In the quest for improved business performance and reduced costs, the Ulrich Model has been promoted as a powerful solution for HR to adopt to help address today’s challenging business climate. But does the Ulrich Model actually work? Asks Gary Ashton

So how is your business preparing itself for the stormy economic conditions ahead? If the HR department been briefed to reduce costs and help improve business performance, then you’re not alone. Today’s HR department is expected to help deliver a stronger, more competitive business.  It is judged on its success in helping meet business targets such as reducing costs, improving customer service, quicker delivery and product innovation, as well as add value through HR business partnering.  HR academic Dave Ulrich launched the business partner model with his 1997 book Human Resource Champions: the Next Agenda for Adding Value and Delivering Results.

The Ulrich Model explained
Ulrich put forward the argument that the roles of HR needed to be redefined to meet the competitive challenges that organisations are facing. To achieve this, he designed a structure where basic administrative HR is taken care of by low-cost, shared-service centres, while a team of business partners align themselves to the various parts of the business in order to design and deliver relevant people strategies. In the middle are the centres of expertise, which provide specialist advice in areas important to the business, such as recruitment, development, remuneration and employee relations.

In short, business partnering makes HR accountable to the business, and expects HR to add real value.  And to date, many companies, both in the public and private sectors, have implemented the Ulrich model, in the hope that it will help to reduce costs (through the shared services), increase business competitiveness through the development of talent, and finally allow HR to become that true strategic, value-adding business partner. A recent survey carried out by the CIPD (Chartered Institute of Personnel and Development), claims that almost one-third of businesses have introduced the model in full, and an equal proportion have partially introduced it. However, not every company has benefited from implementing the popular model. According to research firm Roffey Park, only 47% of managers said that business partnering was in any way successful in their organisation. One in four said the model was ineffective, while the rest were still undecided on the merits of what still is a popular model.

Comments like “HR can’t even get the basics right, so it’s no use talking to us about partnerships” are common. As the new HR systems are implemented to deliver automated, cheaper, more efficient services, the dream that this can then free up HR professionals to provide expert advice required for the business and provide a proper business partnership to address their particular challenges, goes unrequited. So, although Ulrich’s approach seems to have been successful in some organisations, it has yet to deliver for many others.  Those firms that have derived little benefit claim that it’s an uphill struggle as there are several challenges to not only implementing the model, but in the actual running of it too.

Challenges in implementing the model
Systems before people: In our experience, the installation of the Ulrich model can sometimes be driven by the systems changes that provide the basis of shared services. However, making the whole HR organisation work, including the business partners and centres of excellence is seen as secondary importance. Consequently the service starts to gradually erode, reducing the quality of service and the reputation of HR.

Understanding gap: Shifting from a more traditional model of HR to the Ulrich model requires a radical shift in thinking about how HR services are delivered, and how the different roles interact with each other in order to provide service excellence. Failure to shift people’s understanding – both within and outside of HR – can mean individuals reverting back to their traditional roles, causing confusion, which ultimately results in a poor service to the customer.

Capability gap: The business partner and centres of excellence roles, in particular, require a strong combination of technical and interpersonal skills that may have not been required in previous HR roles.  Putting people into these roles where they lack the capability, or potential for development, will not only result in a poor service, but is stressful for the HR individuals involved, and highly frustrating for the customer.

Unwillingness: Some of your HR staff may enjoy their current, more generalist role, with an established relationship and way of working with the line managers, and so may not want to change. Or they may (wrongly) feel that some roles are more superior to others, and so aspire to jobs in which they do not necessarily have the right capabilities.

Non-acceptance and support from line management:  For line managers this model can be seen as nothing but extra work, as basic line management responsibilities are shifted from HR onto them. If this view is sustained, you may not gain their support and they may continue to demand the old service from their more personal, generalist HR manager. Such pressure from line managers can slow down the anticipated level of service and benefits that your HR team is expected to deliver.

Consequently, as well as getting the systems working, it is important to get the design of HR that is right for your business, assign people with the right capabilities in appropriate roles, and engage with the line managers to gain their acceptance for this change in working practices to be a success.

Challenges in running the model
But don’t make the mistake of assuming your problems are over after implementing the model. In ER Consultants’ experience, problems arise when you put the model into action. As different expectations and motivations kick in, the original good intentions may become warped, and it can create further complications, such as:
Shared Services – where one size fits nobody: From a technological viewpoint, the message is clear – standardise, simplify and save money. However, if your organisation has a range of business units whose focus, market or operations are very different and distinct, applying standard processes across them all can prove disruptive. It is also a false economy.  One size does not necessarily fit everybody. To avoid disappointment, it is important that these risks are evaluated and tackled when designing the system and quantifying your benefits.

HR Business Partners – Going native: The role of the HR business partner is to provide strategic advice and guidance to the business, starting with the business challenge, and providing an HR-appropriate solution.  It is the closest role in HR to that of a consultant.  However, as with consultants, working for a specific part of the business for too long and getting too close to the business can create a business partner that sees the world too much from that part of the business, and not enough from a corporate perspective. The consequence of this is HR not adding real value, instead becoming nothing more than a post-box of requests or blind advocate for their business leaders.

Centres of Excellence – Sitting in your ivory towers:  From our own research, we discovered that the risk here is that technical experts can become too disconnected from the business. If the business partners do not allow the space for a healthy dialogue between these experts and the business, you will see the experts drift ever upwards into their towers of jargon, who end up developing and delivering far too many initiatives for the business to digest.

Business Partner/Centres of Excellence overlap – treading on each other’s toes: The reverse of the previous statement can also occur, when turf wars break out between business partners and centres of excellence. It is a difficult balance to strike and can occasionally mean that the business customer of HR getting confused as to who he or she should be talking to.

So does the model work?
Given the many challenges, it begs the question, is the Ulrich model actually worth the hassle? Many HR directors believe it is. The view is that if you ensure you start by defining the objectives of what you want to achieve, rather than being a slave to Ulrich, you can avoid some of the most common pitfalls. Define the deliverables – ask what does HR want as outcomes? If HR wants a seat at the table, it needs to be accountable for outcomes, not just processes. Its personnel need to think less as ‘HR people’ and more as ‘business’ people.

So, does the Ulrich model actually work? In our experience, the answer is yes – it can be made to work. But it is not something that can be implemented according to a manual. To be a success, it has to be adapted to the specific needs and culture of each organisation. By thinking through what you want to achieve, and how HR will deliver that through the capabilities and behaviours of the HR professionals, you have the chance to make the Ulrich model work for your organisation, so it can weather any storm that heads its way.

Implementing the Ulrich Model with ER Consultants
Typically, clients ask us for help either when they are designing their new HR organisation, or when undergoing teething problems in trying to get it to work. ER Consultants provide advice, guidance in the design, implementation and development of new HR delivery models for a range of clients. We provide support in:

Defining the future HR architecture
By this we mean defining the key accountabilities for each area of HR, identifying where decisions get made, and how the different roles interact with each other and with their internal customers and external providers. In tailoring the Ulrich model to your business’ particular circumstances, we will define the optimum structure, tackling issues such as: how the roles of HR services, case managers and business partners will manifest themselves into actual jobs; what ‘centres of excellence’ are necessary for your specific needs; and what actually will be expected of staff and their line managers for this model to work. From this organisational model, the basic structure and roles can then be defined, specifying purpose, accountabilities, decision authorities and measures for each role.

Assessment and selection for the new roles
Internal and external candidates for the new roles created can be assessed by ER Consultants’ Business Psychologists, based on an agreed set of competencies that are critical for the new HR organisation.

Induction and development of new roles
Induction: Changing the way in which HR delivers its service requires HR employees to understand how it all works – the different roles and how they interact with each other and with the customer. To achieve this understanding, the whole HR team needs to be inducted, allowing them to discover in a safe environment, how each role will operate.  Through tackling different real-life scenarios that
HR encounter, and allowing the role holders to contract between each other in what is expected, and working out how the customers will be managed, the HR team will together make sense of the new organisation and how it will operate.

Development: Based on the evidence collected during the assessment of candidates, their development needs can be identified. From this we can build an individual and collective experiential development programme that ensures your new team evolve quickly into the roles expected of them, and deliver a highly effective HR operation.

Change management for HR and line managers
In parallel with the building of a new HR organisation, the staff and line managers’ expectations need to be established – i.e. what HR service will be provided, how it will work and what impact it will have on their own role. For this, the organisation requires a programme of change that starts early in the process, builds awareness and commitment and deals with the resistors to the change, so that upon its launch, the line managers are prepared and anticipating a new, more professional HR service.

For more information, contact:
Gary.Ashton@erconsultants.co.uk

© er consultants Topics Issue 2, 2008