The "war for talent" has slid to second place on the list of critical issues facing businesses — and therefore HR. To leading HR and business guru Dave Ulrich's thinking, "capability" now tops the agenda.

Capability ultimately defines a company and its identity, Ulrich says: "What do we admire a firm for? We admire Nokia for its ability to innovate, BT for its ability to transform. You admire a firm for what it's good at doing. That becomes a capability."

Arguably the world's leading authority on HR strategy, Ulrich, a professor of business administration at the University of Michigan in the US, has recently been directing his attention towards capability — to define some of the key capabilities a firm must have, and must be good at. "[They include] ability to change your culture or your identity, building quality of leadership, building talent, the ability to collaborate through mergers or acquisitions or partnerships to make the whole more than the parts," Ulrich suggested. "Another seems to be the ability to serve customers, to build a connection or intimacy with customers. Another is the ability to have very good accountability and discipline in what you do. Those are the capabilities we see firms working on."

Flow of candidates Ulrich was speaking to Recruiter in an exclusive interview before an upcoming appearance in London. Ulrich is author and co-author of more than a dozen books on HR strategy and organisations, and will share his HR, business and management expertise at a daylong event called "Dave Ulrich Live in London" on 30 January at the Hilton London Paddington hotel (for further details go to www.globalleadersevents.com).

"What I really want to talk about is, what does HR have to do to add value?" Ulrich said. "What I will be doing is laying out eight or 10 things that we know about organisations that we need to manage in order to be successful."

The focus on capability does not negate the importance of talent, Ulrich emphasised. Recruiters can play a critical role in helping a company build its capability by pinpointing and capturing the right talent — when they understand the client firm's capability, ambitions and culture.

Some recruiters have told Ulrich of clients who create "bullpens" or "holding positions" for talented candidates within their organisations so that they can easily be moved into a suitable position when a vacancy is created. "I think good HR people are building relationships with staffing groups to have a sustained flow of talent over time, even if there is not an open position," Ulrich said.

NHS transformation Ulrich suggested that one UK institution has undergone "the world's toughest transformation" in terms of capability over the last 18 months: the National Health Service. "They are trying in the NHS to change their culture from being bureaucratic and hierarchical to being more patient-led," Ulrich said. "What a dramatic transformation that is. I think they're working at it in a good way, I think they're making progress, but I don't think that journey is easy."

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