Unlocking Human Capability: Strategies for Creating Modern HR Value with Dave Ulrich

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00:00:06: Neil Morrison Hello and welcome to another episode of the Aspire to Inspire Podcast brought to you by Staffbase. My name is Neil Morrison, and I'm the Chief People Officer here at Staffbase. Today I'm joined by, I'm going to say, the one and only Dave Ulrich. Dave, author, speaker, professor, thought leader on all things human capability. Co-founder and principal at the RBL Group.

00:00:30: Neil Morrison Godfather of HR. It's a real privilege actually, Dave, to be able to host you today on the podcast. Thanks for being with us and welcome. Looking forward to the conversation.

00:00:39: Dave Ulrich So am I, Neil. Thanks for the opportunity. I'm mostly a father of 3 and a grandfather of 10 and a husband of 1. That's probably more relevant.

00:00:48: Neil Morrison Amazing. Ten grandkids, that's awesome and probably keeps you very busy. Maybe in the times that you do have spare and the work that you do, if we can dive in, I'm looking forward to the conversation. You believe that now is the time for human capability to deliver value to its stakeholders.

00:01:07: Neil Morrison I'd love to understand a little bit more about how you define human capability. How is that made up? And why now? Why is now the time for it to really unlock value for stakeholders?

00:01:19: Dave Ulrich It sounds like you want a whole book. Let me try to keep that brief. If I'm listening to this, I'm in communications, I'm in HR, I'm a business leader worried about people. And we talk about human resources. I think I'm going to start with human. Often when we say who's the human in human resources? Let me tell you my epiphany a few months ago.

00:01:41: Dave Ulrich The human are the employees. In every company, we have a set of employees that we serve. We try to build those employees. We try to make sure that those employees have skills and knowledge because they're human. Here's the epiphany. Executives are human. Boards are human inside the company. Customers are human. Investors are human. And citizens in the communities where we live and work are human.

00:02:05: Dave Ulrich So for me, the logic of human resources is to serve all of the humans who interact with our company. That clearly includes our employees. We communicate with them. We also communicate with the executive team to help them do strategy, the board to help them shape the direction of the business, the customers to help them get their needs met, the investors to get their needs met, and the citizens.

00:02:30: Dave Ulrich And so for me, human resources begins with all of the humans who are stakeholders to a company. I'll stop with that. That's an interesting way to redefine human resources. Human resources is not about HR. It's about serving the humans who are engaged with the company. Both inside the company, executives, boards, employees, and outside the company. Staffbase that does communication,

00:02:54: Dave Ulrich are we communicating not only inside to those humans, but to the customers, to the investors, to the citizens, suppliers, government agencies? That's the place where I see human resources moving. And now is the time. All of those stakeholders need what organizations offer.

00:03:13: Neil Morrison It's really interesting and also quite complex when you think of it like that. Whilst it makes a ton of sense, that complex landscape of stakeholders will often need different things. Therein lies the paradox. I know that the RBL data has shown there's a paradox to navigate often.

00:03:32: Neil Morrison How do you see great organizations really achieve the ability to serve the interests of whatever combination of stakeholders?

00:03:40: Dave Ulrich All of those stakeholders, yes. I think we go to those stakeholders. For example, if I'm in HR and I want to do a communication plan, or I want to do a compensation plan, or a talent plan, or a training plan, or culture change, or leadership, we go into the executives. And I love thinking of them as human beings because our job is to engage them.

00:03:58: Dave Ulrich It's why I like talking about the human part of stakeholders because they're people. And so I go to them, and traditionally what we do is we start by saying, "Here's the communication plan I'm going to propose. Here's the compensation plan, our philosophy. Here's our training program. Here's our workforce plan." I think that's not where you start. I think when we, in communication or in HR broadly, go to some humans who interact with a firm, that could be an executive team, a board,

00:04:27: Dave Ulrich we start with what they're interested in. An executive team is often interested in a strategy. So I start by saying, our strategy is to invest in AI so that we can reinvent the marketplace and create products faster than others. You go to a customer. You are interested in getting products and services that meet your needs. An investor, you're interested in our company providing value that helps you get a good economic return.

00:04:55: Dave Ulrich If we start our HR discussion with stakeholder value, human value, we say to the executive committee, today I'm going to present a communication plan, but I don't want to start there. I want to start with what our customers need from us, what our investors expect from us, what the citizens expect from us. Now I'm going to show how the communication agenda will deliver customer, investor, and other stakeholder, citizen expectations.

00:05:22: Dave Ulrich To me, that changes HR. Everybody says, “Well, I'm in HR to serve my people.” I go, “The best thing you can give your people is an organization that succeeds in the marketplace.” Because if your company doesn't succeed in the marketplace, there is no workplace. Unless we serve those customers and investors well, we're not serving our employees.

00:05:44: Neil Morrison Makes sense. I suppose the context that those stakeholders are then operating in, which over the last few years has changed seismically, that also then has an impact, right, on those within the organization to be aware of, those changes, the shifts in expectations or needs, that stakeholder fluency becomes even more important. How are you seeing the shift or the current, let's say, macro context really shake that up or not?

00:06:09: Dave Ulrich To some extent, that's why now is the time when you started. It's a great quote. It comes in my world from an American activist decades ago that most people don't remember, Martin Luther King Jr. He was an amazing activist who built off Gandhi and changed some of the social activism in the US. He has a speech that almost everybody's heard of,

00:06:28: Dave Ulrich I Have a Dream. What's fascinating about that speech is the first phrase he repeated multiple times was now is the time. Now is the time. And I think now is the time for human capability to be connected to all humans, to all stakeholders. When surveys are done of CEOs, and if you're a CEO on the phone, listen, what are the things you worry about?

00:06:53: Dave Ulrich I love the consulting question. “What keeps you awake at night?” Generally, three things. Uncertainty, the economic uncertainty, the political uncertainty that we all live with. Who could have predicted in the last year the things that are happening in Germany, in the UK, just around the world? Second is technology, AI. All AI all the time. It feels like AI is just dominating the world.

00:07:18: Dave Ulrich I am not an avatar, by the way. This is me, and I hope you're not an avatar. You can poke yourself. Third is organization and people. When at Davos, the conference in Switzerland, at the WOBI, World Organization of Business Intelligence, almost every senior executive survey or program says three issues, uncertainty, technology, and people. In the US,

00:07:44: Dave Ulrich the government, because this is so critical, has now required in the Securities Exchange Commission that companies report human capital. It's a symbol of its importance. Intangible value in the marketplace represents somewhere between 50% and 90% of a firm's market value. If you look at the firm's market value, some is determined by cash, EBITDA, cash flow, but half to 90% is determined by intangibles, and 25% to 30% of those intangibles are people and organization.

00:08:14: Dave Ulrich Long story short, now is the time. That's why I think the human resource world, communication, staffing, development, et cetera, needs to begin to pay attention to all the humans who are interacting or connecting with the firm. That's exciting to me. As you said, it's complicated. It's an ecosystem. It's not just saying, how do I make my employee feel good today,

00:08:36: Dave Ulrich bring a pet to work? That's not enough. I don't disagree with that. We want employees engaged, committed, et cetera. We may talk about that. But we also want to make sure that our customers, our investors, our outside citizens, in whatever country I work, feel connected to the firm in a very intimate and connected way.

00:08:54: Neil Morrison Yes, thank you. In that sense, really, the phrase that's been coined over time, I think, by RBL is sort of this HR from the outside in or value from the outside in.

00:09:04: Dave Ulrich I love that metaphor. Neil, I don't know if you're in a relationship with someone. You're nodding and you're blushing, so that must be yes. When you give your partner, the relationship, your spouse, your partner, a gift, who defines the gift? You, the giver, or she, if you're a traditional relationship, she, the receiver?

00:09:23: Neil Morrison It's a nontraditional one, so it's a he, and very much he.

00:09:27: Dave Ulrich That's it. That's the logic, is whatever relationship we're in, the receiver defines the gift. I'm in a traditional relationship. I've been married 50 years. When I first got married, I gave my wife tickets to sporting events, and her comment was, “Enjoy yourself.” I mean value is defined by the receiver. When you get your partner a gift, is it something that he values?

00:09:50: Dave Ulrich That's the same basic principle. Am I giving the employee something they value? Am I giving the customer something they value? Am I giving the investor confidence in our future earnings? It's that value from the outside in that really shapes the agenda that we're trying to create.

00:10:08: Neil Morrison For that agenda to cut through with stakeholders, it's interesting to maybe unpick say 30 to 40% of the quarter, right, of the 25% that's intangibles. How have you seen organizations really create a narrative or do work that cuts through in a way that shines a light on the intangibles?

00:10:32: Dave Ulrich First of all, we have to recognize that they exist, that it's not just about cash flow, because cash flow business performance is usually 35 to 40% of the intangible value. Strategy is 30 to 35, organization people is 25 to 30. An executive team — I'll tell a quick story. We're working consulting. I won't name the company,

00:10:54: Dave Ulrich obviously. Their market value is 10 billion. Happens to be dollars, could be pounds, marks, whatever it is. I guess it would not be marks. I’ve just dated myself, euros. They're trading at 20% below the industry average on price earnings. A price earnings is a high-level number about how much does the investor value our earnings.

00:11:19: Dave Ulrich They're 20% below. They're a $10 billion company. That's $2 billion. That's a lot. That's a lot. So I said to the head of HR, we need to go to the executive team and say you're trading 20% below on price earnings. There's a $2 billion loss in the marketplace. The head of HR looked at me and said, "That's bad news.

00:11:43: Dave Ulrich We shouldn't share that with them." I'm going, "Are you kidding me? That's not bad news. That's real. If that executive team can't work with that, they're in trouble." Another company, 40 billion, 20% below. That's $8 billion. I said to the CEO, you're trading — It's not a hard discussion. If you don't know —

00:12:05: Dave Ulrich I said, “You're trading at 20% below on your price earnings ratio.” And he said, “You don't think I know that?” He looked at me and he said, “Dave, if you can't help me fix that, get out. You're not here just to hire people and train people. You're here to hire and train people so that the investor has a higher confidence in our future.

00:12:24: Dave Ulrich So when you do a training program, will the training program increase investor confidence in our future success? If you can't make that happen, it becomes a social agenda, not an economic one.” Now, we believe in social agendas, but we also believe that they're connected to the economic agenda. That's the line of sight. I can

00:12:46: Dave Ulrich tell a lot of stories about that. That's the agenda that I think is HR of the future. HR is not about HR. HR or communications is not about sharing information. It's about building success in a marketplace, because if we don't succeed in the marketplace, there is no workplace. I'll tell one other quick story.

00:13:05: Dave Ulrich I was working at one of the four big technology companies, and we all know who they are. It doesn't matter. And I was intimidated. I don't know, Neil, have you ever been intimidated when you go to a meeting and have to speak? I am all the time. I'm not with you because I've known you and you're a friend. Here's why.

00:13:23: Dave Ulrich There were 100 senior leaders. 70 of them had PhDs in computer science, mathematics, physics, technology. And I'm going, my undergraduate degree is in English. I read books and got a degree. My PhD is more in math, statistics. So I thought, “How do I get their attention?” I started this way. What do these companies have in common? I started listing some. Digital.

00:13:50: Dave Ulrich They were in the technology business. Digital equipment. Enron. Sears. Toys "R" Us. Eastman Kodak. Somebody yelled out, “They all went broke.” And I yelled back, “I consulted for every one of them.” There was about a half a second of silence. Then they said, “Either this guy's pretty confident or really incompetent.” I said, “We took a company from 100,000 employees to 20.

00:14:17: Dave Ulrich You have 100,000 employees, give me a year, I'll get you to 20.” They said, “What are you trying to say?” I said, “What we've done in the past is we've built HR systems, people, organization. We'll define that more elegantly. Inside. What can we do for the employees? We did not connect them to the marketplace.” Kodak.

00:14:33: Dave Ulrich Kodak was an incredible company. They made film. Some may not even know what that means. It's a three-foot piece of plastic, one inch wide. They sold it for four or five dollars. At the time, they said, that's the best margin in the world outside of the mafia. I mean this is incredible. They missed the outside in.

00:14:55: Dave Ulrich They missed information. They missed the iPhone. They missed technology. They missed imaging. And Kodak basically shrank to almost nothing. We failed those companies when we focused inside. We succeed. Toys "R" Us, 200,000 employees went out of work because they missed the Amazon distribution model. Our job is not to do HR. It's to do HR so that we succeed in the marketplace. We bring that outside you inside the company.

00:15:25: Dave Ulrich I am so passionate about that because I think a lot of HR people — we're in one company, big company, one of the large companies, I won't name. We said to the HR person, “When you meet with investors, what do you tell them?” Her comment was, “What do you mean? I don't I don't meet with investors.

00:15:43: Dave Ulrich That's investment relations.” Then why are you there if your comments are not helping the investors have perceived value of your future? I mean it's great to do social work. I don't disagree. But if that work doesn't create value in those stakeholders that are humans and investors are human beings. These are not robots, I hope, they may be someday in the future, but we want to build that investment community.

00:16:11: Dave Ulrich That's the agenda we're focused on. HR is not about HR, but creating value in the marketplace.

00:16:16: Neil Morrison Yes. Bringing information from the outside in, I think is a really poignant phrase. Yes. Great.

00:16:23: Dave Ulrich So people say, what does that mean? Staffing. Are you the employer of choice of employees your customers would hire? Have you invited your customers to recommend people, to set standards, to interview people, training? What percent of time do you have outsiders, investors, customers, co-creating your training program, attending your training program, presenting in your training program,

00:16:46: Dave Ulrich communication, the strike zone of Staffbase? Are our internal communications and external communications consistent? Do we say to the marketplace, we believe our brand is A, B, and C, and then we tell the employees X, Y, and Z? No. We need to tell the external customer ABC and our employees A, B, and C so that our consistency inside is connected to the agenda outside.

00:17:11: Dave Ulrich

00:17:11: Neil Morrison I love that. I think it's really important. When we talk to lots of the chief communications officers that we work for or corporate comms teams that we work with, there's this really growing sense, I think, in the age of radical transparency and also in authenticity that your brand proposition, your customer proposition really is exactly the same as your employee proposition.

00:17:34: Neil Morrison And if there's a difference, you're on the wrong track.

00:17:37: Dave Ulrich We should high-five. I don't know if you can high-five virtually. There we go. We just high-fived. We love that. We get invited in as an advisor and you get invited in with communications. We say, build our culture, build leadership. Our first question is, show me your social media, your commercials. Show me your face to the marketplace.

00:17:57: Dave Ulrich Show me your brand. Social media could be advertising. What are the promises you're making your customers? Then we say, show me what you're training your leaders to know and do. Is there alignment between those? Because if we're promising our customers A, B, and C, and we're training our leaders to do D, E, and F, we’ve just got a disconnect.

00:18:20: Dave Ulrich I think the same is true of culture. Culture is one of the hot topics. I'm teaching a class in the hotel where I am. What's culture? Our values, our behaviors, our norms, our unwritten rules, how we go about business. Yesterday, those are the answers we often get. And I said, “Listen to what you just said: our, our, our, we.”

00:18:40: Dave Ulrich Every one of those definitions of culture was about us, inside out. I think culture is the identity of the firm in the mind of your key customer. They said, “What does that mean?” Disney wants to create a culture. What do they want at a Disney theme park to be known for so that we will take our children so that you and your partner will go have a great experience?

00:19:04: Dave Ulrich What's the identity? You just talked about brand. The external brand becomes the internal culture. When those co-align, our internal employee value — you said it brilliantly, our internal employee value proposition is connected to the external value proposition. If your values don't create value for the customer, why do you have them? Anyway, that's the idea. That's the metalogic.

00:19:29: Dave Ulrich It really does put HR on notice. Are we aware of not just the employees as human beings, but our customers, our investors, our other stakeholders?

00:19:40: Neil Morrison Definitely. Just listening to you, one of the things you do so naturally is you extend the thought. You don't stop with the first observation. You extend it into something more meaningful where the value comes. I remember being at an RBL event, hearing about the “so that”, the constant chains of “so that”. Can you tell us about that?

00:20:00: Neil Morrison

00:20:01: Dave Ulrich I'm running a program. This is not a fake. Is your room backdrop a fake?

00:20:06: Neil Morrison No, it's real. It's all real.

00:20:08: Dave Ulrich Oh, I got to ask, what is the picture? I've just been curious since I logged on. What's the symbol of the picture behind you over your right shoulder?

00:20:15: Neil Morrison Actually, it's nothing more than an artist who's from Wales, who spent 20 years of his life traveling Southeast Asia, collecting things along his way, and now does artwork that is inspired from Southeast Asia. It's all like 3D relief work from his collection of different flowers and stamps and all sorts of stuff.

00:20:33: Dave Ulrich What does it mean to you?

00:20:35: Neil Morrison Honestly,

00:20:36: Dave Ulrich

00:20:37: Neil Morrison I just loved it. I just loved it. You know, sometimes you see it, you love it, you just want to have it in your space. It's nothing more than that. But yeah, I think it's beautiful.

00:20:45: Dave Ulrich Let me tell you why I asked the question. I'm trying to connect with you by finding out what's in your mind. Now I see the artwork that's so cool. That's so exciting. I'm in a hotel room, it's real. I'd rather be in a room that has my artwork. We often ask in a program, what do you want to learn how to do better?

00:21:02: Dave Ulrich I want to communicate better. I want to change a culture. I want to build leadership. I want to build compensation. I want to do workforce planning. I want to do hybrid work, whatever the topic is. And I say to folks, why? Then I have people go to their flip chart. I hate to admit, we still put it on flip charts and write the words, “so that” .

00:21:22: Dave Ulrich I want to improve leadership so that our strategy happens. And I say, “No, you're still inside the company.” I want to do leadership so that strategy happens, so that the customers in the marketplace we serve buy more products. Got it. So that investors give us a higher price-earnings ratio, so that communities give us a better reputation.

00:21:42: Dave Ulrich When we do the “so that” question two or three times, we get outside our firm. And that's where HR begins. When I go into a meeting as an HR professional, starting with customers, here's what's happening in our customer base. Here's what's happening with investors because of the HR practices. Now we're building that connection, the inside and out.

00:22:04: Dave Ulrich I think it's exciting. I think it applies to communication. I think it applies to staffing. I think it applies to training, compensation. If your investor could look at your compensation criteria, would they be more or less likely to buy in your firm? Sometimes the investors go, “Well, that's really good. I hope you do that,

00:22:23: Dave Ulrich but that's not what I care about.” We want to get you to care about what we care about and vice versa.

00:22:30: Neil Morrison I love “so

00:22:32: Dave Ulrich that.” It's so easy.

00:22:35: Neil Morrison It's a super practical one. It really stuck with me. I agree actually in the spirit of communications, I think "so that" is a really important question to ask yourself two or three times because it's often communicate the message in the moment, but we should know why we should know the outcome which is driving as we're creating those narratives within the organization.

00:22:54: Dave Ulrich

00:22:56: Neil Morrison One of the things we're okay at the minute seeing more of is hot topics around CEO succession, Starbucks, Chipotle, Boeing. It's a pretty rife conversation at the moment. We've talked a little bit already about talent and talent as an integral part of human capability. I think the phrase “war on talent” has been around for quite a while.

00:23:18: Neil Morrison It's like a very long war, maybe with different battles, but I'd love to get your thoughts on how successful organizations are really navigating that talent landscape right now to achieve their needs.

00:23:31: Dave Ulrich Let me go a step broader. The last 20 minutes, we've been talking about value created outside in. Now I'm going to go to the next step. If I'm focused and I hope everybody's going, yes, I've got to think about who are all the humans that we interact with customers, investors. When we act with an executive committee, what do we bring them to create value?

00:23:51: Dave Ulrich Talent is one thing. Here's one thing we've discovered. Let me just quickly give an example. Around the world, there are HR associations in almost every country. The World Federation of Personnel Management has meetings and they haven't had one in person for years because of COVID. They had one in Singapore in May, and 1,500 people got together for three days to talk about what's new in HR.

00:24:16: Dave Ulrich There were 29 sessions. That's a lot of sessions. There were sessions on hybrid work, AI leadership, communication, HR. Just imagine 29 sessions over three days, each of which had insights and research. If you're an attendee, put in your head, I've just spent three days. I've got 29 sessions. I go back to my executive team and say, “I'm going to add value to customers,

00:24:40: Dave Ulrich investors, strategy boards by doing these 29 things.” I think your executive team would look at you and go, “Neil, I can't do that.” One of the things we've learned is that every field makes progress with a taxonomy. Now taxonomy is not a word HR people have used. What it says is we've got to consolidate the 29 items and you could have more, you could have less,

00:25:05: Dave Ulrich but there's a lot of things HR could do. Every time I go online, there's a new, greatest, latest tool. A taxonomy simplifies. It's like going to a restaurant. I don't know if you have a favorite restaurant in London. There's a restaurant, I don't think they're in the UK, called Cheesecake Factory. If you're in the US, go to Cheesecake Factory, oh, it's great.

00:25:25: Dave Ulrich Has 300 items on the menu. It's got a big menu. That doesn't count all the alcohol, wine, drinks. Imagine if you went in there and they weren't organized, that here's a dessert, here's a coffee, here's a main course. Anyway, just imagine your confusion. You'd walk out. What does a restaurant do? Appetizers, soups, main courses, drinks.

00:25:45: Dave Ulrich That's a taxonomy. Psychology has a taxonomy. Myers-Briggs, four types of people, the colors. Every field has a taxonomy that simplifies complexity. The HR field does not. We get lost in all the details. 29 items. We have created a taxonomy that we've empirically tested, and here it is. We call it human capability. I'm now going to define that. It's talent.

00:26:11: Dave Ulrich I need to manage my talent better. Those are my fingers. They're people. My fist represents the organization. People come together in a team. So when I go into a meet with a business leader, I say, do we have the right people? That's the war for talent. Do we have the right team? That's the culture. That's the capability, human capability. The combination,

00:26:33: Dave Ulrich my hand on my fist, that's leadership. And the forearms represent HR. Okay, Neil, you and I are going to do something embarrassing that will make this more interesting. If you could hold up your right hand with fingers, that's your talent, your left hand with a fist. This is Staffbase. We have great people. We have a great organization.

00:26:51: Dave Ulrich We have great leadership, and we have great HR. And now you dance.

00:26:57: Neil Morrison Love it.

00:26:59: Dave Ulrich Okay. I bet you've not done that in a podcast. I make fun of myself, but we're deadly serious about that. When I walk into an executive team or I go to a customer or an investor, do we have the right people in this organization? That's the war for talent. Are they competent? Are they committed? Are they engaged?

00:27:17: Dave Ulrich Do we have the skillset for the employee to go forward? Are we getting the people who can serve the customer in the way that matters to them? Do we have the right culture? Do we have the right systems? Do we have the right organization? Do we have agility? Do we have innovation? Do we have efficiency? Do we use AI well?

00:27:35: Dave Ulrich And then succession is leadership. Do we have the right leaders? Not only the CEO, but do we have leadership all the way through? Then the forearms represent the HR practices. I find that little topology — and we've tested it. Organizations that have talent, organization, leadership, and HR, they tend to create more customer value, investor value, strategic execution. That's the world that I'm excited for HR.

00:28:02: Dave Ulrich Now, why don't you ask the question? If I take the talent piece, not the organization, but talent, do we have great people as the workforce? No question. People matter. And we think three things. Are they competent? Do they have the skills for today and tomorrow? We love to put new words on old topics.

00:28:21: Dave Ulrich We call it now skill-based organization. In my day and at PepsiCo and before, they called it competencies. Yum!, KFC, do we have the competencies? Are those people committed? You can be really competent and not work very hard. Where I think we're moving in talent is competence, skills, commitment. They show up. Behavioral commitment, engagement.

00:28:45: Dave Ulrich The next one is contribution. Competence, commitment, contribution. Are they flourishing? Are they finding meaning and purpose from the work that they do? In the war for talent, we fight the war with people. By the way, we win the war with organization. I was reading some military history, I'm not sure why, by accident.

00:29:04: Dave Ulrich It said: A lot of the key to success is not who fights the battles, but the logistics chain that enables them to continue to play. That's the organization. We have talent and we have organization, and we have to navigate both of those. That's the framework we've been using for human capability.

00:29:21: Neil Morrison Great. To link back to a previous conversation about the intangible value, is it human capability that makes up a lot of the intangible —

00:29:30: Dave Ulrich 25 to 30%. Talent, organization, leadership is 25 to 30%.

00:29:37: Neil Morrison Okay. So talent, organization and leadership.

00:29:42: Dave Ulrich It's not 80%. Frankly, if we have great people, but they don't eventually make money, the investors aren't going to give us value. 35 to 40% is economic performance. Consistency, predictability. Do we make money? Sometimes HR people are not willing to look at that. Yes, we have to be successful. Staffbase makes money. That's good. 30 to 35%

00:30:06: Dave Ulrich do we have the right strategy, the right investments, and 25 to 30%, which is still sizable. That company I said before, $10 billion valuation, 2 billion discount. 500 million, 25%, 500 million, is because we're not managing our talent, organization, and leadership as well as we should.

00:30:31: Neil Morrison Yes, and telling that story in a way that the external stakeholder understands and values.

00:30:36: Dave Ulrich Absolutely, and the internal action. Let me tell one quick example of that I think is really fun. Working with a company in Southeast Asia, maybe where some of your beautiful art comes from, big company, 15 billion market value. The founder is now about 80, and he knows he's got to build succession, so he creates a leadership training center. Gorgeous center,

00:30:58: Dave Ulrich one of the best physical facilities in the world, spends 400 million. That's a lot. Hires a head of training, PhD from Harvard, and he says to her, “Do a return on investment of 400 million.” She calls and says, “Dave, if executives we train improve their productivity 5%, we put 400 a year through, it's going to be 83 years to return 400 million.

00:31:27: Dave Ulrich I'm stuck. It's really return on his ego, but if I tell him it's your ego, then I'm going to become a consultant.” I said, “You're misunderstanding. Start with that first number, 15 billion market value. What if you got investors to give you a 4% premium on the value of the company because of what you put in the training program? 4% of 15 is 600 million.

00:31:51: Dave Ulrich It's a 50% return.” She said, “Wow, I've never thought of that. That the value of human capability, leadership training, that's leadership, is increasing investor confidence 4%.” She said, “How do I do that?” I said, “I don't know. Call Staffbase.” No, I didn't say that. What do you do? You get the investors to start co-creating the training.

00:32:14: Dave Ulrich You get them to attend. You get them to participate. What do you as an investor know? Supply side, demand side, upside, sell side. We need to help you have 4% more confidence in our leaders who go through this training. Took them a year and a half. Wow. 50% return on the 400 million. I hope people follow those numbers.

00:32:37: Dave Ulrich If I'm in communications, I'm now communications 101, 201, communicate the value of what you do to somebody else. Don't communicate what you know but how what you know helps them. I think that's just a cool story. It's not that simple, obviously, but that logic is just profound to me.

00:32:56: Neil Morrison Yes, definitely. Let's talk about leadership for a moment, if we can. I'd love your thoughts on leadership now, because I get at a societal level, there's maybe a growing sense of dissatisfaction, disapproval, leaders face more transparency than ever. We, I think, have maybe lowest levels of trust in leaders at organizations, religions, media, governments. That flows through to leadership in the corporate world, no doubt,

00:33:29: Neil Morrison as they are viewed by their employees, let's say. I'd love your thoughts on that context and what leadership challenges exist now for those organizations to really be battling through and winning.

00:33:43: Dave Ulrich I'd love your thoughts. What do you think? I knew I was going to ask this, because this as a conversation. You do these podcasts. You've interviewed CEOs. You've interviewed heads of HR. You've interviewed a lot of folks. If you were to say one or two leadership nuggets you've heard, and again, for those who are listening, this isn't scripted,

00:34:02: Dave Ulrich and I'm going to talk for another 10 seconds, so Neil can pull together a thought or two. I think leadership matters. I don't think anybody questions that. You can stipulate it. We have research that shows people do what their leaders do. What are a couple of your thoughts? Then I'll share some of mine.

00:34:19: Neil Morrison I can think back to a couple of recent conversations with Pano Christou at Pret A Manger, with Greg Creed, former CEO at Yum! brands. There were some really powerful insights shared around authenticity and actually the human connection from the leader to the workforce in that sense, knowing what someone believes in, stands for, that their behaviors are congruent with the values that they say are important.

00:34:43: Neil Morrison There was this real theme around authenticity, and that was in the backdrop of this growing sense of transparency or the demand for transparency or the availability even of transparency. Then the second theme that comes to mind is actually something that I was going to ask you later, which is around this creating purpose, or I think I heard it called meaning makers, and that maybe that there is that leadership role now that's really important to reconnect people with a sense of personal or collective purpose.

00:35:15: Dave Ulrich My answer is: amen. I think that's a great answer. Thank you. Can I build on that?

00:35:22: Neil Morrison Please.

00:35:23: Dave Ulrich About 12 or 15 years ago, we wanted to study leadership, and everybody does studies. My PhD, to those who were those scientists in that technology company, my PhD is in statistics. It's in taxonomy. That's why I love taxonomy, talent, organization, leadership. It's not in dance at all. I decided, everybody does surveys.

00:35:48: Dave Ulrich We do a lot of research. We do surveys with thousands of people and thousands of companies. I thought, what does it mean to be an effective leader? So instead of doing another survey with thousands of people, I said, who are the 15 people who've done collectively two or three million Leadership 360s, who've written 100 books?

00:36:08: Dave Ulrich What's the meta-analysis of thought leaders? We went to 15 thought leaders, and you've interviewed some, you will interview some, Maxwell, Eichinger, Lombardo, just really brilliant folks. We said, two questions. Number one, to what extent are — By the way, we stipulate leadership matters. We could have said, "Does leadership matter?" And their answer would have been, “I spent my career on it,

00:36:34: Dave Ulrich duh.” Question one: What percent of leadership skills are the same basic skills, no matter where? Big company, small company, public, private, global. The answer we got back was somewhere between 60 and 80%. We said 65, 75% of leadership skills are the same basic skillset. Question two, so given all these 360s in coaching and leadership training you've done, what are they?

00:37:02: Dave Ulrich We discovered five. You've picked two, and if you had more time, you'd pick the others. I think these five domains of leadership, we call it the code, the DNA of leadership, are timeless. Number one, strategy. You've got to know where you're going. Today, we call that purpose. We call that meaning. In the market today, strategy is not just about an objective financially,

00:37:24: Dave Ulrich it's meaning, it's purpose, but it's directional. Two, you got to execute. You got to get it done. You can't be a leader by just having a plan without a dedication. Execution, build teams, make it happen, build accountability. Third, you got to manage your people. Confidence, commitment, contribution, that talent. You got to get your people to go with you.

00:37:45: Dave Ulrich Fourth, you've got to build what we call human capability. You've got to build the organization that sustains the next generation of people. Then in the middle, so if we had North, where are we going? North stars, Steve Covey's metaphor. East, execution. South, talent. West, human capability, future. In the middle, personal proficiency. That's where you started.

00:38:11: Dave Ulrich Authenticity, trust, integrity. Are you somebody I'm willing to follow? We've said those five leadership domains are somewhat timeless. Strategy, where am I going? Execution, how do I get there? Talent, who goes with me? Human capability, who stays when I'm gone? Personal, how do I interact, connect with the people I'm with? We found that when leaders have those five domains —

00:38:37: Dave Ulrich So one of the things that's cool, if you're listening and your company has a confidence model, and most companies do, go match them. Go match them. We've been in some companies that all of their competencies are in the middle, what you just said, trust, integrity, authenticity. That's great. We love you, but we don't know where we're going. We don't know how we're going to get there.

00:38:58: Dave Ulrich Others have a lot of competencies and skills around execution. We're going to go forward, we're going to make it happen, we're going to be accountable, we're going to help make change happen, but they still don't have a purpose. We found that those five domains are somewhat timeless. Now, they're timely. Timely means those five domains have changed over time.

00:39:18: Dave Ulrich Strategy, you defined it beautifully, it's purpose. It's not just a strategy. It's a strategy with meaning. Execution, it's engaging people in how we get things done. It's building guidance about accountability. Talent management, it's helping people find their goals met. Human capability, it's building the next generation. And in the middle, the authenticity, character, integrity, trust, ethics, those are timeless.

00:39:45: Dave Ulrich They have to be there.

00:39:46: Neil Morrison That's a great framework, this leadership code. Thanks for sharing that one. It probably wouldn't be then a conversation at the minute if we didn't talk about AI, and you'd already mentioned it, but friend and foe, enabler and disruptor, AI right now, I guess, colliding with this sense of putting the human at the center of the value.

00:40:07: Neil Morrison What are your thoughts on how organizations are navigating this moment to keep the human centered whilst capitalize on maybe the opportunity that exists?

00:40:20: Dave Ulrich You know, it's interesting. It's all AI all the time. I'll tell a quick story. It's about a year and a half old. We've all got our stories. Our daughter is a professor of sociology. She called when ChatGPT started and said, “Dad, my job's over.” “Sweetheart, how come?" ”Nobody's going to listen to me anymore. Nobody's going to do a paper.

00:40:41: Dave Ulrich They're going to do an AI paper. They're going to turn it in. It's just replaced me.” I said, “Oh, that can't be.” I got on ChatGPT and I said, “What's the future of HR?” We've all done it. We've all asked questions. Boom. 30 seconds later, 300-word essay. I read it and I went, “My job's over.”

00:41:03: Dave Ulrich I called her back and I said, “Monica, we're both out of work.” She said, “What are we going to do?” Actually, she went to law school, and I read it again. Let me tell you what I think ChatGPT does and does not do. Well, if I were to fill in the blank, AI, and there's a lot of pieces of AI, large language models, ChatGPT, natural language processing,

00:41:26: Dave Ulrich but at a high level, AI provides, I'm giving people a minute to think, information, that's it, so that stakeholders get value. That's what AI does. Now, what information does it provide? I went back and looked at that 300-word essay. It summarizes the past. It's as if I had 10 PhD assistants. It consolidates what's out there. So I read it again.

00:41:55: Dave Ulrich I said, “That's Lynda Gratton. That's Peter Cappelli. That's John Boudreaux. That's Ed Lawler. That's Kurt Lewin. That's Peter Drucker.” It pulls that past together in a brilliant way, but it doesn't create a future. So the information I need, if I'm an HR person or a communications person, is the past. What are the skills of a communications person in a company today?

00:42:20: Dave Ulrich Hit a button. AI will give me the 10 skills. Be careful. That's the past. Where does the human touch on information come in? Given the things we started with in our discussion that you described so brilliantly, Neil, the world's changing. Those skills may not be tomorrow's skills. The human touch needs to create what's next. AI can consolidate the past.

00:42:45: Dave Ulrich I don't think we're going to have research assistants like we had. Our daughter and other professors are saying, sociology, what are the socioeconomic trends in Belgium? Turn in two papers. The first paper is the AI paper. The second paper is your paper. And if your paper doesn't build on the AI paper, the human touch has not created

00:43:09: Dave Ulrich value. I love that. What are the skills in communications in the future? Well we can do an AI. I'm assuming Staffbase doesn't say, we have a set of skills for communications for every company. Here it is. You go do it. No, you go into that company and say, what's happening in your marketplace? Now, there's some basics,

00:43:28: Dave Ulrich but now what do you need to do to move forward? That's the human touch that provides even better information.

00:43:34: Neil Morrison Great. This is a very pragmatic, real, and also optimistic expression, I think, of where we might be at with AI and how it can integrate with our lives, with our work. The question that you asked AI and then got a little bit panicky about, what is the future of HR? I guess RBL Group must be, I don't know how many million data points through research on that question over time. But what are your thoughts now?

00:43:59: Neil Morrison What are your thoughts on where the future of HR really sits? What's coming next?

00:44:06: Dave Ulrich We see five things, and I'm not sure we've got it right. We've talked about some of them. One is outside in. HR is not about HR. It's creating value for stakeholders, the human beings, both inside and outside. Two, in a world of uncertainty, focus on certainty. If we don't know the future in a company, we try to build scenario after scenario, and it's an ad nauseum scenario.

00:44:33: Dave Ulrich I love to focus on what are we certain about. I talked to somebody who has a child. I did this yesterday in class. She has a 16-year-old daughter. “Where's she going to go to school?” “I don't know.” “What's she going to study?” “I don't know.” “Who's she going to have a relationship with?” “I don't know.” “Where's she going to live?” “I don't know.”

00:44:49: Dave Ulrich And I said, “Do anything about your daughter?” She said, “I don't know.” Then I stopped and I said, “Do you love her?” You could just feel the room stop. Oh, without a doubt. That's what you're certain about. In a world of uncertainty, focus on the certainty at a personal level. Your organization, communicate what you're certain about. Those core values that you will not change.

00:45:13: Dave Ulrich Amazon's commitment to customer. Google's commitment to information. Focus on that. Number three, personalize. I think we're seeing an incredible, what does this mean for me? It's not just a narcissistic generation. How will this work help you? Often when we teach, we love to share what we know. I keep going, don't share what you know. How will what help someone in the room have a better experience?

00:45:44: Dave Ulrich Number four, navigate paradox. Navigate paradox. You personalize and you standardize at the same time. You mentioned paradox. We found this so critical. I like simple takeaways, if you haven't noticed. We've all seen charts that say “from to”. From day to day to long term. From operational to strategic. From individual to organization. From social to economic.

00:46:11: Dave Ulrich My comment is next time a “from to” chart, make it an “and also.”

00:46:16: Neil Morrison

00:46:16: Dave Ulrich Make it “and also.” We need to be operational and strategic. We need to be short term and long term. We need to focus on the individual and the team. And I think changing that mindset, that's paradox. The final one is analytics and AI. We need good information and we need analytics in our field in HR to provide us guidance.

00:46:37: Dave Ulrich We've been building some guidance systems that I think are fascinating, that give you guidance about where should I invest to get the impact I care about. Outside in, what's the value we're creating for others? Certainty in a world of uncertainty. What am I certain about? What will I keep doing no matter what? Personalization, how do I care for the one? One by one, one by one. Paradox,

00:47:03: Dave Ulrich how do I go from “from to” to “and also?” Then finally, analytics and AI.

00:47:12: Neil Morrison Brillant. Big Themes.

00:47:13: Dave Ulrich

00:47:14: Neil Morrison Lots to keep us busy, that's for sure. Thank you so much for sharing those. I know you have a weekly newsletter that you share this and many other thoughts. As a reader of those, I can highly encourage people to get on board with that and subscribe.

00:47:29: Dave Ulrich You know, I've written a lot of books. I've written a lot, 30 books. I've written a lot of books. What I find is, and this is a world of change, it takes a year to write a book, a year to produce a book. If it's not around corporate, it's out of date. So I started LinkedIn as a troglodyte.

00:47:45: Dave Ulrich I now have a lot of followers. I have a weekly newsletter. The goal is not to get a like. Likes don't count very much. The goal is to get a conversation. And that could be with somebody in Sri Lanka. It could be with somebody in the North Pole. It could be with somebody in Stuttgart. It could be with somebody in a small city in Africa.

00:48:06: Dave Ulrich I love the access of LinkedIn to sharing ideas. I post on LinkedIn. I'm posting right now at this moment, and again, this is being taped, every week, every Tuesday, I post and hope people will engage with the ideas. I've said to people, my ideas are my best friends. My wife didn't think that was probably the right answer.

00:48:28: Dave Ulrich She's my best friend. But I love the ideas that we engage. This is a field of great ideas. And Neil, your questions, your preparation, the work you're doing, you've done at Yum! and at KFC and Staffbase and elsewhere. Brilliant. Because you're creating ideas that have an impact.

00:48:47: Neil Morrison Great. Thank you, Dave. I think, with the intention of starting a conversation, having a conversation, this has been a conversation I've so appreciated. I can do a big tick-off, something that I've longed to have for a while, a one-on-one conversation with you, Dave. Thank you for all of those insights,

00:49:04: Neil Morrison for the tips, the practical advice, the wisdom that you've shared. This has been a really enjoyable conversation. I hope everyone enjoys watching and listening to it. Dave, thanks for your time. Join us again on another episode of the Aspire to Inspire Podcast soon. Thanks very much.

00:49:21: Dave Ulrich Thank you.