Dr. David Ulrich is arguably the most renowned HR thought leader of the last 25 years. We were privileged to have him present the opening keynote at our HR Management Conference last week in Raleigh. He opened with a question for the 300 participants: What is the biggest challenge you face in your job today? Many of us wrote down items like finding talent, retaining talent, turnover, leadership succession, healthcare costs, and the like. In other words, challenges we face going on INSIDE our organizations. Dr. Ulrich challenged everyone to view the COMPANY and it's external customers as the primary customer for HR, versus the traditional view of HR's customers being the employees, managers, departments, etc. - all inside the organization.
His challenge got me thinking back to business school and our debates about which group is more important to a company's business - it's shareholders, customers or employees. The "shareholder" camp argues that without their investment the company couldn't exist. The "customer" camp argues that without customers there would be no one to buy the products and services. The "employee" camp argues that without employees there would be no one to make the products and services to sell to the customers. The late management expert Peter Drucker defined the purpose of a company as this; to create customers. Without customers a company cannot survive so in almost all situations the customer needs have to come first. Taking a page from Drucker, Ulrich believes that HR's biggest challenge going forward is to ensure their talent, leadership and culture are all aligned to create the most value for external customers. Value being defined by the receiver, ie, the customer. HR is in the ideal place to help ensure our business strategy will happen since that strategy depends on people to execute it.
Ulrich calls this new view "Outside-In HR" and provided many examples of how this approach to HR works differently (see table 1).
To accomplish an Outside-In approach, HR professionals must gain external knowledge and insights from a variety of sources such as industry events and reports, customer meetings, competitor analysis, attending sales meetings, and the like. Such knowledge can transform how HR looks at talent, leadership and culture systems. For example, culture, from an outside-in perspective is the identity of your firm in the eyes of key customers...made real for employees. Think of the positive experience we almost always get at Chic-fil-A as we encounter the intersection of their talent, culture and leadership. You can tell that they work hard to make sure all three systems are aimed at making the customer experience one that would keep them buying their product.
Ulrich's message was aimed primarily at those HR executives who already have a seat at the executive table. Noted Ulrich, it's no longer a question of "how" to get a seat at the table but a question of "what" HR should bring to that table. HR's executive contribution should be as the architect of those three areas - talent, leadership and culture (see table 2).
A key question for many HR executives is how they will find the time to focus on these three areas. Ulrich argues that the answer to that question lies in a fundamental question: Who ultimately is responsible for HR at a company? The HR Organization, the leadership team, the CEO, or line managers? Ulrich believes strongly that line managers should own many of the day-to-day activities that HR departments have traditionally owned. This transformation frees up HR to be the chief "architect and anthropologist" for the company. The architect of the blueprints and frameworks to make talent, leadership and culture happen. The anthropologist studying peoples behaviors to help the company learn how to more effectively apply it's knowledge.
Ulrich provided a great model for how HR can be a true strategic player in the year 2015 and beyond. Don't know where to start? CAI now has experts on the Advice and Resolution team that can help you think through transforming how HR is done at your company. Call Rick Washburn at (919) 713-5247 or send Rick a message .