Ulrich’s first two steps are:
1. Why change? / understanding the context
Ulrich suggests the first phase of transformation is to build a business case by understand the context within which HR adds value.
2. So what? / understanding the benefits
Here, Ulrich notes the need to focus on organisational capabilities as outcomes of HR activities. He suggests these are things like cost (Walmart), global distribution (Nokia), leadership depth (GE), accountability (UPS, Federal Express), innovation (Apple and Google) and speed (Pfizer).
(I think these are good examples, but I’m less impressed by the suggestion in Ulrich’s interview with David Creelman that a more talented workforce, a leadership bench, a unified company culture and a more efficient HR organisation are capabilities for Rockwell. Firstly, because there’s no idea of differentiation behind these – or it there is, it’s not identified. And secondly, because no organisation is going to gain competitive advantage through a more efficient HR organisation!)
It’s hard to argue with Ulrich’s first step – but I’m still going to try!
Or more specifically, I’m going to suggest that Ulrich’s first two steps are listed the wrong way round. Understanding the business and then identifying the outcomes / capabilities that support the business is a fine approach for adding value, but we want to create value too. This requires us to understand our organisation’s capabilities or potential capabilities and then to identify which of these the business context suggests are opportunities for competitive advantage.
I’m also going to draw issue with the second step in this process.
However, I also want to note how much I agree with the step itself. Capabilities are combinations of human, social and organisational capital, are are what this blog, and its sister blog, are all about.
My criticism concerns Ulrich’s idea that, as the book’s subtitle suggests, HR transformation is about building HR from the outside in. In my view, capabilities come from the inside out. They’re so fundamental to organisations that they’re very difficult to build from scratch. The key, as I’ve already suggested, is to identify the capabilities that already exist, or could be relatively easily developed, and then seek to understand which of these provide the basis for competitive advantage.
Continuing the process:
3. How to transform? / making the change
Ulrich notes that HR re-engineering is about
- Changing the HR department to deliver against expectations
- Improving HR practices
- Ensuring HR professionals have the competencies they need to meet today’s demands.
4. Who does it? / allocating responsibilities
Ulrich says he sees line managers as increasingly accountable for HR work, with HR professionals as leaders and architects.
I think there’s a step missing between #2 and #3. Organisations need to develop an HR / people management / HCM strategy before they seek to re-engineer. The strategy will include much more than just the identification of organisational capability – for example, it will suggest the talent groups that support this capability as well.
I also think HR transformation / re-engineering are the wrong phrases. This isn’t actually about ‘HR’ at all. It’s about the opportunities for people management, and the role of organisational capability, or human capital, hence HCM.
So Ulrich’s right to note the increasingly important role played by managers. But again, why call it ‘HR work’? Managers are accountable for managing. HR is accountable for the architecture. And as I’ve also posted on previously, I believe HR should also be accountable for providing the organisational accountability / human capital that’s been agreed as well.
So I still prefer my HCM strategy development process that I posted on a few weeks ago. What do you think? Does Ulrich’s HR Transformation provide ‘a commonly accepted way to think about the HR function’. Or is it time for Ulrich to hand the baton on to Strategic HCM?