Q&A: David Ulrich, Ross School of Business, University of Michigan

Jamie Liddell

(Dave Ulrich is one of the leading figures in the Human Resources field; a writer, speaker, consultant and professor at the University of Michigan, Ulrich has been acclaimed as "the most influential person in HR" by HR Magazine and as the world's "Number One Management Educator & Guru" by Business Week. His model of HR roles and activities - the Ulrich Model - is considered the most influential and most commonly implemented occupational structure tool in the field.)

What do you think have been the biggest changes to human resources, both as a field of study and in practice, during your time in the field?

David Ulrich: HR has had to identify and deliver value: this means not doing more, but focusing on how what we do creates value both for employees inside the company and customers and investors outside. This changes the discussion of HR professionals with HR folks and line-managers. The focus is not on what we do, but what we deliver.

And how do you see HR developing over the next few years: what are the main drivers and challenges you see in play?

DU: I see HR being split like other functions: sales/marketing; finance/accounting; IT/strategic information. HR will be administrative- and transaction-driven by costs and strategic- and transformational-driven by value-added. Managing both halves is important.

SSON: What impact do you see the current financial crisis having on the HR function?

DU: HR becomes more important, not less, because financial capital, business strategies, and other traditional sources of competitiveness are being copied, leaving talent and organizational culture as driving sources of uniqueness. The current financial crisis is not about toxic assets, but bad leadership who made poor decisions.

SSON: How has the Ulrich model itself evolved over the last few years since you first published it, and why?

DU: The premise is the same: how can HR deliver value? What we are seeing are roles (who we are) and competencies (what we know and do). Roles are emerging into employee advocate (today), human capital developer (tomorrow), functional expert (doing the right administrative work right), strategic partner (including change agent), and leader. We have studied competencies and found credible activist, business ally, strategic architect, operational executor, talent manager/organization designer, and culture and change agent. Doing these roles with the right competencies will help the firm be successful.

SSON: Do you think that HR is delivering against that model or does it still have some way to go – how can HR practitioners improve activities to closer approximate to a perfect alignment with the model?

DU: I refer you to an essay we wrote:

"First, the business partner model is not unique to HR; all staff functions are trying to find ways to deliver more value to either top line growth and to bottom line profitability Information systems, finance, legal, marketing, R&D, and HR are all under scrutiny and pressure to create greater value for their companies. This is especially true of transaction and administrative work that can be standardized, automated, or outsourced.

"Second, the intent of the business partner model is to help HR professionals to integrate more thoroughly into business processes and to align their day-today work with business outcomes. We have talked about focusing more on deliverables (what the business requires to win) than doables (what HR activities occur). Instead of measuring process (e.g. how many leaders received 40 hours of training), business partners are encouraged to measure results (e.g. the impact of the training on business performance).

"Third, being a business partner may be achieved in many HR job categories. HR professionals often work in one of four positions in a company.

  1. Corporate HR. As business partners, corporate HR professionals define corporate wide initiatives, represent the company to external stakeholders, meet the unique demands of senior (and visible) leaders, leverage cross unit synergy, and govern the HR function.
  2. Embedded HR: As business partners, embedded HR professionals work as HR generalists within organization units (business, function, or geographic). They collaborate with line leaders to help shape the business strategy, conduct organizational diagnoses to determine which capabilities are most critical, design and deliver HR practices to accomplish strategy.
  3. HR specialists: As business partners, HR specialists work in centers of expertise where they provide technical insights on HR issues such as staffing, leadership development, rewards, communication, organization development, benefits, and so forth.
  4. Service centers: As business partners, HR professionals who work in service centers add value by building or managing technology-based e-HR systems, processing benefit claims and payrolls and answering employee queries. These individuals may work inside or outside the company.

"Sometimes, one of these roles is be uniquely defined as "business partnering" when, in fact, each of the above roles is a partner to the business as they work to create value for employees, customers, shareholders, communities, and management..

"Fourth, business success is more dependent today than ever on "softer" organizational agendas such as:

Talent. HR professionals are centrally involved in providing the right people with the right skills in the right job at the right time. The "war" for talent rages and will likely continue in an increasingly global knowledge economy.

Organization capabilities. HR professionals partner with line managers to identify and create organization capabilities such as speed to market, innovation, leadership, collaboration, , fast change, and culture management.

"Effective HR professionals not only work with business leaders to draft strategies, they also focus and collaborate on how to make strategies happen through talent and organization issues.

"Fifth, as talent and organization issues increase in business relevance, HR professionals may help respond by being architects, designers, and facilitators. Just as senior line managers turn to senior staff specialists in marketing, finance and IT to frame the intellectual agenda and processes for these activities, so likewise do they turn to competent and business focused HR professionals to provide intellectual and process leadership for people and organizational issues. Effective HR business partners are those who respond to these general management challenges. And because of the changing nature of business, the requirements of business partner model are more pressing than ever before.

"Sixth, there is concern that some HR professionals cannot perform the work of a business partner and cannot link their day to day work to business results. Our research shows that the HR profession as a whole is quickly moving to add greater value through a more strategic focus. We have shown that high performing HR professionals have greater business knowledge than do low performing HR professionals. Thus, the business partner model is empirically supported.
As is true for all support functions, it is undoubtedly the case that some HR professionals may never become business partners. They are mired in the past administrative HR roles where conceptually or practically they cannot connect their work to business results. Other HR professionals are natural business partners, seeking first and foremost to deliver business value through the work that they do. Most are somewhere in between. A decade ago there was a clamor to "get to the table" and to become part of the business. Today, many effective HR professionals are already at the table and they need to know what to do when they are there. Being at the table poses a new set of challenges in language and logic of being an HR professional.

"Seventh, being a business partner requires HR professionals to have new knowledge and skills. Traditional HR skills have focused on administrative issues such as policy setting and administration, union negotiation, and managing employee transactions. Today, the business partner model requires HR professionals to also connect their work directly to the business. Our research indicates that as HR professionals acquire the skills and knowledge necessary to be business partners, they add significant value to financial and customer business results. Likewise our research shows that those that do not make the transition in knowledge and skills are less likely to have business impact. When HR professionals are business partners, business success follows.

"Eighth, the inevitable failures in the application of the business partner model may be due to several factors:

1. As indicated above, some HR professionals will probably never be able to adapt to the full business partner role. Asking HR professionals who have focused on policies and transactions to do talent and organization audits and massive change efforts may be too great a shift for some.

2. Some may not make the shift to business partners because of personal interests and aspirations that deter them from engaging in the business partner role.

3. Some HR professionals may desire to be business partners but simply do not how to proceed. Such individuals need to understand the frameworks, logic, knowledge, and skills that are necessary for them to grow into the business partner role. BAE Systems recently under took a serious commitment to enhance the competencies of its HR professionals. As a result of the developmental program, HR’s perceived impact on business performance increased dramatically (the percent of line managers rating HR as 4 or 5 in business effectiveness increased 120%.)

4. A particular firm’s business conditions may not require talent and organization as keys to success. There may be some cases where an organization’s success does not depend on individual abilities or organizational capabilities. For example, a company may have a monopoly, may be protected from competitive pressures and may find that business performance is dictated primarily by the maintenance of the monopolistic protection. In addition, our empirical work together with our colleagues, Alejandro Sioli and Arthur Yeung, shows that HR is most closely associated with business performance under conditions of high change and has substantially less influence under conditions of low change.

5. Some line managers have trouble either accepting the importance of talent and organization and/or accepting HR professionals as significant contributors to these agendas. However, research by a number of consulting firms shows that senior level executives are increasingly focusing on issues such as strategy execution, leadership, talent, and change … all HR agendas.

"Ninth, there are really few other options. When someone said to us that the business partner model was not working, we asked, "What would you suggest?" Two responses were forthcoming. First, "Some HR professionals do not know the business well enough to be able to function as business partners." Second, "Some HR professionals are too enmeshed in transactional administrative work to be able to function as business partners." Both of these problems have direct and obvious solutions.

"The reality is that the HR professionals must evolve into being the best thinkers in the company about the human and organization side of the business. The nature of business is dramatically changing. Changes are occurring in virtually every element of the social, political, and economic environments that impact business. Under such conditions, the human side of the business emerges as a key source of competitive advantage. Therefore, HR specialists in the logic, research, and processes of human and organization optimization become central to business success."

What might the next iteration of the Ulrich model look like?

DU: We will look at the above HR roles and HR competencies. We will see HR even more connected to external customers. We will see investors paying increasingly attention to the talent and organizational issues.

How do you view the concept of outsourcing elements of HR? And does that answer vary once we bring in the concept of offshore outsourcing?

DU: Done well, outsourcing can help reduce costs and increased quality of service. Offshore works because knowledge can be transferred quickly and easily. Knowledge is an asset that has few global boundaries.

If companies do decide to outsource, do you see the better option being to outsource parts, or all, of the HR function?

DU: This is a mixed answer. All the administrative work of HR (in staffing, training, compensation, benefits, et cetera) are able to be integrated through outsourcing. It is better to do them as one versus separate. Outsourced activities will likely be done on an industry average.

But other parts of the HR function (talent development, organization development, leadership assessment, et cetera) are not outsourced because a company wants to exceed industry standard.

Do you see the increasing reliance upon automation in business – especially business services – as a terminal (or, indeed, any) threat to the HR function? And if so how can HR practitioners guard against that threat?

DU: Technology has good and bad news. The good news is efficiency, connect 24 hours a day, and distributed work. The bad news is isolation and lack of emotional connection. Not over-relying on technology will help HR do a better job.

SSON: What are the most common HR mistakes you’ve seen made by the businesses you’ve worked with?

DU: Several:

  • HR doing strategy HR without line managers
  • Line managers doing HR without HR managers
  • Trying to do too much
  • Not focusing on outcomes, but activities
  • Doing what is easy, not what is right
  • Focusing only on employees inside the company versus customers and investors outside
  • Not measuring progress or measuring the wrong things

SSON: On a more personal note, what’s the best advice you’ve been given during your career? And did you take it?

DU: Again, several things:

  • Keep learning. Obsess with what I did and make it better the next time
  • Do work that is easy to me, energizing, and enjoyable: don’t run up "sand dunes" that don’t lead anywhere
  • Focus on results: what is the outcome of the work I am doing? What value will it ad to what people?
  • Engage others: don’t try to have all the answers myself
  • Innovate… keep trying to do something new. Listen hard for problems that others can not solve. Solve them

SSON: If you could have your career over again, is there anything you’d do differently, and if so what and why?

DU: It is easy to say I would stay at home with my family, but they were generous with their time and support. I would keep trying to do bold things that push what’s next and work to build my point of view about the business.

SSON: Finally, what are your current ambitions for the next phase in your career?

DU: We would like to see HR through the eyes of the investor and customer. We would like to develop leadership throughout a company that delivers value to multiple stakeholders. We would like to find ways to audit quality of leadership or management that investors would be confident in. We would like to help HR professionals live to up to their standards and customer expectations.