Adding Value in HR
Chris Ball looks at some of the ideas in a new book by Dave Ulrich and Wayne Brockbank, and gets to speak to one of its esteemed authors
The chances are that if you ask a professor of HR or Organisational Behaviour in a mainstream UK university about Dave Ulrich, they might not be able to tell you much. I know; I tried, though discretion demands I withhold details! Interestingly however, the CIPD has adopted Ulrich as one of its own. He was given the prime slot of the closing keynote speech at the CIPD’s Harrogate conference in October and last June the magazine People Management carried a feature article by Ulrich and his co-author Wayne Brockbank as a taster for their new book, “The HR Value Proposition.”
Leading HR managers and directors in UK companies know about his work and even talk about ‘the Ulrich model,’ of structuring HR management. (It’s short hand for drawing out the specialised functions of strategic partner, administrative expert, employee champion and change agent.) Ulrich is, it seems, one of the fortunate few who have exerted significant influence on the ‘real world,’ outside their ivory towers of academic existence.
If Ulrich doesn’t really read like an academic, this is because he seems as interested in making things work as analysing them. Working through a consultancy firm he founded at the University of Michigan, he gains insight into the way HR is delivered in hundreds of leading organisations and has synthesised what is happening in the best.
In ‘The HR Value Proposition,’ Ulrich and Brockbank tell us where HR people should position themselves in the organisation and how they should achieve this. They don’t entirely eschew the nitty-gritty of day to day HR practice, though in the main they take a ‘big picture’ perspective. They are observers of trends and trend-setters at the same time. Although Ulrich as never actually been an HR manager himself, he has captured the mindset required to succeed in commercial organisations. ‘The HR Value Proposition,’ could well be a standard text for anyone seeking a CIPD qualification.
His thesis is that HR managers today must think in terms of the added value HR should deliver. Ulrich and Brockbank explain how to understand and measure such added value. There are plenty of diagrams, self-assessment tools and the like. Value, they say, is defined by the receiver more than the giver.
Ulrich and Brockbank are looking for, ‘HR transformation.’ While it is possible to think of many new ways of delivering HR administratively, from e-HR to portals and on-line employee services, HR transformation involves changing the way we think about HR’s role in delivering value to the company’s customers, shareholders and managers.
The premise of HR value therefore involves HR practitioners being aware of what others want, including a thorough understanding of issues like technological change, economic, political and demographic issues, the nature of the competition etc.
Ulrich and Brockbank tell a story of how a director of HR decided to visit a few key customers and improve his ‘line of sight’ with the company’s market place. A meeting was arranged with the Vice President of Purchasing at one of his company’s main customers. The moment he walked into the Vice President’s office however the HR director was met with the statement, ‘I’m busy today. Why should I spend time with you?’ Ulrich and Brockbank argue that the ability to add value and transform HR entails giving convincing answers to such questions.
To achieve this they should think about their companies in terms that make sense to investment analysts. Ulrich and Brockbank assert they need to be able to answer the following questions; ‘Who are your five major shareholders and what percentage does each own? Why do they own your stock? What are their investing criteria? What is your tangible value and intangible value? What is the company’s price to earnings ratio and how does it compare with the industry average? Who are the top analysts who follow your industry? How do they view your company and the competition?
Being in a position to answer these questions sets the HR professional on the road to being able to deliver ‘real value,’ in other words, value from the perspective of the receiver rather than the provider, argue Ulrich and Brockbank. They comment, ‘When HR professionals begin with the receiver in mind, they can more quickly emerge as full strategic contributors; add greater value for key stakeholders (customers, investors, line managers and employees); enhance business productivity; achieve measurable and valuable results; create sustainable advantage and have more fun with their careers.’
Ulrich and Brockbank outline what they take to be the five elements of ‘the HR value proposition.’ (Dave Ulrich sketched these out briefly in our discussion – see below – but the book goes into much more detail). The elements amount to knowing the external business realities, serving external and internal stakeholders, crafting HR practices, building HR resources and ensuring HR professionalism.
From these five elements Ulrich and Brockbank go on to establish fourteen criteria for ‘HR with a value focus.’ You need to read the book to get the detail, but for example take the issue of ‘intangibles.’ Much of the added value generated by HR practitioners comes from their ability to influence ‘intangibles,’ say the writers. Intangibles represent value derived from choices about what happens inside the firm and from how investors value those decisions, rather than its physical assets. Organisation and people are among the most significant intangible assets of the company, and this is an area where HR can make an important contribution.
The underlying point in much of what Ulrich and Brockbank have to say
is that expectations of the HR practitioner have evolved. Today there
is a multitude of roles which he or she is expected to assume. We are
enjoined to be ‘…coach, enabler, advocate, change agent,
initiative leader, employee champion, business partner, HR leader, strategist,
rapid deployment specialist, internal consultant, operational supporter,
competency professional, client relationship manager and even human
capital steward and manager of firm infrastructure.’ No wonder
the personnel profession sometimes seems to suffer a collective crisis
of identity!
One way of making these multiple roles more manageable is through a
consolidated role framework, described by the writers. They summarise
it as including roles of employee advocate, functional expert, human
capital developer, strategic partner, and HR leader.
Such an outlook, they argue offers a simplified way of describing and explaining how different functions are accommodated within the profession. It spells out what skills and competencies HR practitioners need to develop, how we must take responsibility for maintaining the leading edge in the body of knowledge we work with and how we can place ourselves at the centre of business decisions in organisations.
If this seems to deal only with the grand strategy side of HR, what of the role of those administering systems as skilled technocrats? The blend between strategic and functional day to day work of HR is one of the emerging themes in ‘Human Resource Champions.’ HR professionals must show they can deliver HR services efficiently, says Ulrich and proceeds to collect together examples of the kind of re-engineering of HR departments which have become commonplace in the intervening decade.
Ulrich himself did not invent shared service centres, outsourcing services, or the use of self-help approaches via new technology, though his nod of approval in the direction of these changes may well have speeded their dissemination. (One senior HR manager I spoke to recently referred to them as part of ‘the Ulrich approach.’) At the same time, Ulrich advises us how to become employee champions and strategic partners.
Not everyone can be all things – some will settle for being an administrative expert, others influencing senior management by suggesting HR solutions to business problems. Hence a model, not only for change in the functions of personnel practitioners but the career paths which ultimately we all might tread. Writing at a time (1996) when there were increasing numbers of commentators making ludicrous calls for HR to be abolished, Ulrich and his collaborators have helped shift the debate to more sensible terrain.
Sceptics who question the relevance of American thinking to Europe and the UK in particular, may ask whether it is worth taking the plunge. How realistic is it to try to transform our approach to HR in the way Ulrich and Brockbank suggest? Can we really be expected to seek such a widening of our remit, forming alliances with stakeholders like shareholders and customers? And how far would we be permitted to do so anyway?
In fact, examples of Ulrich and Brockbank’s thinking in practice, abound already in the UK. True, there might be issues in some organisations around the degree to which functional heads are happy at HR assuming a strategic business partner role. However, this model is increasingly found as HR managers coach and mentor functional managers to accept and deal with the HR consequences of their own decisions. Some practitioners may feel that winning top level support for HR to engage with strategic business decisions sounds rather like Mrs Beaton’s recipe for making jugged hare (first catch it!) Ulrich and Brockbank tell you how to go about doing so however.
Now read Chris Ball’s Conversation with the Guru
