For most of its history, HR measured itself by how well it served employees. Dave Ulrich, the Rensis Likert Professor at the University of Michigan’s Ross School of Business and a partner at the RBL Group, has spent the last several years making the case that this is no longer enough. In a series of recent articles, Ulrich argues that HR’s real mandate is to convert what happens inside an organization into value for everyone who depends on it: customers, investors, communities, and employees alike.
Start Outside/In
Ulrich’s first principle is deceptively simple: if an organization doesn’t succeed in the marketplace, there is no workplace. He points to once-dominant companies, including Blockbuster, and Kodak, that had strong internal practices but missed the shifts happening outside, and paid for it. In his view, effective internal HR practices have to start by aligning to the external ecosystem the organization operates in, recognizing the value each external stakeholder, whether customer, investor, or community, needs before shaping what happens inside.
That reframing challenges who counts as “human” in human resources. Ulrich extends the term to everyone who engages with the organization to receive value, not just the people on payroll, but the customers, investors, and communities the organization ultimately exists to serve.
A Taxonomy for a Crowded Field
The second problem Ulrich identifies is clutter. Between conferences, podcasts, research reports, and LinkedIn posts, HR has no shortage of ideas; what it lacks is a shared way to organize them. Just as biology categorizes organisms into species and genus, or medicine categorizes conditions into diagnostic categories, Ulrich argues HR needs its own taxonomy to move from isolated initiatives to a coherent field. His answer, developed with colleagues at the RBL Group, is the Human Capability Framework, which organizes HR work into four connected pathways:
Talent: attracting, developing, and engaging people so they have the competence, commitment, and contribution to deliver value.
Organization: turning individual competencies into collective capabilities, such as agility, innovation, and customer-centricity, that a market-facing ecosystem actually rewards.
Leadership: the individual leaders who shape how people think, act, and feel, operating on what Ulrich’s research calls a consistent set of timeless domains.
HR function: less a department than, in Ulrich’s framing, a business within the business, run with the agility and accountability of a professional services firm.
Taken together, this integrated framework is what lets HR agents, generative AI, and analytics be pointed at the initiatives that create the most stakeholder value, rather than spreading effort evenly across all of them.
Turning Principle Into Practice
A framework only matters if it changes decisions. Working with Norm Smallwood, Ulrich suggests that leaders should weigh HR initiatives against three criteria: how much impact an initiative has on stakeholders, how well it is currently being executed, and how much room there is to improve it. Ranking this way, rather than by what’s trending on LinkedIn, is what lets business and HR leaders make informed choices about where to spend limited time and budget, and then intentionally disclose what they’re doing and why.
Proving the Payoff
The case for stakeholder value is only as strong as the evidence behind it. Working alongside Rebecca L. Ray of The Conference Board, Ulrich argues that as regulators and boards push for more transparency on human capital, most organizations still lean on perceptual data, interviews and surveys, rather than analysis of which HR metrics actually move business results. The Human Capability Framework is offered as the corrective; giving investors, boards, and executives a structure to prioritize the pathways (talent, leadership, organization, and HR) that most affect the outcomes each stakeholder group cares about, then track that agenda over time rather than treating it as a one-off report.