Leadership Matters

Cultural shift and digital disruption are changing the way we do business, and the very fabric of the economy. Dave Ulrich tells us how HR can keep pace.

By Liz Bernier

HR has long been envisioned by those not exactly “in the know” as the gatekeepers, red-tape dispensers or the unglamorous pushers of paper in a business ecosystem. While generally an unfair assessment, it is true that HR has historically been regarded as an administrative function as opposed to a strategic one.

But the times, as they say, they are a changin’.  

We are facing incredible changes in technology, information and automation – incredible changes worldwide – and sweeping economic changes following suit. And Dave Ulrich – recently named the most influential HR thinker of the decade – says this will disrupt the status quo not just for business in general, but for the entire HR function.

There’s no denying that the pace of change is fast now – faster than we’ve ever seen. There are bound to be massive impacts, Ulrich said to an audience of 60 chief human resources officers (CHROs) at the Human Resources Professionals Association (HRPA)’s annual CHRO Conference in Toronto.

“Of the original Fortune 500 companies in North America, how many still exist today?” he asked. “Sixty. That’s an 87 per cent failure rate for the biggest companies in North America. What a fascinating pace of change.”

One of the critical challenges HR is facing right now is cultural shift.

In a world of external change, where the environment is changing quickly, an organization has to change as quickly as that environment for it to be successful.

“Some of that change means, a) managing the culture, b) implementing initiatives, and c) helping people manage personal change. So when you can change the culture, implement initiatives and make personal change, the organization responds to the outside world,” he said.

When it comes to effective, sustainable cultural change, it has to be a process of growth – not a rejection or repudiation of the preexisting culture, says Ulrich.

“You take the old culture and you build on it. You don’t renounce the old culture. You say, ‘The old culture was great for the time and place, but there’s a new culture we require.’ And you pivot to that culture. My first comment on culture shift is that it’s not a shift, it’s a pivot,” he said. “The second is that it’s not the culture – it’s the right culture.”

Planting the grass

If you haven’t heard of Ulrich yet, chances are you haven’t spent much time in the business section of the bookstore. With a prolific 30 books to his name as well as more than 200 articles, the author, professor and thought leader commands HR and business audiences around the world.

He says that his goal is to spark ideas with impact.

“It used to be, ‘Do you like your job?’ Satisfaction. Then it became engagement. ‘Does your boss give you the tools to do your job?’ Now, engagement literature is about meaning and purpose. ‘Do you find meaning and purpose in your job?”
– Dave Ulrich

“Let me tell you what my passion is in the HR field,” said Ulrich. “Elephants eat grass. Then, the elephants that eat the grass process it, and then they pass the grass. Most of the academics I know study the grass that the elephants have passed. My passion is to plant the grass the elephants will eat next year.”

His focus is not on where HR has been, but on where HR can go, what HR can do. What are the opportunities?

“Sometimes they may not make sense – sometimes the grass doesn’t grow. But I hope we can get out of our current (mindsets) and think about what the future is.”

That’s something that was top of mind while he was writing his most recent book, HR from the outside in: the next era of human resources transformation.

“What’s the hardest paragraph of a book to write? The first one. So we struggle. What does this book say, and how can we say it in five words or less? Here’s what we came up with. ‘HR is not about HR… it’s about the business.’ And that’s the book. That’s the grass I want to plant today,” he said.

“The first question is not, ‘What do I do in HR?’ It’s, ‘What do I do for somebody else?’”

That’s the first and most important question HR needs to ask itself in order to keep pace with economic and market shifts. How does HR create value for the business?

“HR is about business, and it changes business, and it helps business grow,” said Ulrich.

Volatile, uncertain, complex and ambiguous

But as with most things, transforming HR is easier said than done, says Ulrich. There are a lot of external forces at work that are impossible to predict that will significantly impact the business environment.  

“The U.S. military was destroyed in Vietnam, and they discovered you cannot fight war with large, slow-moving forces. In a world of volatility, uncertainty, complexity and ambiguity (VUCA), you’ve got to move quickly. So they started the Special Forces,” he said. “In a VUCA world, you can’t have big and slow. You’ve got to have small and fast. And that applies to organizations.

“It’s not how big we are, it’s how mobile we are – while still having the benefits of skill. And we see firms doing that today.”

For instance, Amazon had started creating pop-up stores that sell only bestsellers for the geographic region they are in. That’s one way in which a behemoth firm has managed to be mobile, flexible and adaptive.

So how does a business build that model? First and foremost, through its stakeholders, says Ulrich.

“The boundary between investors and customers and employees is clearly blurred… You win by having an exceptional consumer experience. You win by having high net promoter scores,” he said. “What’s the biggest single promoter of a net promoter score? The product? No. It’s your experience with the employees who work there – as reflected by the culture.”

Take Airbnb, for example.

“How does Hyatt beat Airbnb? They give their frequent travelers an incredible experience. They give them unusual experiences. And that’s what we need to look at.”

Culture as a social interface

In fact, constructing that culture is, at its core, all about creating connection.

“(And) this is my fear with technology: in research on the digital age, it isolates people – it doesn’t connect people. I can now get a college degree sitting in my basement – or better yet, my parents’ basement,” said Ulrich.

“The social experience. The interface. This is where I think technology is an enabler and a disabler. Because if technology isolates us, pushes us apart… we fail. The challenge is how do we use technology to pull us together? How do we use technology to help people form better relationships?”

That’s one critical piece to consider when constructing a culture – but another is this: Are we in a place where employees can gain meaning?

“In engagement literature, there’s been an evolution. It used to be, ‘Do you like your job?’ Satisfaction. Then it became engagement. ‘Does your boss give you the tools to do your job?’ Now, engagement literature is about meaning and purpose. ‘Do you find meaning and purpose in your job?’ ‘Is it linked to your identity?’” said Ulrich. “And the other piece that goes along with that is to focus the accountability of this on the employee. This is active engagement.”

It’s not about whether you like your job or you like your pay. Instead, you can answer any engagement question by asking, “Do I do my best?”

“So the engagement is not the company’s obligation – it’s the employee’s obligation. And that kind of active engagement logic is a very good predictor of future (success). In fact, what we’re finding is that employee engagement correlates to customer engagement. So if I’m competing with Airbnb, I want my employees to be very engaged. If I’m competing in retail with Amazon, I want my employees to be very engaged. Because when they’re engaged, customers will be engaged,” he said.

It’s not about timesheets and attendance and processing payroll anymore. It’s not even just about people and culture-shaping. It’s about creating the right culture, with the right people, to deliver strategic business results, says Ulrich. That’s what HR has to aspire to, and that’s why one small sentence can sum up the singular goal the profession should strive toward.

“HR is not about HR – it’s about the business.” 


Liz Bernier is a communications specialist at the Human Resources Professionals Association.

Photos by Ali Aghtar, HRPA