Dave Ulrich on how to supercharge your human capital investment for the best business outcomes

Imagine spending hundreds of thousands of dollars on developing an algorithm that predicts the people most likely to leave your organisation. It’s a good HR investment, yes? For we all know that retaining good people is an essential ingredient for business success.

Now what if you had data that showed the ability to retain people did not have much impact on outcomes in reality. Instead, acquiring the right people had more impact on the results that matter for your business.

What about your investment in leadership? All organisations want to build better leadership. I bet it’s one of the first areas in your HR budget you look at each year. Let’s build a leadership development programme. But what if research across 1,200 organisations worldwide finds that investment in leadership training does not have the most positive impact on business outcomes. Instead, it’s building the business case that generates the outcomes. If people know why leadership matters and how leadership drives results in your company, that will cause more positive outcomes than simply designing a training programme.

These are two examples uncovered by Dave Ulrich and his colleagues at strategic HR and organisational leadership Consultancy The RBL Group. But don’t think these necessarily translate to your business. For here’s the rub. To really deliver value to their businesses HR needs to take the next step and move from benchmarking and best practice – both of which still have their place – to ‘guidance’. In other words, beginning with the results your particular organisation is trying to achieve.

“I think we in HR get so excited about our latest best practices or innovative ideas that we walk into the business leader and say, I'm going to do this in diversity. I'm going to do this in culture change. I'm going to do this in agility. I'm going to do this in innovation – instead of starting with that result,” says Ulrich.

“We have this unconscious bias of seeking best practice. We've gone to some really great thought leaders in HR and said ‘look, this idea, it will help you focus your work’. The response? ‘But what's the best practice we should have in agility? That's a hot topic today.’

“The first best practice is – is agility the right one to focus on or should you focus on innovation? Should you focus on collaboration? Should you focus on customer service? Which capabilities should you organisation drive right now?

“Instead of benchmarking – how do I compare – or best practice – who do I copy - let's move to guidance. What can I do to meet my goals? Guidance moves from description to prescription. Start with the question what can we do with our HR human capital investments to help us as a business reach our business results?”

It sounds easy but Ulrich and the team at RBL have discovered some 185 variables that could deliver the best outcome for you organisation. These are based around the five most common outcomes businesses desire – employees, strategy, customers, financial investors and communities – and initiatives and competencies in four pathways – talent, organisation, leadership and HR. Imagine all that in a grid.

In this video interview Ulrich explores why now is the right time for HR professionals to get out of their comfort zone and harness this time of uncertainty rather than trying to manage it. He discusses how HR leaders can move from benchmarking and best practice to an ‘organizational guidance system’ (OGS) and what that looks like in practice. And he invites HR professionals to help shape the OGS and be part of what he calls the greatest HR disruption in more than 50 years through taking a free assessment that will generate their own OGS report.

“I think there's going to be 20-30% of HR professionals who are comfortable wearing their old clothes. They fit well – they benchmark, just tell me the company I'm going to go try to copy. If you're in that bottom 20%, I hope you've had great guidance for your retirement plan because somebody's going to replace you. Companies cannot allow human capital to lag the requirements of the business today,” he says.

“I hope HR people in the last year have found that in this crisis of 2020 and 2021 human capital is center front. 2008 and 2009 was the financial and economic crisis, 2020 and 2021 is the people and organisation crisis. I hope you've reinvented. I hope you've experimented. Try those things that will work, even if we don't do them perfectly. Get on board. The best is yet ahead.”