HR’s role is no longer confined to internal operations – it must create value for external stakeholders like customers, investors, and communities. A renowned HR scholar, Dave Ulrich, has championed this “HR from the Outside In” philosophy, urging HR leaders to align practices with external expectations. In Ulrich’s view, HR should focus not just on employees and processes but also on business strategy and the needs of key stakeholders in the environment where the business operates. His recent Organization Guidance System (OGS) concept further provides a framework of four pathways (talent, organization, leadership, and HR) to guide organizations toward outcomes that matter to both internal and external stakeholders.
This article analyzes new HR World Media , The State of HR Leadership & Innovation 2025 survey findings on HR stakeholder value creation and compares them to Ulrich’s insights. We’ll see where HR teams embrace an outside-in approach that delivers value to external stakeholders – and where gaps still exist. Key themes include how often HR engages stakeholders outside the company, what initiatives HR leaders plan to increase external value, and how these efforts align (or not) with Ulrich’s OGS framework.
Engaging External Stakeholders: Are HR Teams Truly Outside-In?
Figure: Horizon Summit survey results Figure: Horizon Summit survey results on how frequently HR gathers feedback from various stakeholder groups (blue = “frequently,” red = “occasionally,” orange = “rarely,” green = “never”).
The State of HR Leadership & Innovation 2025 survey – aiming to shape the agenda of the upcoming Horizon Summit – asked HR leaders how often they gather insights or feedback from different stakeholder groups to inform HR decisions. The results reveal a stark contrast between internal and external focus. Nearly 80% of HR teams frequently seek input from business unit leaders, and about 60% often gather feedback from employees – indicating strong engagement with internal stakeholders. However, only roughly 20% reported frequently getting customer feedback, and an even smaller fraction (around 10–15%) do so from investors or local communities (advocacy groups). In fact, the majority of HR leaders admitted they rarely or never engage these external groups in dialogue.
This gap suggests that while HR is well integrated with internal partners, it has not fully extended the same level of engagement to external stakeholders. Ulrich’s outside-in philosophy would call this a missed opportunity. He argues that HR must base decisions on external realities and stakeholder expectations, not just internal priorities. In other words, truly “outside-in” HR professionals act as “strategic positioners” who understand the business context and market dynamics, translating external trends and stakeholder needs into HR strategy. Yet the survey data shows many HR teams are still internally focused, with infrequent direct input from customers or investors. This disconnect points to a stakeholder feedback gap: HR isn’t routinely listening to the voices of those very external stakeholders for which it aims to create value.
Why does this matter? Ulrich notes that “the business of HR is the business itself,” – meaning HR’s real value is measured by business outcomes and stakeholder success, not just HR activities. If HR isn’t regularly interfacing with customers, investors, or community representatives, it risks developing people strategies in a vacuum. For instance, an HR policy on customer-centric training will be far more effective if actual customer feedback shapes it. Similarly, workforce initiatives supporting community or investor relations require understanding those stakeholders’ expectations. The survey results highlight that HR has progress to make in operationalizing the outside-in approach: frequent collaboration with internal stakeholders is a strength, but limited engagement externally remains a weakness.
Some HR teams are starting to take action to bridge this gap. As one HR director in the survey put it, “We realize we need to treat external stakeholder input like we do employee feedback—as a vital source of insight for HR decisions.” This growing awareness is encouraging, but how exactly do HR leaders plan to increase their value to external stakeholders? The survey offers some answers.
How HR Teams Plan to Create Value for External Stakeholders
Respondents highlighted several initiatives when asked about strategies for increasing HR’s value to outside stakeholders. Below are key themes from the survey – with direct quotes illustrating how HR teams are putting the outside-in philosophy into practice:
- Embedding Customer-Centric Metrics: Many HR teams integrate customer-related metrics into their HR goals and processes. “HR is now partnering with our customer experience team to tie employee performance to customer satisfaction scores,” noted one respondent. By linking people management efforts to customer outcomes (like Net Promoter Score or service quality), HR ensures that talent and training investments directly support better customer value creation.
- Human Capital Reporting for Investors: Some HR leaders are stepping up the communication of workforce value to the financial community. As one CHRO explained, “We’re developing an annual human capital report for our investors to demonstrate how our talent initiatives drive business results.” This reflects a proactive effort to speak the language of investors by sharing data on employee engagement, productivity, and skill development as leading indicators of financial performance. Such transparency can enhance investor confidence that HR contributes to long-term shareholder value – a practice aligned with Ulrich’s insistence on delivering value to investors.
- Community and Social Impact Programs: Another theme is HR expanding its role in corporate social responsibility and community engagement. “Our HR team launched a community apprenticeship program to boost local employment and our employer brand,” one participant said. By partnering with local communities and advocacy groups, HR helps address societal needs and strengthens the company’s reputation. This approach creates mutual value – providing communities with opportunities (jobs, education) while bolstering the organization’s talent pipeline and public image. It directly speaks to delivering value to the community as a stakeholder, which Ulrich also counts as a key outcome of modern HR work.
- Co-Creating Value with Business Leaders: Respondents also emphasized collaborating closely with internal business leaders to serve external stakeholders indirectly. “By working hand-in-hand with business unit leaders, we ensure our HR initiatives drive outcomes that customers and shareholders care about,” explained one HR business partner. This involves aligning HR projects (whether a new learning curriculum or a performance incentive) with the company’s market strategy and stakeholder promises. Essentially, HR and business leaders are co-creating value: HR provides the talent and culture solutions, and business leaders convey external expectations (market trends, customer requirements, investor concerns) so that those solutions hit the mark. Such alignment echoes Ulrich’s idea that HR professionals should be “credible activists” and “capability builders” who help the organization fulfill its strategy in the eyes of external stakeholders.
These examples show that forward-thinking HR teams actively seek ways to extend their impact outward. From incorporating customer feedback loops to publishing workforce metrics for investors, HR is beginning to operationalize the outside-in mindset. Notably, these initiatives correspond to areas emphasized in Ulrich’s frameworks, which we will examine next.
Are HR’s planned actions hitting the targets Ulrich’s Organization Guidance System envisions to create stakeholder value?
Aligning with Ulrich’s Organization Guidance System (OGS)
Ulrich’s Organization Guidance System (OGS) is a model that helps business and HR leaders ensure their organization delivers on the outcomes that matter to stakeholders. It focuses on four key pathways: talent, organization, leadership, and HR effectiveness. The idea is that by making the right improvements in these four areas – and continuously guiding those improvements with data – an organization can “win” for both its internal constituents and external stakeholders. How do the Horizon survey findings stack up against these four OGS pathways?
- Talent: The survey confirms that HR teams excel at the talent pathway internally – they frequently engage employees and invest in people development. This is crucial since employees are the ones who ultimately create customer satisfaction and innovation. Ulrich’s OGS starts with employee outcomes like competence and well-being as a foundation. By embedding customer-centric metrics into performance and training (as noted by respondents), HR is aligning talent management with external outcomes. Engaged, skilled employees are a prerequisite for delivering value to customers and communities. The challenge will be maintaining high employee engagement while explicitly linking those efforts to external stakeholder metrics (for example, training customer-facing staff with direct customer input). The survey’s customer-feedback gap indicates room to tighten this link – HR could gather more frequent input from customers to inform what skills or behaviors to develop in employees. In OGS terms, that means better connecting the talent pathway to customer and investor and community expectations.
- Organization (Capabilities & Culture): The strong partnership with business unit leaders (80% engage frequently) suggests HR actively shapes organizational capabilities alongside line executives. This aligns with Ulrich’s emphasis on building the right organizational culture and systems to meet market needs. For instance, if a company strategy shifts to emphasize customer experience, HR and business leaders together might foster a more customer-centric culture – a capability that OGS would highlight. Survey respondents mentioned that co-creating value with business leaders implies HR ensures organizational changes (structures, processes, cultures) serve external goals. One gap, however, is the lack of direct external insight feeding those organizational decisions – if HR rarely talks to customers or community members, they might rely on second-hand information. To fully align with the OGS approach, HR should incorporate direct market and stakeholder data when shaping organization-wide initiatives. This could mean involving customer feedback in designing a new service model or considering investor concerns when revamping performance metrics. The OGS calls for organizations to prioritize capabilities that will “meet customer and investor expectations”, so HR’s organizational development efforts should be explicitly linked to those expectations.
- Leadership: Ulrich often speaks about building a “leadership brand” – a reputation that leaders in the organization consistently behave in ways that meet employee, customer, and larger community expectations. The survey did not directly ask about leadership development, but the outside-in philosophy implies HR should be developing leaders who excel at engaging external stakeholders. Are HR leaders and other executives spending time with customers, investors, and community groups? The low frequency of external engagement suggests a potential gap in the leadership pathway. HR could take steps to cultivate leaders who are externally connected, for example, rotating executives into customer-facing roles or training them to communicate the people strategy to investors. One survey respondent hinted at this, saying their company is “preparing leaders to be ambassadors to the community through volunteer initiatives.” Such efforts align leadership behavior with community expectations. Overall, though, the findings indicate that leadership development focused on external stakeholder value is not yet a widespread priority. Ulrich’s OGS would encourage more systematic development of leadership capabilities that drive outcomes like customer loyalty and investor confidence.
- HR (Function & Analytics): The fourth pathway concerns the HR department’s effectiveness and how it uses data to drive results. Ulrich’s OGS concept pushes HR to move beyond traditional metrics and adopt an outside-in guidance system – meaning HR should track how its policies impact key stakeholder outcomes (e.g. customer NPS, investor ratings) and adjust accordingly. Here, the survey reveals a clear area for improvement. While some respondents are beginning to produce human capital reports and use analytics to show HR’s impact, most HR teams still rely primarily on internal HR metrics (like employee engagement or turnover) without tying them directly to external measures. The fact that so few HR organizations regularly seek external feedback is telling – it implies that HR decisions may not be leveraging real-time stakeholder data. To align with OGS, HR functions will need to adopt a more data-driven, externally informed approach. For example, using employee-customer correlation data (how employee engagement affects customer satisfaction) or monitoring the company’s social reputation as part of HR’s success criteria. Encouragingly, the survey’s examples of new investor-focused reports and community programs suggest that HR is starting to broaden its own scorecard. However, fully implementing an OGS means HR would have a guidance system in place – essentially a feedback loop where stakeholder outcome data continuously informs HR strategy. Few organizations appear to be at that mature stage yet.
In summary, the State of HR Leadership Innovation 2025 survey findings partially aligns with Ulrich’s OGS framework. HR leaders firmly address the talent and organization elements by supporting employees and working with internal leaders, which is foundational for any outside-in strategy. They are also beginning to extend into leadership and HR effectiveness by considering external stakeholders in leadership roles and HR metrics. Yet, significant gaps remain in making these efforts routine and data-driven. Ulrich’s OGS is about systematically starting with external stakeholder outcomes and working backward to HR actions – and most HR teams are only starting to take those steps, rather than fully embedding them.
Conclusion: The Future of HR Leadership in Stakeholder Value Creation
The evidence from the survey and Ulrich’s frameworks paints a clear picture: HR is moving in the right direction on stakeholder value creation, but it isn’t “outside-in” enough yet. On one hand, HR leaders overwhelmingly recognize the need to partner internally to drive business results, and many are launching initiatives that connect HR work to customer, investor, or community outcomes. These efforts validate Ulrich’s HR insights – confirming that the future of HR leadership lies in expanding HR’s impact beyond the company’s four walls. Where HR has embraced this (for example, integrating customer metrics or engaging in community skill-building), it aligns well with the pathfinders in Ulrich’s Organization Guidance System and is likely to pay off in stronger stakeholder relationships.
On the other hand, the survey highlights that HR’s current engagement with external stakeholders is sporadic and limited. This indicates that HR as a function has not fully transformed its mindset to an outside-in orientation. Too many HR decisions are still made with primarily internal input, and external feedback is an afterthought. Ulrich’s work emphasizes that HR must “create and deliver real business value” – and in today’s stakeholder-driven world, tangible business value is measured by customer loyalty, investor trust, and social reputation as much as by employee metrics. By that measure, HR’s performance is mixed. There are pockets of excellence and innovative practices, but not a consistent, embedded discipline of stakeholder engagement across the board.
For HR to truly fulfill its promise in stakeholder value creation, a few improvements are needed going forward:
- Institutionalize Outside-In Listening: HR organizations should establish regular mechanisms to gather and act on feedback from customers, investors, and community representatives (as with employee surveys). This could mean HR sits on customer advisory boards or holds annual investor dialogues on talent strategy, etc. The goal is to make external input a standard part of HR planning.
- Connect People Metrics to Business Outcomes: HR must continue developing analytics that links people initiatives to external outcomes—for example, showing how a training program improved customer retention or how culture changes influenced brand reputation. Reporting such connections proves HR’s value and guides better decision-making. Embracing an Organization Guidance System approach (even informally) can help HR prioritize actions that drive the metrics external stakeholders care about.
- Develop Externally-Orientated Leaders: HR leaders and the executives they support need skills and incentives to engage outside stakeholders. CHROs should be as comfortable discussing customer experience or investor expectations as they are discussing internal HR policies. Similarly, HR should help cultivate business leaders who understand that talent practices and stakeholder outcomes are two sides of the same coin. This might include leadership development programs incorporating stakeholder scenario simulations or community engagement projects.
In closing, the survey indicates that HR leaders aspire to increase their value to external stakeholders, and some progress is underway. Compared to the ideal state outlined by Dave Ulrich’s outside-in and OGS frameworks, most HR functions are still on the journey rather than at the destination. The future of HR leadership will belong to those who can bridge the remaining gaps – by systematically aligning every HR initiative with the value it delivers to customers, investors, and society. The message to HR teams is clear: continue to broaden your perspective, use data to stay guided by stakeholder outcomes, and be bold in redefining HR’s role as a creator of value from the outside in. By doing so, HR will not only earn its seat at the table but ‘own the table’ and drive tangible business and stakeholder results in the years ahead – these ideas, alongside with many others will be discussed in details at the upcoming Horizon Summit in Amsterdam on 5-6 November.
References:
- Dave Ulrich’s HR from the Outside In framework and Organization Guidance System insightsrbl-net.s3.amazonaws.comlinkedin.com;
- The State of HR Leadership Innovation 2025 survey on stakeholder value (2025); Survey Link
- Ulrich, D. (2024) “How to Increase HR Contribution by Focusing on Lead Indicators…”linkedin.com;
- Ulrich, D. & colleagues (2020) on the Organization Guidance Systemlinkedin.com.
