Four steps to create leaders: Prof. Dave Ulrich

BANGALORE, INDIA: Dave Ulrich is Professor of Business Administration at the Ross School of Business in the University of Michigan, where he is in the core faculty of the Executive Program, Co-Director of Michigan's Human Resource Executive Program, and Advanced Human Resource Executive Program.

His teaching and research is on how to create an organization that adds value to customers and investors. He studies how organizations change, build capabilities, learn, remove boundaries and leverage human resource activities.

Prof. Ulrich was in Bangalore recently to address the HRD Congress. In an exclusive interview with Srinivas Rasoor of CyberMedia News, he talks about the leadership in Indian companies, cultural values, innovation and the importance of natural learners. Excerpts:

CMN: How do Indian ICT companies leverage their human capital to drive competitiveness?

Prof. Dave Ulrich: They leverage human capital by making sure that the employees have talent and skills that would help serve the customers needs and so we try to built talent inside the company in response to certain customers needs outside the company.

CMN: How can Indian ICT companies drive revenue per capita from an average $40k to $150k?

DU: I don't think you will get there all at once. To move from $40k to $150k, you have to take a lot of little steps, and so you would ask employees what are things you could do to reduce the cost of operations or increase the revenue and getting employees involved that will allow you to have lot of people thinking about the common problems. So they find hundreds and thousands of ideas. In Toyota, they have a suggestion system where every employee is encouraged to make suggestions on how to improve the process, to reduce cost and increase the revenue, and to get that many employees have to make a habit. It will take time.

CMN: What is your take on the leadership trend in Indian companies?

DU: Leadership makes a huge difference, because it is not about any one individual leader. It is about the collective identity of leaders. The essence of leadership brand in India is that the leaders inside the company reflect the expectations of the customers outside the company. Therefore, the leader inside the company should be doing things that the customers are delighted that they are doing, and if we build that in India, we will be more successful.

CMN: Does the term "natural learners" apply to leaders or organizations?

DU: It applies to both. An organization is a learning organization while it can generate a set of new ways of doing work and then generalize and pursue those ideas across boundaries. An individual is a learner, when that individual does today and not what they did yesterday. Often we say - how you guide your job - that thing you know how to do yesterday may not allow you to do your job tomorrow because the world is changing and natural learners will continue to learn how to do better.

CMN: Companies that have excelled at quality initiatives in concept and implementation may not necessarily have the mindset for innovation, is something we generally hear. Are there any statistics to prove this?

DU: When quality begins, innovation and quality both begin at the same place, which is beginning with customers outside. Innovation usually comes when there is a customer need that we haven't met. Sometimes, quality focuses only inside a change in our internal processes. But quality begins outside, with what customer expects and it do not have; then we are more able to get innovation and quality together.

CMN: How do you see the value of culture in an organization?

DU: Culture is the most valuable part of any organization today. Most people define culture from the inside out our values, norms and expectations. We like to define culture from outside in. Our best customers know us by the culture we adopt. To some extent, culture is a brand; it is an identity of the firm in the mind of the customers. What we have learned is the strong firm brand would give 25 to 30 percent more revenue. Culture should be part of the revenue increase.

CMN: What is your take on human capital as a competitive engine?

DU: Competitiveness means there are two things - doing something that customers value, and secondly, in a unique way. Customers value products: they value low price, they value innovation, but they also value the quality of the service they receive. Our competitors may copy the price of the product, manufacturing process, etc. Where they can copy less is the way we service people. And service often becomes the differentiator because it is a unique source of competitive edge.

CMN: What are the common factors of knowledge management and human resources? How far have we come in these factors?

DU: Very far! Knowledge management is the ability to take ideas and transfer them across boundaries. Human resources are the processes and disciplines, which enable that to happen over time. So HR sustains knowledge management.

CMN: Integration of HR with business strategy is still a challenge. Are there examples of companies that have integrated and balanced economic behavior, and technology into a new knowledge value proposition?

DU: Hindustan Lever in India has given the strategy. Here are the HR priorities that we should invest in. They have done a very nice job. They start with the concept of business strategy and then they say what does the organization need to be good at to make that strategy happen and what are the HR priorities to be implemented in order to go forward, and they have done a good job.

CMN: It is possible to bring together, HR, KM, business, change and technology forward in an integrated way?

DU: It is not only possible, but it is required! If we do any of those separately, for example, if we do technology separately without HR, we will have the technical systems, but we do not have the good ability to integrate them socially. If we do change, we have an event, but we have created a new cadre. It is a challenge and that has to be integrated. HR should be integrated with others as they have to do with the way they hire people but also the process and change. They really must be integrated.

CMN: Are HR activities are a subset of an organization's capability to deliver value to shareholders, customers, line managers and employees?

DU: Yes. The success of the HR is measured by the extent it delivers that value to each of the stakeholders, to employees we make sure that they have a value proposition to work hard or productive to line managers they execute strategy, to the customers we make sure they buy more products, to investors we make sure they buy our stocks and to community we make sure we have good reputation.

CMN: You have put forth 14 criteria for a new HR practice. How many companies have put this practice in a tangible way?

DU: My experience is about 20:60:20. Twenty percent of the companies only do the new HR and do well, 20 percent they never get there and 60 percent with coaching and training can make that progress.

CMN: Looking at current business, one needs to think about where business is going and what HR should be doing in 10 years time. What is the future reading for HR?

DU: Human resources will be important in two ways: one is continue to improve the quality of talent and people within the organization -- that means we do see in India a turnover, so we get good people in the company and stay in the company. The second way is managing the organization culture or capabilities. It is not just good people who make successful; it's how those people work together as a team. Managing both of those mentioned becomes critical the talent and teamwork and the individual and organizational capabilities.

CMN: How do you create leaders in an organization?

DU: There are four steps we follow in creating leaders. The first is: we form a theory or point of view of leadership, how to find successful leadership. The second is: to assess people, people change and where they need to improve. The third is: to invest in job experience, job training, and life experience and the fourth is: to track and monitor the success. So the theory, assessment, the investment and monitoring all enables us to create global quality of leadership.

CMN: India is facing high rate of attrition in some sectors. Is it necessarily bad or viewed as natural consequences of the demand-supply equation?

DU: One of the jokes I like to make is the most strategic activity any company can engage in human resources is to take the lowest performing employee and place them in the competitor. And so, if we lose bad employees, it is a good thing. However, we have to learn to keep good employees. I feel it is a natural consequence.

© CyberMedia News