MO5 Value Chain

The MO5 Value Chain is a strategic framework for describing and analyzing the value creation of human resource management (→ HR management), developed by Christian Scholz (2003). Building on Michael Porter’s concept of the value chain (Porter 1985, 2000), Scholz reinterpreted value creation in HR by identifying five distinct value creation objectives that form the core of HR work.

Unlike Porter’s temporally and functionally sequenced model, the MO5 value chain links value creation competency-wise, enabling a non-linear, dynamic analysis of HR contributions across the organization.

The Five Value Creation Objectives of the MO5 Model

1. Unique Positioning
   Achieved by establishing a strong HR brand through the strategic positioning of HR work (→ profiling function, → brand).

2. Talent Optimization
   Realized by expanding and interconnecting core competencies to develop and retain top talent.

3. Leadership Success
   Supported through effective motivation and relationship-building, informed by the Ohio State leadership style model (→ leadership style model).

4. Speed
   Focused on accelerating and optimizing HR processes, promoting agile decision-making and efficient workflows.

5. Managing Diversity
   Emphasizes actively managing complexity, particularly through inclusive policies and handling environmental and demographic variation.

Dual Coordination Logic: Market vs. Organizational Solution

Inspired by New Institutional Economics (Coase 1937; Williamson 1975, 1985, 1991, 1996), the MO5 value chain integrates two fundamental governance mechanisms for value creation:

• Market Solution: HR activities are regulated internally through autonomous actors and self-organizing marketplaces within the company.

• Organizational Solution: HR functions are embedded within a hierarchical structure where rules and decisions are centrally coordinated.

Each of the five MO5 objectives can be achieved via either the market or the organizational route, enabling flexible goal-solution combinations tailored to organizational needs.

Internal Marketplaces (Market Solution)

• Core Competency Marketplace

• Potential Marketplace

• Motivation Marketplace

• Innovation Marketplace

• Information Marketplace

Organizational Mechanisms (Organizational Solution)

• Recruitment of suitable employees

• Structured development pathways

• Relationship-focused management

• Task-oriented performance management

• Compensation, role design, and succession planning

Extension to HR Processes

The MO5 model also incorporates foundational HR functions such as:

• Recruitment

• HR Development

• HR Deployment

• Employee Management

• Compensation

These process-oriented components are integrated into an extended version of the MO5 model, reflecting the comprehensive scope of HR value creation.

Digital Transformation and eHRM Integration

The MO5 Value Chain also serves as a framework for eHRM—the digitization of HR functions through web-based systems and applications. These tools, ranging from eRecruiting to eLearning, align with either the market or organizational principle depending on how autonomously they operate or how strictly they are governed.

Each of the ten “honeycombs” (five value goals × two solutions) in the MO5 model can be supported by digital solutions, making it a design blueprint for strategic HR digitization.