Most large organisations are missing significant commercial opportunities as a result of poorly implemented talent management practices, according to research released today by Orion Partners, a management consultancy specialising in HR Transformation and Change.
The newly released study, “Ulrich Comes of Age” covers global and multi-national organisations with a combined responsibility for 2.5 million employees and is commissioned to mark the 18th anniversary of the influential Human Resource Champions published by David Ulrich in 1996.
Overall, 83% of large firms are missing out on commercial opportunities from effective talent management, according to their own senior HR professionals. Of these respondents almost one third rank the outcome of their firm’s talent management as ‘poor’ (30%), while 53% say outcomes are acceptable but still leave untapped opportunities.
This leaves only 17% who describe their organisation’s talent management outcomes as ‘good’, with an integrated process that allows rapid adjustment to meet the changing needs of the business.
Allan Boroughs, partner at Orion and author of the report “Ulrich Comes of Age”, comments: “David Ulrich’s book was written at a time when many organisations struggled with the basics of HR. 18 years on, there is plenty of evidence that his theories have had a positive effect on HR operations. All the basic indicators of HR efficiency, capability and commercial focus show a positive direction of travel. However, this is not the whole story.
“The evidence is that these achievements have been made at the expense of real progress in the talent management arena. An overwhelming majority still do not have an integrated approach to talent – and only half as many organisations are as satisfied with their talent processes as they are with their HR operations.
“As organisations once again start to respond to positive economic conditions, they need to secure and manage their supply of key skills and manage their performance to achieve growth. This is a critical business investment and it has been neglected in the push for HR efficiency.”
Investment has been uneven
Over the last ten years, 95% of large organisations have invested heavily in HR infrastructure. An overwhelming 97% of HR professionals state that people issues are critical to their business.
However – just one quarter of large firms have developed a fully integrated approach to talent management. Of the remaining three quarters (75%), a majority (62%) said they had invested only in ‘parts of the talent management process’, while 13% have an entirely ‘ad hoc’ approach to talent.
Allan Boroughs, partner at Orion, explains: “Investment in the Ulrich Model has dominated the HR profession over the last ten years but many have tried to adopt a ‘standard model’ without thinking about how it will work in their own, unique, organisations. Organisations need to look at their unique business needs in the design process and tailor Ulrich’s model accordingly. All the evidence shows that a ‘one size fits all’ mind-set is ineffective.
“Big-ticket items like technology and shared services can take up the lion’s share of any budget for transformation, but can distract from other vital parts of the change programme. Equally important are areas like assessing and developing their Business Partners and developing the specialist skills needed in the centres of expertise.”
The future of the Ulrich Model
Potential improvements to the Ulrich Model appear to be centred on issues of interpretation and implementation, rather than the overall approach.
A clear majority have benefitted, with 77% of large organisations saying that the Ulrich model has had a “positive impact” on HR services. Moreover, 90% of large firms report “considerably greater” HR expertise in the function than a decade ago.
In spite of this success, the wider vision of Ulrich’s approach appears to be incomplete. Nearly two thirds of HR businesses partners (63%) say they still retain “too much” transactional activity in their role, counter to David Ulrich’s original challenge to the industry to free up the time of business partners to contribute to more strategic activity.
Allan Boroughs, partner at Orion, concludes: “The issues arising from our research are not weaknesses of the Ulrich Model itself, but more a matter of how organisations have interpreted it. The organisations that have been most successful at change are the ones that have adapted the Ulrich model to fit the unique needs of their organisations.
“The value of HR lies in more than just reducing its own administrative costs. True commercial value comes from raising capability levels in HR and developing services that deliver the skills the organisation needs to meet new growth opportunities and expand in new markets. Efficient and effective HR operations are a critical first move in being taken seriously and achieving that elusive ‘seat at the table’, but they are only a first step.
“The lessons from our research are clear; the transition of HR towards the Ulrich model has brought undoubted benefits. But this is incomplete. It is the organisations that can shift their attention away from ‘administrative excellence’ and towards talent management which will have the potential to add the most to the bottom line”