and the value they deliver to businesses?

I think there's good news and bad news. Certification provides a discipline and a baseline entry that's really critical. If I'm going to get a psychologist, I'd rather have one who's licensed than not. If I'm going to get a financial planner, I'd rather have one who's licensed than not. Or if I'm going to get an attorney, I'd rather have one who's passed the bar.

But being certified doesn't necessarily mean that you're competent, because a lot of attorneys I've known are attorneys by certification, but their competence really varies based on a lot of things. They may have different skills in different settings. I'm more interested in the competence than the certification.

There are a lot of financial planners or plumbers who are licensed to do the work. What I'm more interested in [as a consumer] is, once they've been licensed in the basics, how do we make sure that they have the competencies to really deliver value to those they serve.

Can you certify something like navigating paradoxes?

I don't know how you would do that. But if [I got sued], I would want an attorney who sees all sides of the issue, who doesn't just come and say, "Oh, that's a stupid man [who is suing you]." He says, "Let me take you through his argument and why you're at risk here."

That certainly makes sense. Would you say that HR departments are more relevant to the organization today than they were, say, five years ago?

Yes -- and now let me say why. I don't think people care all that much about the HR department. Do I care about the finance department or the information technology department? I care about what they deliver, and I'm willing to be pretty assertive on this. I think HR brings three things to a business. One is talent. We bring in good people who have the commitment and the energy to do their work well.

Second, we bring a great organization. We put those people into systems and procedures.

Third, we bring good leadership that bonds the two. Talent does what leaders do. Organizations respond the way leaders behave.

I'm not sure business leaders care that much about how [HR is] structured. I think they care about HR giving them the right talent [and] the right set of organizational capabilities, like information, speed of response, collaboration, innovation and culture change. Can you help my organization be successful? Can you help me as a leader make decisions that help us succeed over time?

Do you see HR doing more in the way of interacting and collaborating with other parts of the organization, say, finance, marketing or IT, and how important is that to HR's effectiveness?

I do. I think organizations can't operate in silos. One of the outcomes of an organization is share price and market value. HR should be connecting with finance and investor relations to show the market valuation increase of culture and leadership.

We published a book on that, The Leadership Capital Index. Marketing is worried about its brand in the marketplace. HR should be working with the branding folks to turn external brand promises into internal leadership brands.


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