Building the 21st-century company

HR should never be satisfied with its progress David Ulrich argues. There are four core areas which he believes need to be constantly worked on if it is to maximise its contribution to the modern company

The task of helping to design the 21st-century corporation one that has the right structures, processes and culture to win in the current business environment remains a critical one for HR professionals. But how clearly do they visualise what they need to do to contribute most effectively to this end? And are we asking the right questions?

Often, we do many things to distract ourselves from looking at the progress we have made. We try to stay busy with activities, conferences and a whole range of initiatives. Such activity mania has two flaws.

First, we assume there is a destination, a point in time where we can end our journey. We look forward to the day when our relationship with line managers, participation in key meetings, and the empirical evidence that our work really has an impact will make an unequivocal statement that we matter, that we are professionals. Sadly, such definitive destinations do not exist; the end for HR as a profession is an ever-moving one.

Second, sometimes by keeping busy we no longer see how far our profession has evolved. Spending time with our heads down creating initiatives, attending conferences, holding workshops and so on may keep us from seeing the progress we have made. We must get rid of these flaws if HR is to make a positive contribution. Those who benefit will be the organisations multiple stake-holders: employees, customers, and investors. Employees benefit if HR is more committed and more competent; greater customer-share results if a closer relationship with customers is encouraged; and shareholder value is created through these intangibles.

To create this value, I envisage four landmarks to be aware of: contribution (how we work with others), content (what difference we make when we contribute), governance (who does HR work), and competencies (what we need to know to perform well). Mastering each of these becomes a milestone for the journey.

How HR works with others

HR professionals must be more than partners; they must be players. Players contribute; they are engaged; they are in the game they do things that make a difference. Dick Beatty (a colleague at University of Michigan) and I have identified five HR player contributions. These are coach, architect; designer; facilitator; and leader.

As coaches, they can inspire, teach, and train. They enable people to learn from the past and adapt new behaviours for the future. HR professionals coach business leaders to increase employee and organisational productivity by setting standards, giving feedback, and becoming personal leadership trainers.

As architects they turn ideas into blueprints. They draft plans for how organisations can and should succeed, and lay out the choices that line managers ultimately make. These involve choices in talent, structure, decision-making, information-flow and other processes to ensure the alignment of the organisation with strategy goals.

To put blueprints into action you need designers the third HR role. As such they need to make sure that HR is involved in producing the systems for staffing, rewards, team, training, development and organisation design that meet business goals. Its critically important that ideas are implemented. So often, good ideas are never put into action.

How the work actually gets done is up to the facilitator. HR players facilitate when they bring resources such as talent, money, and time together to accomplish goals.

Last but not least, as leaders, HR players are role models for what they preach. They lead by demonstrating within their own function what they propose to others. Too often more is preached than practised.

What HR can deliver

When I presented the player contribution model at a recent session, the immediate and obvious question was, What are the issues HR needs to address to carry out these roles? Without identifying the content for HR, contribution has no direction. HR professionals add value when they help an organisation develop capabilities to win; these capabilities become intangibles when they give investors confidence in a future stream of earnings; and they are HR deliverables when they become the outcomes for the HR function. I believe there are eight possible outcomes for HR.

One of the most obvious is to attract, retain, and motivate talent. Organisations with more talent are more likely to win. But talent combines both competence and commitment. While competence is concerned with skills for the future, commitment implies engaging employees intellectually, emotionally and behaviourally.

Nowadays HR must act with speed. Change has been the metaphor for the past decade, now it is speed. This comes when leaders have the capacity to make decisions, to remove bureaucracy, to provide discipline in implementing projects and to remove cherished ways of doing things.

Moving from change to speed-of-change is important, but if the lessons learned for speed have to be continually relearned, they will not be maintained. It is therefore important to instill learning so that individuals, teams and organisations generate ideas that make an impact, and ideas from one setting or time are transferred to another.

It is equally important to craft a mind-set that is shared by customers and employees alike. Organisations have an identity or image that makes an impact by establishing a brand or reputation in the mind of customers that creates value. That identity also shapes the culture or values among the companys employees.

Innovation is another key HR outcome. It applies to strategy the creation of new business models; administrative processes ways to deliver business; and products or services what customers receive.

Organisations that are innovative have a constant stream of new ideas that become commercially viable; they can also turn individual creativity into collective innovation.

And it is up to HR to ensure that the company has the ability to turn such ideas and ideals into behaviours to assure accountability. Aspirations should not be limited by the resources available.

Leaders embody the companys brand in their behaviour. To make sure that leaders at all levels of an organisation have the right attributes, the right behaviours, competencies and values, HR needs to invest in a leadership brand.

Some firms have clear strategies, goals, and objectives. Others remain active, but unfocused with strategies appropriate to the old world rather than the new. HR can make an important contribution by assuring strategic clarity.

These eight capabilities may become the DNA of an organisation and the intangibles for investors. More directly relevant for HR, they may be the basis for what HR has to deliver.

In the past year, I have attended some wonderful HR conferences. Most of them invite HR professionals to learn about the latest trends in recruiting, training or commitment. My concern is that many HR tools have been created with only one of the capabilities in mind. And while I would not disagree with innovative ideas for talent, I suggest that in the future, leading HR professionals will have to do more than attract, retain, and motivate talent.

Who does the HR work?

Who does it? Its a question that has multiple answers. As the work expands, both in terms of contribution and content, those doing it must also evolve. The following are my seven suggestions for those that either do or will do HR work.

First are the line managers they are ultimately accountable and responsible for HR work and should be the final decision-makers who make informed HR choices. They demonstrate their commitment to HR by being the visible, public champions of new initiatives.

HR professionals themselves oper-ate on a variety of different levels. The corporate HR designs policies and procedures that affect the entire organisation and build enduring values and ideals.

Corporate HR professionals are also responsible for nurturing corporate employees, for shaping programmes to implement the CEOs agenda, and for ensuring one cultural face to those interested in corporate identity the investors who buy the firms stock or large customers who use corporate services, for example. I foresee corporate HR becoming even more streamlined and focused on long-term, enterprise-wide HR policies that shape values.

Third, HR professionals work in business units. In large organ-isations, business units may be by geographic location, product line or function. HR professionals work directly with line managers in each unit to clarify strategy, do organ-isation audits, and decide which HR activities have the most impact on business strategy. In the future, I see HR generalists within business units becoming more business-focused and able to broker HR services.

The fourth category is those HR professionals who work in centres of expertise. In large firms particularly, such centres exist when HR professionals who deliver functional expertise come together to share that knowledge. They deliver it to each business unit by internal consulting with business units. They also share learning or knowledge across business units by sharing experience from one business to another. In future, HR professionals will have to become even better consultants who adapt knowledge from one business unit to another, who build relationships for sourcing knowledge with those outside the company, and who create menus for business unit choice.

Fifth, there are HR professionals who work in service centres. These centres grew up in the 1990s as routine administrative tasks came to be more efficiently done in a standardised way. Employee questions could be answered in phone centres. Routine, standard transactions could be done better, faster, and more cheaply through such service centres. As one HR executive said, If we move the HR work 400 yards, we might as well move it 3,000 miles. In the future, much of this work may be outsourced as vendors gain scale and efficiency across organisations.

HR work may also increasingly be done through technology. It will allow employees to do their own administrative HR work. Self-reliance, self-sufficiency and employee self-service will become more popular as HR professionals remove themselves from the governance of HR and enable employees to manage their transactions directly with the firm.

Finally, HR work may be outsourced. Some forms of outsourcing may involve hiring consultants for specific projects and/or for specific expertise, others may occur through partnerships where suppliers form alliances with a firm to share work. Such alliances will likely continue as different sources of expertise combine around common interests.

What HR needs to know

Competencies reflect the knowledge, skills, or ability HR professionals must have. In research carried out with 18,000 respondents over the past decade I, together with Wayne Brockbank, director of Michigans HR competence research, have identified five domains of HR competencies for HR professionals: knowledge of the business they must know about finance, marketing, strategy, globalisation, technology and other business functions; delivery of HR they must master the latest research in functional HR; management of change they must be able to make things happen, fast; culture management they need to know how firms create new patterns of behaviours and mind-sets among employees and customers; and personal credibility they have to know how to build personal trust by living the values of the firm and having an informed point of view.

But as our research has continued, we now foresee the need for further HR competencies. These are: measurement they must be able to measure the impact of their work and this requires knowledge of measurement theory and the ability to apply it; technology those who learn how to assess, deploy and leverage technology will be excited rather than threatened by new ways of delivering HR work; intangibles by understanding intangibles and the creation of market value, they may be able to contribute to real shareholder value but only if they master the latest trends in finance and market valuation; and globalisation learning to leverage knowledge, to adapt to local conditions and to instill a global mind-set will become critical. Armed with these sets of skills, HR professionals will become players who contribute real value to the organisation.

So are we there yet? No. But we have a wonderful history that will help shape an even more exciting future. With knowledge of where we have been and an image of where we are going, the HR profession will continue to evolve. We dont need to distract ourselves along the way, we should relish the journey.

Further reading

Delivering Results A New Mandate for Human Resource Professionals edited by David Ulrich, Harvard Business Press (1998)

Results Based Leadership by David Ulrich, Jack Zenger and Norm Smallwood, Harvard Business Press (1998)

Building the HR Scorecard: Creating and Sustaining High Performance through People Metrics, by Brian Becker, Mark Huselid and David Ulrich, Harvard Business Press (2000)