Ever since his groundbreaking study of human resource competencies back in 1987, Dave Ulrich has been considered one of the foremost authorities on strategic human resources.
Ulrich, a professor at the University of Michigan’s Ross School of Business and a partner at the RBL Group, a Provo, Utah-based consulting firm, has written or co-authored 23 books, most of them dealing with HR. These books include his seminal work, Human Resource Champions, published in 1997, as well as his latest, the best-selling The Why of Work, co-authored with his wife, psychologist and consultant Wendy Ulrich.
Ulrich, known for his oft-quoted truism “HR must give value or give notice,” has long advocated that HR has an invaluable role to play in helping companies succeed — so long as HR leaders can actually speak the language of business.
Now, in the latest version of the Human Resource Competency Study , Ulrich and his co-authors outline the six competencies today’s HR leaders must master, based on their extensive research. They are: credible activist, strategic positioned, capability builder, change champion, HR innovator and integrator and technology proponent.
For this special 25th anniversary issue of HRE, Senior Editor Andrew R. McIlvaine discussed, in a Q&A, some of these latest findings with Ulrich, as well as what he thinks of the past 25 years of HR and what the next 25 may bring.
As you look ahead to the next 25 years, what do you see as the key challenges for HR executives?
I don’t think anyone has a clue. Twenty-five years ago, it would’ve been hard to predict what we’re seeing today. We’ve been doing our Human Resource Competency Study for the past 25 years. The changes become things you can’t anticipate.
One, HR [professionals are] going to have to know the business — not just things like finance, how to read a balance sheet and so on, but they really have to know the business. They’re going to not only have to know all about HR practices, but how to innovate those practices.
They’re going to have to have some competency for managing change. They’re going to have to have the ability to not only build talent, but also the organization.
Too many people are redefining HR as human capital — they’re defining HR just as talent. How talent — people — actually work together is crucial. Just focusing on talent is missing the organizational piece.
But again, I don’t think anyone really has a clue as to what’s going to happen within the next 25 years. Twenty-five years ago, they were predicting that big companies would disappear, but today they’re thriving. So it’s very hard to predict.
Your latest Human Resource Competency Study uncovered the skills and competencies needed by HR leaders today. What have been some of the biggest changes in these skills and competencies over the past 25 years?
First, it used to be that HR leaders needed to be seen as trusted advisers, having credibility with the rest of the organization. Now it’s being a credible activist — a trusted adviser with a point of view about the business.
Second, we used to say you have to know the business; now it’s being a “strategic positioner” — knowing the business is just the baseline. You don’t have to be completely fluent, but you have to know the strategy, who the outside stakeholders are and what they need, and you have to have a good understanding of the external business conditions — the social, demographic and economic trends affecting the business.
Third, you have to have a mastery of HR innovation and integration — being excellent isn’t enough.
Fourth, you need to be able to do organizational-capability audits.
Fifth — and this is really fascinating — is that HR has been really gifted at initiating change, but now HR leaders need to be gifted at sustaining change. Your business impact will be greatest if you’re able to sustain change.
And sixth, HR has to be able to use technology in new ways. Technology is now a source of information about how the organization operates and succeeds. Technology is now about binding people who are not face-to-face and connecting communities. I think these are pretty profound changes.
Do you think HR has been well-served by the technological innovations we’ve seen during the last 25 years? What sort of innovations would you like to see during the next 25?
Technology lets us automate the transactional work of HR and allows us to do transformational work, and I think that serves us well. I think predictive analytics is extremely useful for helping HR obtain data in a whole new way and I look forward to seeing more of that.
Technology lets us build incredible communities of practice throughout the world. I think social networking will continue to give us new capabilities in recruiting and hiring — the possibilities are significant.
Of the need for skills and competencies identified by the latest study, which do you consider to be the most important and, potentially, the most difficult to acquire?
Fifty percent of what we do is nature and 50 percent is virtue.
The “credible activist” competency would probably be more nature — some people are simply more predisposed to that. As Marcus Buckingham once said, your strengths are your predispositions.
As for the other five, it’s hard to differentiate. If I had to pick one, today, that our research shows to be a critical predictor of an HR individual’s success, I probably would pick “capability builder.” Can they do an organizational audit and create the culture or capability necessary to serve external customers?
Our research shows that this is where HR really has to be successful. The future will also be about strategic positioning.
For example, there’s an oil and gas company in Europe that was having trouble finding scientists a couple years ago — it needed to increase the flow of talent. So they went into high schools and universities to encourage students to seek careers in the natural sciences. They went on Facebook and LinkedIn and started programs to help the next generation get better at learning natural science.
As a result, the flow of talent into the company has increased by 100 percent.
We call that “HR from the outside in.” Lots of companies want to be an employer of choice, but that’s an internal focus. An external focus should be: We want to be the employer that our customers would choose.
In other words, bring customers into your internal processes. Go to your customers, and let them help you design your assessments and appraisals, connect the competency models in your organization to your customers’ needs.
When you create value statements, ask your customers whether those are the values that are important to them, and if they say yes, then determine what you have to do to live those values.
Every HR system can get filtered through the customers’ eyes. Investors are already starting to look aggressively at the internal HR leadership practices of companies. They’re interested in whether the company has great leadership capability. The new ROI will be “return on intangibles.”
How do you think changing demographics, both in the United States and the world, may affect the HR profession in the next 25 years?
There’s a great book by Ken Dychtwald called Workforce Crisis in which he asked people from all four generations what they wanted from their jobs. All of them said, essentially, the same things. Boomers, for example, were just as likely as Gen Y to say they wanted to be creative at work.
There were some differences — the older generation was more concerned about retirement than the younger ones — but basically, people are people. We tend to over-focus on demographic differences.
There are some things companies have to be aware of, of course: For the youngest generation, “long term” is next Tuesday. They don’t think in terms of work/life balance, it’s more about life/work balance — the younger generation has a passion for life before work. They’re also more susceptible to technology addiction — video games, mobile phones, the web — which can actually affect the brain similar to the way addiction to a substance can.
What do you think of the trend of HR leaders coming from non-HR backgrounds — do you expect this to increase, decrease or remain the same?
I don’t think it’s a critical issue. I think HR people play an increasingly important role in today’s companies. You see some HR leaders being paid an enormous amount of money because their role is so critical.
It’s critical because HR helps position the business for the future. Our line is, you have to know the language of business, and the language of business is finance. You don’t have to be a native, you don’t have to be fluent, but you do have to speak enough of the language to get around — you have to be reasonably comfortable with it.
The best HR people are starting their HR conversations with a discussion of the issues facing the business. Whether it’s an HR person who has to learn the language or someone who came up through the business, it’s almost a moot point. Leaders are saying, “I want an HR leader who can really create value, regardless of where they come from.”
With respect to HR education at universities, do you see the need for changes and, if so, what are they?
My sense is that a lot of people in HR have educational backgrounds in psychology or sociology. I think the strongest HR people have to know the language of business and, hopefully, HR education is well-grounded in business.
I would hope that as part of the first-year requirements of a two-year program, students would learn not only the basics of business but would also get an introduction in how you think about business, how you make sense of business and how HR fits into it.
I would also hope that students have the opportunity to learn about all the specialized research — the body of knowledge — that exists within HR specialties today.
Ed Lawler, for example, has done great work around designing reward systems, and an HR person should be acquainted with this body of knowledge. I think HR students should come out with an appreciation of the thought that’s gone into all the great work that precedes them.
If you could give just one piece of advice to an HR person just starting out in his or her career today, what would it be?
I’d have to give them two pieces of advice: One is to have a passion for what you do. Let it be connected to your values, find meaning in the work that you do.
The second would be about learning agility: Keep your head on a swivel, constantly be looking for new things to do. Be consumed with looking forward — find out what the problems are that people are struggling with and position yourself to help solve them.