HR Policies & Procedures, Podcasts

Dave Ulrich: Teaching HR the Language of the C-Suite

BLR’s popular podcast, HR Works, recently featured an interview with Dave Ulrich, the man some call the “father of modern HR.” He and his colleagues have a new book out that can help HR leaders in a practical and research-based way. The book is Victory through Organization, Why the War for Talent is failing Your Company and What You Can Do about It.

Note: This is the second of three articles based on the podcast. See the first article here. The third article will appear in a future edition of the HR Daily Advisor. (To listen to the whole podcast, visit HR Works.)

Dave is a Professor of Business of the Ross School, University of Michigan, and a partner of the RBL Group, a consulting firm focused on helping organizations and leaders deliver value. He has consulted and done research with over half of the Fortune 200. He’s the author or co-author of more than 30 books, including the number one Wall Street Journal business best seller, The Why of Work. He’s been named the top management thought leader in Business Week, Fortune, Financial Times, The Economist and People Management, and he has been designated the number one most influential international HR thought leader by HR Magazine.

[Steve Bruce, host of HR Works] Dave, welcome to HR works.

[Dave] Well, when you read that Steve, I feel tired. It’s great to be with you, and I look forward to our conversation.

[Steve] I first met you years ago, when you were facilitating a meeting for HR managers and their company presidents, and I remember I was taken by the fact that you were talking to the presidents about HR, and the presidents were all nodding in agreement and laughing, but some of the HR people were completely lost. So, what advice do you have for HR managers about speaking the language of the C-suite.

[Dave] I remember the session. I thought it was a wonderful session sponsored by SHRM. In a book, I think the hardest line to write is the first line, because it’s got to capture the book. Here’s the first line of our Victory through Organization book. “HR is not about HR. HR is about the business.” And so, to the HR managers in the room, unless you can talk the language of business, and really understand that HR is about the business, you don’t succeed. And the C-suite executives don’t listen.

Once you talk that language, C-suite executives are delighted to hear you. I was with a group of chief marketing officers last week. And they’re going, “Oh, here comes the HR guy.” So you realize that a company’s culture is based on its identity in the marketplace. You, in the marketing field with brand and advertising, create that identity. We, in HR, turn it into reality. We have to partner to make that work. Everyone right now is gaga over analytics. I mean, as soon as you say the word analytics, HR people eyes’ light up and they start to glisten with glee.

Here’s our data. We get analytics on analytics. When we study, “Does the HR’s person ability to do analytics have an impact on the business results?” Our answer was no. And by the way, that just shocks people. “Well, but it’s analytics, it must be good.” Here’s the insight. If analytics don’t focus on the business, they’re wrong. Lots of HR analytics are around HR scorecards. It’s HR for HR. They’re around HR intervention. “Let’s do this to do better hiring.” Analytics start with the business: Who are our customers? Why are they buying our products? What’s our cycle time for innovation? Who are our investors? Why are they buying our stock or reducing our cost of capital? Unless you start with those outcomes, analytics becomes another false hope for HR.

Our analysis of analytics says that in the HR field today, analytics is not having business impact. By the way, when I say that, if there are folks who study analytics, they get really angry. “Well, I’m an analytics person; I must be right.” No, you got what statistics call type III error. You’re measuring HR scorecards. You’re measuring interventions of HR. You’re not starting with business and showing how HR will drive business results.

[Steve] You briefly mentioned there are few analytic or metrics that you use, and I know you backup your recommendations with rigorous research, so are there any particular measurements you recommend for HR managers?

[Dave] Yeah, again, start with the business. We’ve done a lot of work around customers; Net Promoter Score, for example, is one of the new customer metrics that we in HR should be close to. What drives net promoter score? Is it product? Is it relationship with the customer? Or is it our internal organizational culture that affects how we work with you?

The one I love right now, Leadership Capital Index, was in my previous book. In the investment community, when an investor invests in a company, either stock through equity or debt through financing their capital, we have found that 25 to 30% of the investment decision is based on the perceived quality of leadership. So when I go talk to investors or venture capitalists, they say, “Should I buy in to Amazon?” Well, to be honest, Amazon doesn’t have that much financial profit, but they have an incredible leadership capital. They have a great leader, Jeff Bezos. They have a leadership team, and it’s that leadership capital that investors are paying for.

We, in HR, should be bringing rigor to that index, and we should be helping investors know the quality of leadership and culture that makes that happen. So we created an index. Some of that is the individual skills of leaders and some of that are the organizational capabilities that allow investors to have more confidence in the firm.

That’s an example of where I hope HR is headed. (I did a book called The HR Scorecard with brilliant colleagues, probably 20 years ago now. Today I think that book to be an embarrassment because it’s not about the HR Scorecard. It’s about the business impact.)