Dave Ulrich on calculating the market value of leadership: An interview by Bob Morris


Dave Ulrich is the Rensis Likert Collegiate Professor of Business Administration at the Ross School of Business, University of Michigan, and a partner at the RBL Group a consulting firm focused on helping organizations and leaders deliver value. He has been ranked as the #1 management guru by Business Week, profiled by Fast Company as one of the world’s top 10 creative people in business, a top 5 coach in Forbes, and recognized on Thinkers50 as one of the world’s leading business thinkers. Dave has written 30 books and over 200 articles that have shaped three fields:

o He has influenced thinking about organizations by defining organizations as bundles of capabilities (Organization Capability) and worked to delineate capabilities of learning (Learning Organization Capability), collaboration (Boundaryless Organization), talent management (Why of Work), and culture change (GE Workout).

o He has articulated the basics of effective leadership (Leadership Code), connected leadership with customers (Leadership Brand), and synthesized ways to ensure that leadership aspirations turn into actions (Leadership Sustainability). Dave’s current work on The Leadership Capital Index (published by Berrett Koehler in September 2015) creates a “Moody’s index” for leadership. This work examines leadership through the eyes of investors and helps realize the market value of leadership, thus bringing the fields of firm valuation and leadership together.

o He has shaped the HR profession and been called the “father of modern HR” and “HR thought leader of the decade” by focusing on HR outcomes, governance, competencies, and practices (HR Champions; HR Value Added; HR Transformation; HR Competencies; HR Outside In). He spearheaded a “gift” book on the future of HR (The Rise of HR, distributed to over 1,000,000 HR professionals), in which 70 thought leaders freely share their insights.

Here is an excerpt from my interview of Dave.

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Morris: Before discussing The Leadership Capital Index, a few general questions. First, how do you exp-lain the fact that the average tenure of CEOs now is less than half of what it was only a decade ago?

Ulrich: Performance demands coupled with transparency make the CEO (and other senior leadership jobs) much more difficult. Investors have less patient capital and the competitive landscape is more demanding than ever with technology enabled information and global players. CEOs who don’t perform quickly are identified and pressured to meet global standards.

Morris: Opinions are sharply divided about how important charisma is to effective leadership. What do you think?

Ulrich: Of course, we resonate with charismatic leaders. The inspire us and give us confidence. But it is useful to get underneath charisma (is it presence? Communication skills? Style? Or something else?). And, we have learned that any array of personal attributes that do not lead to clear results will not create sustainable leadership. Finally, leadership is less about what a leader is, knows, or does, but how that personal style makes others better. For example, authenticity or emotional intelligence without creating value for others is more narcissism than leaders. Leaders should build on their strengths that strengthen others.

Morris: Opinions are also divided as to whether or not to motivate another person. I doubt it but do believe that it is possible to [begin italics] inspire [end italics] another person’s self-motivation. What are your own thoughts about this?

Ulrich: Most people are motivated by something to do something. For example, we have had students at the university who are labeled “unmotivated” then we find out they are whiz’ at video games, dress up in costume and arrive hours early to a football game, and plan and deliver great parties. These students are very motivated, just not to what faculty think matters. Leaders’ tasks are to help others see that doing things the leader values will help the other better meet their goals, not just the leaders’ goals. If students have more academic discipline, they will have more opportunities for play and pleasure through their lives not just while at college. Leaders need to direct motivation.

Morris: In your opinion, what are the defining characteristics of a workplace culture within which personal growth and professional development are most likely to thrive?

Ulrich: Managing “culture” has become and I think will become an increasingly “hot” topic in the next few years. The war for talent will evolve to victory through organization where the organization becomes more important than the people. Individuals may be champions, but teams win championships. The organization culture area is murky at best with dozens of overlapping and competing ideas and frameworks. Without clarifying this in a short answer, let me say that culture should begin by identifying the “right” culture, which I believe is the identity of the firm in the mind of key customers and investors outside. In this logic, culture inside a firm should be tied to firm brand promises made to customers and investors outside. When employees see that their daily actions will generate value for customers and investors, they are more motivated to pursue those actions.

Morris: In 1924, 3M’s then chairman and CEO, William M. McKnight, observed, “If you put fences around people, you get sheep. Give people the room they need.” In today’s business world, to what extent (if any) are there still “fences” that restrict and demoralize workers? Please explain.

Ulrich: Organizations succeed because they respond to the environment in which they operate. Most hierarchical organizations define clear roles, responsibilities, rules, and routines … called bureaucracies, that enable organizations to have clarity about what is expected in a world of high complexity. Today, the environment is not only complex, but also enormously uncertain and changing. Building bureaucracy will not respond to change. Organizations today have to be building around empowerment, involvement, engagement, and decision making so that employees can respond at the pace of environmental change. This means changing fences which constrain behaviors to networks that invite new behaviors and opportunities.

Morris: In your opinion, does the Chief Human Resoyrces Officer (CHRO) or equivalent today have more, less, or about the same influence on the most decisions made at the highest level as was the case fifteen years ago? Please explain.

Ulrich: Last year we published an interesting finding … the 14 leadership characteristics of the top CEOs were most matched by the top CHROs (more than those of a CFO, CMO, or CIO). We find that top CHRO’s know and do what CEOs need to succeed. High performing CHROs help define and deliver individual talent, collective leadership, and organization capabilities that enable organizations to win.

Morris: What is the single greatest challenge that a CHRO or equivalent faces in an international organization that has more than 100,000 employees located in dozens of different countries?

Ulrich: The basic question for any CHRO in a large or small company, public or private, global or domestic is to answer the question: “How will my work add value to this organization?” This value is defined not only by internal outcomes (more productive employees, more likely to accomplish strategies), but also increasingly by external outcomes (customer commitment, investor confidence, community reputation). HR professionals should define and deliver talent, leadership, and organization insights that create internal and external value.

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Tom read the complete interview, please click here.

Dave cordially invites you to check out the resources at these websites:

His Amazon link

His website link

RBL Group link

Ross School of Business link

Forbes interview on “The Future of HR” link

Harvard Business Review link

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