Is the Ulrich model still valid?
Jenny Roper, August 22, 2016
It's never been a valid design as it severely fragments and sub-optimizes the HR Function as a whole.
Read More Mark LaScola
September 15, 2016 18:40
Professor Ulrich's HR model still divides opinion 20 years after making first making its mark
“Often in crowds when you mention Ulrich you get hisses and boos.” HR transformation specialist and founder of Glass Bead Consulting Andrew Spence’s description of the animosity that exists towards professor Dave Ulrich among some people.
Are you surprised by that reaction? You might be, given that Ulrich, along with being professor of business at the Ross School of Business, University of Michigan, co-founder of The RBL Group and author of numerous HR books, is also the father of the HR business model. He is the man widely credited with the invention of a model that the vast majority of HR departments still use to structure themselves some two decades later.
But that creation is exactly the reason for the somewhat fraught relationship between Ulrich and some in HR. Ulrich may be the most influential HR thinker of the decade, according to this magazine’s Most Influential ranking, but questions are being asked about how fit for purpose his model is in our rapidly evolving workplace. Or indeed ever was for some organisations.
Business partner bottlenecks
Given many organisations are still adopting the HR model for the first time, the hostility is rather surprising. Brett Walsh, global human capital leader at Deloitte, explains that businesses have adopted the model at different points over the past 20 years, depending on their maturity curve. “It’s interesting to me that after pretty much 20 years, the Ulrich model is actually not dead; if anything it’s very alive,” he says. The drivers behind Ulrich model adoption in 1995 – to drive efficiency, standardisation and HR’s strategic impact – remain as relevant to businesses today as they ever were.
These gains have certainly been enjoyed by one such organisation relatively new to Ulrich: the employer of a global CSR director who wishes to remain anonymous. But while he recognises that his firm’s HR department has definitely improved since the introduction of the model, he adds that HR business partners can end up obstructing strategic change, given they often become overwhelmed by business-as-usual requirements.
He cites the example of an apprenticeship designed to provide a mutually beneficial alternative to graduate hiring. “We briefed the business partners and gave them materials to explain it… and that’s where it died. They very much listened to ‘What does my division want?’ Of course within that division everyone said ‘We need a graduate.’ That’s where it came undone,” he reports.
“Eventually we had to go round the business partners. What was frustrating was, when we wrapped up the programme, we had some really nice testimonials from the line managers, so there was a real mind shift going on there. But the springboard from the business partners was missing,” he adds.
For this firm, then, business partners have become so embedded in the business and so distanced from central HR that they’ve taken the business’s typically much more short-term-orientated demands to heart to the extent of ignoring or overriding the overall business need for strategic change.
Our source is mindful of this not necessarily being an inherent issue with the Ulrich model, however – just a potential pitfall. It’s a pitfall, exacerbated, he explains, by business partners being bogged down with day-to-day transactional work. And blame must also lie, he says, at the door of the centres of excellence, which have alienated the business through an overly specialised, jargon-heavy approach.
This latter pitfall is one that HR director at global IT services and consulting firm T-Systems, Sarah Sandbrook, is similarly wary of.
“I think having that ability to hop, as I do now, from pensions to management development to employee engagement… I look at my team coming up now and they are far more pigeon-holed because they have all grown up in Ulrich-style business models,” says Sandbrook. “So I think we need to be careful we’re not specialising too soon, otherwise the HR leaders of the future could end up quite one-dimensional.”
Series of compromises
Another criticism levelled at the Ulrich model is that articulated by John Boudreau – research director at the University of Southern California’s Marshall School of Business and Center for Effective Organizations – in his essay ‘The Strategic Role of HR’. Here he explains the danger of HR practices becoming too standardised: “…it appears that the dedicated business partners are supporting the businesses in ways that do not include tailoring HR practices, but rather working with centres of expertise and HR administrative service units to deliver an array of similar services to the businesses,” he writes, adding: “There are economies of scale to be gained… However, when it comes to talent management [for example], different business strategies may call for different practices.”
What HR departments seem to have on their hands, then, is a model that is, for the vast majority, a big improvement on what went before, but still entails some compromises.
In the words of former global director of organisation development Barry Fry, writing in his essay ‘Owning our HR operating model: an enterprise-centred organisational design methodology for HR’: “It is a myth that there is a perfect structure. Every structure entails a series of compromises, for example the loss of standardisation for the benefit of localisation, or vice versa.”
But does this always have to be the case? Many would say not.
At this stage it seems only fair to hand over to the man himself: Dave Ulrich. For him and the many who stand by him and the value of ‘his’ model (“I did not create it, but observed, researched and wrote about it,” Ulrich is reported as caveating many times), the issue is that it should never actually have been treated as a model in the first place.
“I sometimes wonder what this [‘the Ulrich model’] refers to. I think some see it as an imposed HR structure with centres of expertise who act as specialists and embedded HR professionals who act as generalists,” he muses.
“In my mind, this narrow focus on HR structure is less than 10% of the ‘Ulrich model.’ My view is the ‘Ulrich model’ is instead a set of assumptions about HR.”
The problem, Ulrich explains, is that people too often see the structure part of his theories as a ‘solution’ – something which, once implemented, will automatically deliver brilliant HR. As with anything, the reality is of course much more nuanced. As with anything, it’s often not what you do, but how – or rather how intelligently – you do it.
Journey not magic wand
Walsh explains that the history of the Ulrich model over the past 20 years hasn’t been one of organisations, one by one, simply adopting, wholesale, some kind of pre-defined Ulrich blueprint. Rather it’s been several decades of organisations adopting the parts they were able to at different times and in different orders: “Those that have led the Ulrich charge have discovered they couldn’t actually transform in one go; it’s taken two or three bites at the cherry, because it was a very big challenge he put down.”
“There is no ‘it must be in this order,’ because investment and maturity cycles are completely different,” Walsh adds. “It feels like organisations are in a perpetual state of transformation in many cases, but it’s a journey; it’s not something that can be a one off and then you’ve done it and you don’t need to do anything for the next 10 years.”
Whether people have recognised Ulrich adoption as necessarily “a journey” has been the deciding factor in whether they begin to make a success of the model or not, explains Walsh. It is only by tirelessly perfecting the model that organisations are finally arriving at an “optimised HR structure where you’ve got highly trained and empowered HR partners; you’ve got integrated internal intelligence and networks of expertise in HR…” he explains.
But for those who haven’t treated Ulrich as a journey but rather a structural magic wand, the result has been far from a strategic Utopia.
Constant vigilance in supporting the model, then, is key. “I think the onus is on HRDs to make sure we are looking at the development of the profession and our teams and giving people the chance to broaden their experience,” T-System’s Sandbrook says of the need to ensure burgeoning HR practitioners enjoy varied developmental experiences, for example.
The biggest failure to stay vigilant in truly optimising the Ulrich model that Sandbrook still sees is that perennial of HR managers being expected to magically transform into truly strategic, consultative business partners overnight: “I think the Ulrich model, if it’s applied as the good David intended, is strong and still stands up. I think the problem we’ve got at the moment is we didn’t necessarily change the way we work but suddenly everybody was a business partner.
“I talk to an awful lot of people who frankly ain’t business partners. They have the job title and the salary, but when I start conversations with them about strategic HR they look at me like I’ve grown an extra head.”
“There’s a lot of homework that has to be done behind the scenes to think about what exactly you mean by business partners,” agrees director of the Centre for Performance-led HR at Lancaster University Management School Paul Sparrow, regarding the need to radically upskill and, often, recruit new HR talent to business partner teams.
“Many organisations are in their third or fourth revision of the business partner role,” agrees Spence. He explains that introducing true business partners is a huge task. “It is crucial that BPs are comfortable with hypothesis testing, utilising analytics techniques and using evidence to back up people decisions,” he adds of the kinds of skills that today’s business partner needs.
Regarding the issue of a disconnect between centres of excellence and the rest of the business, director of people and CR at Ricoh Rebekah Wallis describes the delicate balance HR must strike. “If you think of the employees and customers as being the focus, so where everything starts from, in theory the centres of expertise should be a pull rather than push mechanism,” she says. “So the business partner says: ‘These are the commercial aspects, the employees’ needs; centres of excellence, this is what I need you to look at for me.’”
Benefits of bespoke: Ulrich for all?
So the introduction of a new HR business model, as with anything, will take a lot of hard work and honing over many years. Adding to this challenge, explains Ulrich, is the fact that actually no two HR business models should ever look alike. “Adaptation begins by making sure that the HR organisation matches the strategy and structure of the business. One of the misapplications of ‘the Ulrich model’ is that there is one type of HR structure that matches all situations. HR has to adapt to the business requirements,” he explains.
Ricoh’s Wallis details how, for her organisation, for example, tweaking the Ulrich model to bring CSR to the fore as an area of specialism – including this element in her job title and embedding these activities in every other strategic HR activity – delivers competitive advantage: “We’ve completely embedded CR activities in our leadership programme, for example. That brings multiple benefits. It reinforces the Ricoh culture and the sustainable business aspect; it gives us the chance to push people out of their comfort zone.
“It gives us commercial perspective because we know from research that businesses want to do business with good, responsible companies; we know employees want to stay with responsible companies,” she adds. “We do a lot of ROI on that. Engagement is much higher for those who’ve engaged in CR activities.”
“If people are supposed to be your most important asset then why adopt a generic off-the-shelf model that everyone else uses? Where is the competitive advantage in that?” reiterates KPMG partner Robert Bolton.
The question that needs to be addressed, then, is whether the Ulrich model is suitable for all. Surely if each organisation requires something slightly different, it stands to reason Ulrich won’t be for everyone.
Nicola Fuschillo, head of HR at Diabetes UK, confirms that for smaller organisations, full-blown centres of expertise and shared service centres won’t be affordable or indeed desirable. But she says there are many elements that even smaller set-ups should borrow and adapt.
Just a few months into her new role, Fuschillo is mindful of the crucial importance of revamping Diabetes UK’s HR structure: “I have a million things to do but actually getting the team structure is really important,” she says. Fuschillo is aiming to create a mini, combined-specialism centre of excellence in the form of ‘an employee experience team’. “They will work with the business partners and a separate L&D team; there’ll be joined-up thinking between all areas of work,” she explains. “Rather than having someone looking at recruitment, someone looking at pay, someone at induction, actually one person would do that, so there’ll be synergy.”
The crucial thing for Fuschillo is that a vigilant eye is kept on recalibrating the model as the organisation evolves. “I think that should be the case with all structures and roles; it’s a continuum of change,” she says. “Directors can be afraid that people will react badly to change but actually people need to realise that change should be happening all the time. You have the basic structure, then it flexes.”
All this brings us back, then, to the importance of continually honing how the model is implemented to ensure it’s not only fit for purpose generally, but fit for purpose for the ever-changing, highly specific needs of the business in question. “Just as business competitiveness evolves, so should the business model,” confirms Ulrich. “Many look at the 1990s HR work we did and wonder why it does not work in 2016. Of course not; our ideas have evolved dramatically in the half dozen books and 50 articles we’ve published in the past 20 years.”
And so to the future. To the question of whether the dramatic evolution of the world of work, and new thinking in light of this, will lead to the eventual demise of the Ulrich model.
Many predict it will. For Will Peachey, senior VP, group transformation, at Capgemini, the radically different eco-talent system coming over the horizon will render current HR business models largely obsolete. “If you’ve got an organisation with a model like Uber, and you don’t actually employ your people, but have a contractor model, then suddenly all this beautiful shared service stuff that you’ve invested in begins to disappear,” he says.
“I can see a really radical future model where you’ve got AI and robotics and a significant reduction in workforce. At the other end you’ve got really highly skilled people who you desperately want and you’re prepared to be much more flexible in the way they work. I wonder whether there is a future of HR that is about ‘How do I find and create and support particular communities of talent rather than particular business units?’ So you become the concierge of talent.”
For Lancaster University’s Sparrow, HR will entail much more externally facing HR roles and departments. If the future of work is to become less about self-sufficient, hermetically sealed individual businesses, and more about organisations and individuals collaborating in a multitude of ways, then HR models will have to reflect this, he asserts. He details in his essay ‘Living in a collaborative world: implications for HR operating models’ the need perhaps for strategic integrator HR roles that operate internally and externally.
For clues as to how this might work, HR leaders might look to organisations already necessarily engaged in such collaboration. One is Sellafield, now operated by a consortium of private businesses and relying heavily on these, and others, to assist with highly specialist work, such as waste retrieval and decommissioning.
Sellafield’s strategic integrator resource currently takes the form of an industrial relations director, who liaises with the employers of staff working alongside, and often under, Sellafield employees. But HR director Colin Reed explains that the HR model at Sellafield will soon be much more externally focused.
“In our organisation you’re going to see a change where we are more engaged with third-party companies and how they’re working with their employees… there will be more emphasis on ‘Are you as part of our supply chain holding up your end of apprenticeships and training?’,” he says.
“On redeployment we don’t always have the opportunities at Sellafield. So absolutely there will be more HR roles looking externally at what the marketplace is doing, what we can do in dialogue with others. There’ll be a specialism for that in future. We’ll be setting up a team responsible for focusing on how we move people around.”
Sparrow agrees that those centres of excellence and specialisms that HR holds so dear will need a radical rethink, as alluded to by Reed. “What we have always argued is that the answer to business problems such as productivity, innovation and creating much more customer-centric ways of working is cross-functional. Productivity is a great example. So your solution is a mix of design, people management, different mixes of skills… so bringing together professionals from across traditional functions.”
“Our centres of excellence, I’ve always argued, are about HR from within,” he adds. “It’s about excellence in terms of HR process, whereas this is about HR outcomes.”
Then of course there’s the decisive role automation and data analytics will have on the way HR structures itself. “Over the next five years [AI and cognitive technologies] will become much more prevalent in shared services,” predicts Deloitte’s Walsh, adding: “Over recent years we’ve seen the introduction of a directorate for analytics and strategic insight, so ‘data scientist’ is now a role that you’ll find many advanced HR functions recruiting for.”
But HR needs to tread carefully in potentially dismantling their variations on Ulrich, warns Ricoh’s Wallis. “What needs to remain in any future model is business partnering in its truest sense, so engagement at a very strategic influencing level. I think that’s absolutely critical,” she says. “If you believe, which I do, that increasingly business is about the people, then HR does need that ability to influence.”
And for many organisations, a version of Ulrich, tailored to their particular business’s needs – whether they be global, highly talent focused or size-specific – is working nicely for now. Certainly much work must be continually invested to make sure the Ulrich principles of strategic partnering and operational efficiency are always delivered. Reliance on a one-size-fits-all, magic solution model won’t do. And much thought must be invested now into what the future will look like for any given organisation, and how HR can best support this evolution.
But despite the ambivalent, even hostile, reactions that his model can provoke, it seems for now that Ulrich remains king.