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WHY STRATEGIES FAIL? DEVISING A STRATEGY EXECUTION SYSTEM FOR CERTAIN SUCCESS

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“If you can’t measure it, you can’t manage it. If you can’t manage it, you can’t improve it.”
Kaplan and Norton (and many others)

According to Professor Robert Kaplan and Dr Dave Norton, companies that effectively execute their strategy evidence an impressive 50-150% increase in value. Those that don’t continue to battle the odds of success.

The People Barrier

The People Barrier

The desktop research around strategy execution speaks volumes:
• Fortune Magazine cites that “….less than 10% of strategies effectively formulated are effectively executed”
• Harvard Business Review states that “…the prize for closing the strategy- performance gap is huge : increasing performance by at least 50% for most organisations”
• Bossidy & Charan in their book “Execution” cite that “…in the majority of cases – 70% – of the problem isn’t bad strategy [thinking] but bad execution [action]”
• Chris Zook in his book “Profit from the Core” states that “….more than 2/3 of companies had targets that exceeded 9% real growth; yet less than 1 company in 10 achieved this level of profitable growth.”
What desktop research is showing us is that companies that fail to forecast and target success, will generally miss the target. In plain English, the same adage holds true “what gets measured gets done”. And yet despite innumerate measures, companies STILL fail to hit their targets and achieve strategic goals and objectives – and the question “why?” has to be hot on the tail of this statement.

REAL RESEARCH TO UNDERSTAND WHY?

Why is successful strategy execution so difficult to achieve?

Kaplan and Norton have dedicated a lifetime of study to understanding the field of strategy and execution. Why do some companies succeed while others fail even when both have seemingly impressive leadership teams? Is it the thinking, or is it the action? Is it really around metrics or is strategy driven by culture and behaviour change?
The Balanced Scorecard didn’t just ‘appear’ in the halls of Harvard. It evolved as one of the best ways to combat the Four Barriers to Strategy Execution. Kaplan and Norton’s research has identified four key themes, or barriers, that appear to interfere with successful strategy implemenation. Their research also supports that a startling 80-90% of companies FAIL when it comes to strategy execution. Here’s what they found:
1. The People Barrier: only 25 % of managers have incentives directly linked to strategy implementation.
2. The Vision Barrier: only 5% of the work-force actually understand the strategy the organisation intends to execute.
3. The Management Barrier: a staggering 85 % of executive teams spend less than an hour per month discussing strategy.
4. The Resource Barrier: alarmingly more than 60% of organisations fail to link their strategy to a live budget.

The ongoing frustration of wanting to achieve something great often outstrips the company’s ability to implement their thinking. The results can be devastating and leaders can quickly lose credibility having promised and communicated one thing, yet fail to implement on the other hand. While the perception of leadership integrity remains challenged, its important to make clear that often the thinking is in tact, but it’s the execution that is poor.

WHAT TO DO?

The temptation for any business is to try to ‘nail’ all four barriers in one go. That alone may be a strategy, but will probably result in continuing poor execution. Perhaps a better strategy is to target one barrier at a time, and over time, with the goal of eliminating them totally. As each barrier becomes a strategy in and of itself, over time, each barrier will be diluted if not eliminated completely. And, when that happens, the strategic thinking has a chance to surface over the traditional mindsets and restrictions that inhibit success.

THE 10-20% EXECEPTION VS THE 80-90% NORM

Those organisations that enjoy an impressive 50 – 150% increase in value have a formal process for strategy execution. Through this lens they have commonly identified what we can today call the “conventional wisdom” of stratgy execution:
1.FINANCIAL: They recognise that financial indicators are lag indicators and only measure the tangible outcomes of the strategy.
2.CUSTOMER: They revere the customer value proposition and define them as their source of value.
3.PROCESSES: They acknowledge that strategic processes create value for customers and shareholders.
4.LEARNING & GROWTH: They know that aligned intangible assets drive improvement in the strategic process.

ENTER, KAPLAN & NORTON’S 6 STAGE CLOSED LOOP MANAGEMENT SYSTEM FOR SUCCESSFUL EXECUTION

This is how Kaplan and Norton deliberately ensure you overcome the Four Barriers to successful strategy execution.
1. DEVELOP THE STRATEGY: Formulate your mission, vision & values – all the fundamentals. Keep in mind Google’s mission – “To organise the world’s information and make it universally accessible and useful.” And that of Bill Gates: “To put a PC on every person’s desk.’

2. TRANSLATE THE STRATEGY: This means having to create strategy maps and themes with measures and targets, assigning portfolios and providing funding to ensure that you overcome the Vision Barrier.

3. ALIGN THE ORGANISATION: This includes all business units, support units and employees. Ensure you overcome the People Barrier through initiatives that support strategy execution. Never under-estimate the investment required and the power of appropriate change management and communication in strategy execution.

4. PLAN THE OPERATIONS – Devise resource and capacity plans as well as key process improvements that will be required to make sure the Resource Barrier does not hinder the success of your strategy.

BOTTOM LINE : EXECUTE, MONITOR & LEARN

Make sure you properly review your strategy and operations to overcome the management barrier. TEST and review the profitability, devise hypotheses in terms of cause and effect and be alert to emerging strategies, new opportunities and risks. ADAPT where necessary.
This strategy execution system coupled with leaders who affirm their fundamental goals and purpose with quantifiable outcomes, Norton and Kaplan have continuously shown how much value you can derive by implementing strategy maps and balanced scorecards. This is why they have been acknowledged by Harvard Business Review for creating one of the most significant management tools in the past 75 years.
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Dr David Norton is the co-creator of the Balanced Scorecard and leading global practitioner in applying the Balanced Scorecard in both the Private and Public Sector. Together with Professor Robert Kaplan, he has been acclaimed by Harvard Business Review for his significant contribution to the management profession in the past 75 years. More recently Thinkers 50 have ranked them in their Hall of Fame alongside Tom Peters, Kenichi Ohmae, Warren Bennis, Howard Gardner, Henry Mintzberg, Charles Handy, Philip Kotler and Ikujiro Nonaka for their mammoth contribution to business management and leadership.

On the 11th September 2014 Dr Norton will present a full day seminar in Johannesburg on EXECUTING STRATEGY IN A NEW ECONOMY – Balanced Scorecard Essentials.

STRATEGIC EXECUTION “SUCC-ESSentials”

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CREATING YOUR UNIQUE STRATEGY AND EVEN MORE DISTINCTIVE SCORECARD TO ACHIEVE UNPRECEDENTED SUCCESS.  

Today Strategy is EVERYBODY’S EVERYDAY job

Inside OR Outside Strategic Thinking

What do the world’s most acclaimed thought leaders have to say about strategy execution and why so many strategies fail to achieve their desired results? Professor Michael Porter, Dr Gary Hamel, Michael Hammer, Professor Robert Kaplan, The late CK Prahalad, Dave Ulrich, Ram Charan, Dr Dave Norton and Tom Peters’ thinking on Strategy Execution.

Tom Peters offers his 2 golden rules to guide your strategy – Rule # 1:  You can’t beat Walmart on Price. Rule # 2: You can’t beat China on cost. In essence he says, “You can’t be remarkable by following someone else who is remarkable.”

Inside OR Outside Strategic Thinking

Michael Porter is globally acclaimed for his strategic insights and in particular his  5 Competitive Forces that Shape Strategy. This model calibrates the attractiveness of an industry and benchmarks your outcome against that of your competitors to shape your new strategy. This is external analysis that on its own, fails to consider the internal factors, processes and people needed to execute and achieve your desired success. This does not imply that Michael Porter is a non-believer in internal strategic triggers as he also notes, “Operational effectiveness and strategy are both essential to superior performance… but they work in different ways.”

Dr Gary Hamel argues that some of the best strategies come from employees within their organisations. This inside-out strategy is based on the premise that they are close to technologies, processes and customers. The late CK Prahalad studied and believed in co-creating unique value with your customers; an outside- in approach. Professor Dave Ulrich is obsessed with designing strategy from the Outside-in with customers defining your future HR strategy. Michael Hammer’s business process re-engineering has been applied by many organisations to improve internal processes that deliver superior performance.

P’s & Ham 

In this instance, Peters, Prahalad & Porter’s insights offer you an external approach to shape strategy while Gary Hamel & Michael Hammer’s insights recognise the significance of internal processes. That said, they all acknowledge that these management interventions and ideas cannot stand alone. Michael Hammer has long been acclaimed for his innovative approach to improving internal capabilities and yet he concurs, “High performance operating systems are necessary but not sufficient for enterprise success.”

Today Strategy is EVERYBODY’S EVERYDAY Job

Ram Charan says that in the majority of cases (70%) the real problem isn’t bad strategy – strategies most often fail because they are not executed well.

With this wealth of wisdom and thought leadership, why are companies still failing to execute strategy?

Inside AND Outside Strategic Execution

Professor Robert Kaplan and Dr Dave Norton say that while there is a plethora of great strategic implementation tools out there, companies fail to integrate external and internal triggers that measure the cause and effect hypotheses in respect of the 4 key drivers of value in their business. A successful scorecard will show you how improvement in one area may be achieved at the expense of another. It breaks down silos and has a key shared understanding among all employees.

You can’t use a rugby scorecard for a cricket match |The “what to measure” dilemma

Traditionally people have tracked their performance against established standards and then taken corrective action. Exclusive reliance on financial measures as a management system was causing businesses to do the wrong things. These traditional measures offered lag indicators as they only reported on outcomes. Your scorecard should provide you with lead indicators – drivers of future financial performance. In a recent interview Norton confirmed that companies still rely too heavily on the quarterly report and use this as the life-cycle in their organisations.

A good balanced scorecard should tell your visionary strategy story

Norton and Kaplan confirm that companies also fail to execute their strategy when they fail to create a unique scorecard that is discernible and relevant to their business. Your strategy should be distinctive to your “do-well” existing and future capabilities. On Kaplan’s visit to South Africa in 2012, he was asked why companies, who widely publicise and communicate their scorecards, so liberally, do not fall prey to prying predatory competitors.  He said, that in all of his years observing Balanced Scorecard interventions, he has failed to see competitors achieve success by simply adopting another company’s scorecard. Your scorecard becomes your organisations’ unique DNA, it captures the hearts and minds of the people who co-create it. Nicola Tyler, the CEO of Business Results Group and sought after strategic facilitator, has long argued that the closer a person is to the origination of an idea the more likely they are to act on it.

And if your strategy and your scorecard are not unique and distinctive, remember Tom Peter’s earlier words, “You cannot be remarkable by following someone else who is remarkable.”

July 2014

In 2014, BRG & GIBS will present Dave Norton – Live and in Person: Executing Strategy: Balanced Scorecard Essentials. The 2014 programme includes the latest findings and experiences in strategy, measurement, leadership, human capital and cross functional priorities and solutions with tried and tested Balanced Scorecard essentials. In a recent interview Dave Norton highlighted that although he is comforted and assured of the effectiveness of the Balanced Scorecard by the 100 plus companies in The Balanced Scorecard Hall of Fame who have evidenced success using the Balanced Scorecard correctly and in its entirety; there are still 100’s of companies out there just doing it wrong.”

Dr Dave Norton has most recently been honoured by Thinkers 50 in their Hall of Fame sharing this acclaim with Tom Peters, Warren Bennis, Howard Gardner, Charles Handy, Philip Kotler, Henry Mintzberg, Kenichi Omae, Ikujiro Nonaka and his colleague Professor Kaplan, for their mammoth contribution to business management and leadership. Harvard Business Review recognised the Balanced Scorecard as one of the most influential management ideas in the past 75 years.

Public Sector Strategy Execution Essentials

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Applying the Balanced Scorecard to deliver value for a “public sector version” of “shareholder value”.   

Public Sector

Radical Transformation

RADICAL TRANSFORMATION  

In Kaplan and Norton’s book they discuss triggers of a transformational strategy. This is what Kaplan and Norton say about transformational strategy, in their latest book The Execution Premium. “The trigger of a transformational strategy can be negative, such as a burning platform of a failed strategy or the appointment of new leaders.  New leaders are frequently summoned to deal with burning platforms, but leadership changes have become the norm in all organisations, including the public sector, where new leaders are appointed after elections.”

So what now for the South African public sector after the 5th democratic election? In President Zuma’s inauguration speech he has promised radical transformation. This is what he said. “we will move into industrialisation and strengthening the role of the state of the economy….the government would concentrate on better execution of land restitution and job employment, especially for the youth… to achieve this the performance of the state has to improve.. we have to eradicate corruption and inefficiencies in the public service…. And we are determined to succeed.”

This is what Dr Norton says

The change of administration is an ideal time to introduce a Balanced Scorecard (BSC). The new leadership has a new vision and new strategies.  However, research shows that directions are not enough to create results.  90% of organizations fail to execute their strategies.  The issue for a new administration is not only a new strategy.  It’s about executing that new strategy!

The BSC requires an organization to translate that strategy into a set of related objectives, measures, targets and initiatives.  The “strategy map” can then be cascaded to all departments and all levels of the organization.  It can be communicated to employees and citizens and can be used as a basis for budgeting and human capital development.

The change of administration is the best of times.  Citizens are excited about the new directions but are cynical about the likelihood for success.  The BSC provides a way to “put your money where your vision is by creating a Strategy Focused Organization that brings together the energies of the citizens on a set of shared objectives, measures and results?

THE BRAZILIAN CNI STRATEGIC VISION AND PLAN TO REVERSE DECADES OF POOR PERFORMANCE

What can we learn from Kaplan and Nortons’ Strategy Execution Model and Balanced Scorecard used by the Brazilian Confederation of National Industries to achieve their bold economic plans for growth.

The Confederation of Local Industries (CNI) is an association of private sector organisations seeking to improve the competitiveness of Brazilian Industry. A member of their board suggested that they use the Balanced Scorecard to push an agenda for growth. They wanted to reverse the continued poor performance of the Brazilian economy over the past decades.

What transpired was one of the most innovative and complex applications of theme-based strategy maps. CNI recognised that implementing the national strategy would require the co-operation of a broader audience. They quickly realised they would need to change their structure to deliver on the strategy map objective to build stronger coalitions with various stakeholders such as government ministers and entrepreneurs. What they also acknowledged was that their strategy map goals were beyond their own control, but were determined to do their best. Their assertion is that the strategy map process will certainly increase the probability of implementation with better social and economic outcomes.

ADDRESSING AN UNFAVOURABLE CLIMATE FOR DOING BUSINESS IN BRAZIL

From the outset CNI acknowledged that a key to generate sustained economic growth was to address the climate which was unfavourable to investments, discouraged business persons and created obstacles for generating jobs to finance social expenses and services for society. As recently as last week it is still reported that the Brazilian government continues to make it difficult for businesses to operate within the onerous constraints.

CNI’S VISION FOR A PUBLIC SECTOR VERSION OF “SHAREHOLDER VALUE”.

This was about 5 tangible results or high level objectives for the public sector version of shareholder value.

  1. Economic growth reaching annual levels of 5,5% by 2010 and 7 % by 2015.
  2. More jobs and income for the citizens.
  3. An increase in the quality of life.
  4. A decrease in social and regional inequalities.
  5. Expansion of businesses that generate sustainable value.

How did they measure up….In 2010, the financial world fell in love with Brazil with 7,5% increase in output that year. Tens of millions of people were entering the middle class and in 2013, they raked in $ 65 billion US in direct foreign investment, 4th highest in the world, according to the United Nations Conference on Trade & Development. But behind this all was what CNI largely anticipated and that was the bureaucratic headache of doing business in Brazil, something they call custo Brazil  – a combination of the longer time and higher costs that come in doing business there. This is still a largely prevailing problem inhibiting growth. Despite all this foreign investors are seeing the value of doing business in Brazil and recognise they have to be there.

MEASURING KEY BUSINESS OUTCOMES TO ACHIEVE DESIRED RESULTS – PRIVATE SECTOR CONTRIBUTION

With their belief that the private sector was the key to sustained economic growth and for Brazil to achieve the desired results, their strategy map indicated a clear market positioning for Brazilian companies, measured against several business outcomes.

  1. Competitive and quality products.
  2. Innovative products and services.
  3. Products and services with higher aggregate value.
  4. Recognition of Brazilian brands.
  5. Accelerated growth of industrial output.
  6. Increased participation by Brazil growth in trade.

CNI DEFINED THE 5 DRIVERS TO ACHIEVE THEIR STRATEGY

  1. Expansion of the industrial base.
  2. International insertion.
  3. Management & productivity.
  4. Innovation,
  5. Social & Environmental responsibility.

CNI ACNOWLEDGED THE SET OF ENABLERS TO LEVERAGE ECONOMIC GROWTH

  1. Infrastructure
  2. Resource availability
  3. Entrepreneurial leadership
  4. Institutional & regulatory environment
  5. Education & health

NOW, THIS IS WHERE THE BALANCE COMES IN…

According to Dave Norton, this overall architecture by itself was not enough to achieve execution. What was required was another level of detail. This was a set of strategic objectives for each of their themes, in particular, a measure to see the cause and effect relations between them. This logic clearly defines the set of activities and their interrelationships required to execute the theme.

INNOVATION THEME – CAUSE & EFFECT CASE IN POINT

By example, The CNI Innovation theme was designed to create country- level results including, economic growth, more jobs and income and expansion of businesses to generate value with products and services with a higher aggregate value. These outcomes also need to be linked to the enablers including innovation programs and learning & development enablers.

This succinct description of their Economic Development Strategy enabled the leaders for the first time, to clearly communicate their desired direction for the country and the specific requirements to achieve results from their strategy execution process.

SOURCE | The Execution Premium – Robert S Kaplan and David P Norton 2008

In 2014, BRG & GIBS will present Dave Norton – Live and in Person: Executing Strategy: Balanced Scorecard Essentials. The 2014 programme includes the latest findings and experiences in strategy, measurement, leadership, human capital and cross functional priorities and solutions.

Dr Dave Norton has most recently been honoured by Thinkers 50 in their Hall of Fame sharing this acclaim with Tom Peters, Warren Bennis, Howard Gardner, Charles Handy, Philip Kotler, Henry Mintzberg, Kenichi Omae, Ikujiro Nonaka and his colleague Professor Kaplan, for their mammoth contribution to business management and leadership. Harvard Business Review recognised the Balanced Scorecard as one of the most influential management ideas in the past 75 years.

 

Employee Engagement Gap

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Dr. Caren ScheepersEmployee Engagement

“Imagine a time when you were highly absorbed and engaged at work. What were the circumstances that caused this attentiveness and engagement? What did you feel at the time, what did you see, what did you hear and what did you smell? Make that experience vivid in your mind. Let your body actually experience the feeling now.” This is an exercise that I regularly start off with when I facilitate workshops on the topic “Employee Engagement”. As you read this article you are welcome to participate. You can even partake in the next exercise, by asking a colleague to work with you.

“Now choose a partner to work with and show your partner how you literally step into those circumstances and personal experience. What your partner then needs to do is to notice attentively what you look like, sound like, your body posture and your facial expression. The next step is to mimic it so that you can see clearly how your posture for instance changes when you are truly engaged or in the zone”. You have to take turns in this exercise, obviously. It has an added benefit of practice how to “tune in” to where other people are at by mimicking their non-verbal behaviour. Consequently, it allows us to become aware of how others feel and as a result build rapport with them. The question to discuss then is, “When last have you felt this invigorated at work?” and a follow up question, “How big is the gap between what you experience when you are fully engaged and your current work circumstances?”

Having observed numerous of these exercises, I realised that it is clear when employees are engaged and that it is actually quite contagious. Other observations were that the more upright body postures generally brought positive energy into the room and lasted long after the exercise. Neuropsychology explains this phenomenon by biochemical neurotransmitters in our brains that are activated by the imaginary incident, which also explains why we would feel fearful of circumstances that have not yet taken place (Scheepers & Jooste, 2012).

Tuning into our own awareness of being engaged or withdrawn as well as to others’ experiences, teaches us intuitively what engagement is about. Employee engagement is topical currently and mostly practitioners have been writing about this phenomenon. Lately, it luckily also grabbed the interest of academia that quite frankly wanted to find out whether employee engagement was only the latest “fad of the month”. Empirical studies followed that were published in top tier journals. For instance, the seminal work of Saks (2006) on the antecedents and consequences of employee engagement has academic rigour and provides scientific evidence for what we regularly experience intuitively in our daily work lives.

Nonetheless, mainly two exponents provided the theoretical foundation for employee engagement. Kahn (1990, p.694) defined it as ”employing themselves physically, cognitively, and emotionally…in varying degrees.” In turn, Maslach (2001) who conducted more than 30 years of research, contrasted engagement with burnout, another phenomenon that we often come across in our highly stressful modern work environments. Her research revealed that burnout was the opposite of being engaged and the face validity of her study is high when we consider that vigour and dedication constitute engagement, whereas exhaustion, cynicism and withdrawal illustrate the opposite. Later research of Schaufeli et al (2002) confirmed Maslach’s notion of engagement and burnout being antipodes.

You might ask whether engagement is similar to commitment. Robinson et al (2004) pointed out in this regard, that engagement is more than commitment and more than an attitude. It is rather the degree to which an employee is attentive and absorbed in their work. Saks’ (2006) research provided evidence that commitment is actually a consequence of engagement. Furthermore, we can differentiate between job and organisational engagement. As a result, this article will focus on these two aspects.

a)         Job engagement 

Some people are highly engaged with their organisations, whereas others are actually engaged with their discipline or type of work and do not care where they conduct this job. These employees find meaning in the content of their work. Interestingly, job engagement increases when people have more contact with the beneficiaries of their work (Grant, 2012). Consequently, organisations must make a concerted effort to get back-office employees in contact with external or internal customers who are impacted by the quality of their work or lack thereof.

For the last 7 years, I have been lecturing on the GIBS MBA Module: Organisational Development and Transformation and I regularly asked these students whether they experience quality of work life. Sadly, over the years few of the MBA’s could declare that they were experiencing quality of work life. We often discussed Hackman and Oldham’s (1980) recommendations of bringing more of themselves into their work or being more engaged by: ensuring jobs are challenging, having variety, conducting significant tasks, allowing for personal discretion and making an important contribution. These students reported that getting feedback on their performance also increased meaningfulness of their jobs.

An interesting theory that could be associated with job engagement is the Social Exchange Theory or (SET) that implies that employees, who are provided with challenging and enriched jobs, feel obliged to reciprocate by responding with higher levels of engagement (Saks, 2006). On the other hand, when employees do not feel supported by colleagues or they do not get appropriate recognition and rewards, it leads to the burnout syndrome (Maslach et al, 2001). Kahn’s (1990) research revealed that our careers could constitute a series of leaps of engagement and falls of disengagement as well as that the person-role dynamics are complex.

b)         Organisational engagement 

Schaufeli and Bakker (2004) found that engaged employees have a greater attachment to their organisation. As a result, they have a lower intention to quit. Furthermore, they are involved in extra-role behaviour or being good organisational citizens and contribute to the greater organisation and not only to their own department or division.

I found it disappointing that in contrast, numerous executives on Senior Management Programmes found it difficult to articulate the social value that their organisations were creating and rather focused on financial results, whereas without financial results the organisation would anyway not be able to sustain itself. Nonetheless, through firstly meeting human needs by producing products or delivering services, organisations are able to declare financial returns and sustain the business. To the contrary, luckily organisations in South Africa like Nedbank, Woolworths, Nampak and FNB utilize corporate social responsibility projects as team building exercises and to build pride in their organisation’s contribution to society and subsequently organisational engagement.

Perceived procedural justice or fairness with regards to distribution of resources also influences organisational engagement (Rhoades et al, 2001). Conversely, a lack of fairness can exacerbate burnout (Maslach et al, 2001). Another dimension to consider is the Psychological Contract (Rousseau, 2004) with the resultant two-way relationship where employees receive economic and socio-emotional resources from the organisation and they respond in kind and repay the organisation by being psychologically present or engaged. We found in a specific study around this psychological contract that the human resources practice that had the most important relationship with the relational contract was training and development (Scheepers & Shuping, 2011). Consequently, investing in employees’ development would result in them perceiving that they are important to the organisation and they would reciprocate with loyalty to the organisation.

In closing, it is important to note that in the USA the engagement gap or lost of productivity cost due to employees being disengaged is estimated at $300 billion per annum (Kowalski, 2003). We do not have South African statistics to report however, the engagement gap remains an important phenomenon to investigate and I invite more researchers to conduct qualitative and quantitative studies to provide scientific evidence of the antecedents and consequences of employee engagement.

Follow Dave Ulrich on twitter: @dave_ulrich

References: 

  • Grant, A. M. (2012). Leading with meaning: Beneficiary contact, prosocial impact, and the performance effects of transformational leadership, Academy of Management Journal, 55 (2), 458-476.
  • Hackman, J. R. & Oldham, G. R. (1980). Work Redesign, Addison-Wesley, Reading, MA.
  • Kahn, W. A. (1990). Psychological conditions of personal engagement and disengagement at work, Academy of Management Journal, 33 (4), 692-724.
  • Kowalski, B. (2003). The Engagement Gap, Training, 40 (4), 62, as cited in Saks, A. M. (2006). Antecedents and consequences of employee engagement. Journal of Managerial Psychology, 21 (7), 600-619.
  • Maslach,C., Schaufelli, W. B. & Leiter, M. P. (2001). Job Burnout. Annual Review of Psychology, 52, 397-422.
  • Rhoades, L., Eisenberger, R. & Armeli, S. (2001). Affective commitment to the organisation: the contribution of perceived organisational support, Journal of Applied Psychology, 86, 825-836.
  • Rousseau, D. M. (2004). Psychological contracts in the workplace: Understanding the ties that motivate, Academy of Management Executive, 18(1), 120-127.
  • Saks, A. M. (2006). Antecedents and consequences of employee engagement. Journal of Managerial Psychology, 21 (7), 600-619.
  • Schaufeli, W. B., Salanova, M., Gonzalez-Roma, V. & Bakker, A.B. (2002). The measurement of engagement and burnout: a two sample confirmatory factor analysis approach, Journal of Happiness Studies, 3 (3), 71-92.
  • Schaufeli, W. B & Baker, A. B. (2004). Job demands, job resources, and their relationship with burnout and engagement: a multi-sample study, Journal of Organisational Behaviour, 25, 293-315.
  • Scheepers, C. B. & Jooste, M. (2012). Neuroleadership informs internal business coaches on change, COMENSANews, Nov 30.
  • Scheepers, C. B. & Shuping, J. G. (2011). The effect of human resource practices on the psychological contract at an iron ore mining company in South Africa. South Africa Journal of Human Resources Management, 9(1), 1-19.

Q & A with Professor Dave Ulrich

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January 2014

Nicola Tyler, CEO of Business Results Group, asks Dave Ulrich why HR transformation must become a C Suite priority for business leadership, why Gen X challenges must be taken seriously and his thoughts on Ricardo Semler’s business model previously presented at the Progress Conference in 2013.

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NT: Typically HR have sat outside of the C Suite. In your opinion why has this become a priority for change?

DU: Organizations win by creating a competitive advantage which is doing something unique that competitors can not easily copy and that customers value.  Traditional sources of uniqueness have been about cost (which leads to lower price), strategy (which leads to desired products and services), or technology (which leads to efficiency).  Today most competitors can copy product, product, and technology.  Competitiveness is not strategy statements, but the ability to deliver on the strategy.  The emerging competitive advantage comes from talent, culture, and leadership which allow an organization to have lower pricBes, better products, and improved processes.  HR professionals join the c-suite by bringing unique insights about talent, leadership, and culture that help organizations win.

NT: There has been a see-saw reaction to Generation X challenges. These waiver between reasonably wide acknowledgement that their expectations are a reality and denial which dismisses the change required to meet their demands. Why should companies rise up to the challenges of Gen X?

DU: There are two sides of the Gen X issue:  why people work and how they go about working.  On the “why” question, Gen X is much like other generations.  People want to do work that has meaning and impact.  Leaders can relate to Gen X employees by appreciating the next generation’s desire to find meaning from work.  On the “how” work is done question, Gen X employees are radically different.  They use technology, have shorter time frames, care about life before work, and value relationships.  Leaders who are sensitive to these “how” questions will help create more productive employees in all demographic groups.

NT: Recently we hosted Ricardo Semler at our 2nd Annual Progress Conference on Happiness@Work. A maverick in the true sense of the word. At the conference he spoke of his workplace democracy success which includes a large scale business with no HR department. Why do you think the SEMCO “HR” model is so effective?

DU: The reason the SEMCO model works is probably because at SEMCO HR is everyone’s business.

I have been advocating for some time now that the responsibility of talent management is not an HR responsibility but rather a line manager responsibility. People don’t leave organisations. They leave bosses.

In our WHY OF WORK studies we corroborate the importance of people’s personalised contributions. Too often employees feel emotionally disconnected from the work they do; their work may capture their talents and time, but not their heart and soul. At SEMCO, time is the least of their priorities and they have structured their organisation into small business units. This was predicated upon Ricardo’s belief that in large organisational units people feel tiny, nameless and incapable of exerting influence on the way work is done and their contribution to the outcome. We elaborate in Why of Work how great leaders personalise work conditions so that employees know how their work contributes to outcomes that matter to them. SEMCO get this and have done so for decades.

To start out, at SEMCO, they do not refer to workers or employees – they always refer to people. In particular, they make sure the people at SEMCO do the work they love. Ricardo does not believe on sending people on motivation courses; he finds them another job – one which gives them a personal sense of meaning & purpose. The other significant feature at SEMCO is their real understanding of their people’s needs inside and outside of the business.

Firstly, they believe that letting people participate in decisions that affect their lives is important to motivation and morale. He says, ‘There is no contest between the company that buys the grudging compliance of its workforce and the company that enjoys the enterprising participation of its employees.”

Secondly, they understand the needs of their people outside of the organisation. Their needs and desire to create meaning and purpose in their communities, families, church organisations and social groups. To go beyond merely understanding this they have created a work model that allows the people in their organisations to achieve their goals outside of the organisation. Their “retire-a little” programme affords them the opportunity to spend time when they still have the energy and “youthfulness” to enjoy their retirement and do personal stuff that matters. As Ricardo says, “Giving employees even the slightest LEEWAY – with respect to hours or where they work could give them a new life.” So yes, at SEMCO, they buy the hearts and minds of their people and not just their time.

NT: So would you suggest that businesses could do away with their HR department? Or alternatively what is your advice to HR professionals to ensure they survive extinction?

DU: HR does not start with HR issues, but business context. Business contexts requires understanding of the setting in which the business operates (e.g., social, political, and technical trends that shape a business’ opportunity set) and clear expectations of the key stakeholders (e.g., customers, investors, communities).   As HR professionals understand these business context issues, they get invited into the management discussions about strategy.

In the management discussions about strategy, each functional area brings unique insights:  finance brings insights on costs and profits; marketing offers customer insights; IT offers systems and process insights.  HR offers insights on three areas:  talent, culture, and leadership.

In the talent space, HR can ensure that employees are competent, committed, and contributing.  Competence means that employees have the knowledge and skills to do today and tomorrow’s jobs.  Commitment means that employees are willing to work hard and do their best.  Contribution means that employees find meaning from the work that they do.  HR professionals help leaders make informed talent choices so that the organization has the people who can deliver on strategic goals.  Organizations don’t think, people do; and getting the right people to think the right way helps organizations win.

In the culture space, HR professionals create an organization’s way of working and pattern of work that shapes how people think.   Organization’s don’t think, but they shape how people both inside and outside think and act. Collective work in teams and organizations outperforms individual work and talent.  HR professionals help define the culture in ways that deliver value to external customers and investors and then embed that culture among employees and throughout the organization’s systems.   HR professionals are organization architects who shape a culture.

In the leadership space, HR professionals ensure that leadership is a shared, not individual responsibility.  Individual leaders with charisma and charm are important, but collective leadership throughout an organization ensures that correct actions occur over time.   HR professionals help create a leadership brand where leaders action and behaviours make customer expectations real.

Business Results Group and GIBS will be bringing Dave to South Africa to present his 13 milestones for HR to transcend the way the deliver measurable value to their organisations. In JHB on 27 May and Cape Town on 28 May. For further information visit www.theprogressconference.com.

Professor Dave Ulrich

Dave has consulted and done research with over half of the Fortune 200. His honours exude a consistent track record of global influence and authority in human resources and business management.  His research is based on collective feedback from over 60 000 line managers and HR professionals on the competencies required to improved business performance.

An accomplished and celebrated educator Dave is sought after the world over to present his findings and educate businesses. He has published over 200 articles and book chapters and over 25 books which he has co-authored with numerous fellow thought leaders.