Dave Ulrich is HR’s leading academic. I had the pleasure of attending a workshop in Zürich organised by the ZFU. Dave spent a full day taking a group of senior HR folks through his latest thinking. He is an excellent, engaging, witty speaker and has the right mix of theory and practical examples.
He took a break from academia for 3 years to work as a missionary, but he is now back into his research. I’d urge any one in HR to read his stuff, and get to hear him if at all possible. I learnt lots.
I enjoyed it when he said if you dont have e-HR, then go and buy it now, but his main takeaway was that HR needs to focus on how it adds value to the business. HR theories and fads mean nothing if they don’t have a clear business impact. He stressed that value is measured by the receiver, not the giver. He is so right. His 14 Criteria model is easy to grasp, but it demands a fundamental action shift for many HR practioners.
He suggested that all HR folks take the following test. (or similar)
1. What is the turnover and profit of your company?
2. What is its P/E ratio?
3. Who are the main competitors?
4. What are their P/E ratios?
5. What are the main industry challenges?
6. Where is your company weak/strong?
7. How fast is it growing or shrinking?
Unless HR folks can engage in a sensible discussion with the business, then it is really tough to add value. He also suggested getting an equity analyst to brief the HR management. Analysts are more and more concerned about intangibles. The Economist once defined an Intangible as, “Anything in a firm that generates value that you can’t drop on your foot.” Human Capital is the normally the biggest one, yet most CEO’s don’t really talk about it with investors. That is dumb.
Dave made the point that if marketing can come up with a model for valuing something as fuffy as brand, then it is high time that HR started to articulate the value of human capital and talent in financial terms. This is a pet topic of mine.
His advice for HR Executives..
HR executives have many conversations that lead to action. With the HR value proposition as a foundation, these conversations focus on results relevant to each stakeholder.
· With investors, conversations focus on how intangibles become a determining factor in the creation of sustained market value. Actions focus on intangibles audits and how these audits can provide specific insights on how to improve shareholder value.
· With customers, conversations focus on customer needs and how HR practices can be aligned with customer expectations, with a view to increasing customer share. Besides adjusting practices, action may involve ways to engage customers in designing and delivering HR practices.
· With line managers, conversations center on delivering business strategies through prioritizing and creating organization capabilities. Actions follow as the concept of capabilities translates into investments of budget, time, and energy.
· With employees, conversations provide insight into an employee value proposition that assures that if and when employees deliver value, they will get value. Actions may then be specified to ensure that employees have both the ability and the attitude to do what is expected of them.
· With HR professionals, conversations capture both the roles and competencies they require to deliver value. This helps HR professionals realize their roles and demonstrate their competencies.
There was much more to it than what I’ve said here, so go and buy his books.
I’ve commented on the links between HR and Finance before, but I think it is vital for HR and Finance folks to talk to each other more…
I was good to catch up with the Kevin Delany, the HR practice partner head from PWC Europe. PWC accquired Saratoga, one of the leading HR benchmark firms. If you are interesting in looking at the latest in measuring intangibles, then Kevin is well worth getting in touch with.
I also had a quiet beer with Armin Trost. He is a German HR academic, teaching in theBlack Forest. He used to run Recruiting at SAP. I like his business model of teaching, research and consulting. He is planning to start a blog.
Thomas Sattelberger, the HR Head at Continental, kicked off the second day. He explained forcefully and lucidly how Continental HR has transformed. Impressive stuff, and it provides the Ulrich theory with a really good practical proof point. He is also speaking at the SAP HR Congress in Nürmberg next week. (I’ll be there too)
Michael, Arne and I ran a workshop case study on the second day. We had senior HR types from several Swiss, Finnish and German companies in attendance. Instead of the typical SAP death by powerpoint, we experimented with a new approach. I’d read Ulrich’s research, so we put together a case study that picked up on some of his key themes. We modelled it on the traditional business school type case, but with a little more humour.
You can try it too if you like. (I’ve removed the corporate slide layouts..) Meet Borris Bottomline, Christina Cashflow, Peter Paperbased, Brian Banker, Andrew Android, and Thomas Trotsky… Any suggestions for improvement welcome.
(wordpress.com won’t allow slideshare embedding yet, but hopefully it will soon. Slideshare is really rather neat)
The session worked suprisingly well. Lots of discussion, and we wove in some real customer examples. The bit of humour tends to relax people, especially if they haven’t met before.
The advice Dave Ulrich gave the HR folks, that HR professionals should be able to cogently discuss these external realities – the technology, regulatory and economic factors, and demographics of the global business environment – and connect them to their day-to-day work, applies equally to those advising and selling.