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Workforce Segmentation –What is it? how to do

it? and why should you care?

Workforce Analytics practice session – tools and techniques

Workforce Segmentation and Differentiation

- What is it?

- Why should you care?

- How do you do it?

- Examples

- Exercise

- Review and questions

Segmentation “What is it?”

Reflection of competitive strategy

- What is your competitive advantage?

- What is your goal?

- How will you achieve it?

Effective workforce strategy needs to address two simple questions:

- How does the workforce contribute to the company’s competitive

advantage?

- How should the workforce be managed to ensure that advantage is

realised?

Workforce differentiation creates value by recognising the differences in

how an organisation designs and manages its workforce.

Segmentation “Why should I care?”

Something unique

about your company

All positions, like all

employees, are not equal

Performance requirements vary People are

different

External environment

may impact your

needs

Signs you are not thinking strategically about your

workforce… - Employee goals may have little obvious relationship to company strategy

- Annual compensation changes are not all that different for high and low

performers

- Senior line managers do not have a clear understanding of who their

strategic talent is nor are they held accountable for the management of

their talent

- When evaluating a workforce initiative the focus is almost entirely on cost

- The value of workforce practices is based on how they compare with

external best-practice standards

- The financial conversation with HR largely focuses on controlling the

overall budget

- There is no clear line of sight between value of a workforce practice and

strategic success

Source: Becker, Huselid, & Beatty (2009) The Differentiated Workforce. Harvard Business Press., Boston, MA.

Segmentation: How To

- Understand your “competitive advantage”

- Alignment with your strategy

- Map the chain from strategic outcome to inputs

identifying the “key drivers” along the way (3-5 works well)

- Specify what jobs are strategic and why

- Understand the talent yield of positions

- Identify measures of success and outcomes (ensure

leadership accountability for workforce success)

- Develop policies, interventions and strategies

- Execute, review, and modify as required

Understand your Competitive Advantage

Potential Keys to Competitive Advantage: Resource

Based View

Rare

Valuable

Non-substitutable

Ambiguous

Alignment with Strategy

What is your organisation’s strategic capabilities?

What are your key drivers of success?

What are the processes, procedures, and knowledge that deliver

these capabilities?

What is and is not strategic? – all jobs may be important but what

are strategic?

What is it about these jobs that makes them so valuable?

Mapping the value chain

Source: Rucci et al (1998) Employee customer profit chain at Sears. Harvard Business Review, Jan-Feb, 1998, pp.82-97.

Attitude about

the job

Attitude about

the company

Employee

Behaviour

Service -

helpfulness

Merchandise

- value

Customer

Impression

Employee

Retention

Customer

Retention

Sales

Customer

Recommendations

Talent Yield

Talent Yield = Strategic Importance x Performance Return

Performance

Stra

tegi

c V

alu

e

Worst Performer

Best Performer

Talent Yield Curves

Source: Boudreau & Ramstad (2007) Beyond HR. Harvard Business School Press, Boston, MA.

Segmentation: Exercise

Segmentation test: common workforce measures to be wary of…why?

Cost-per-hire and time-to-fill

HR expense factor

Human capital ROI or human capital value added

Training expense factor/time training per employee

Turnover rates

Costs of turnover and vacancy costs

Segmentation: Review

All about strategy

Understand your competitive advantage

Identify the key drivers of performance

Differentiate your workforce strategy based upon the

contribution to the business

Use a “systems thinking” perspective across your workforce

strategy

Hold leadership accountable for outcomes

Measure impact and outcomes

Segmentation: Attributes

Equity not Equality

Engaging the Right Employees

Hiring the choice employee not becoming an

“employer of choice”

Earned increases not entitlement

References Becker,B., & Huselid, M.A. (2003). Measuring HR? Benchmarking is not the answer. HR

Magazine, December,2003. pp.56-62.

Bonabeau, E. (2004). Perils of the Imitation Age. Harvard Business Review, June 2004,

pp.46.

Huselid, M.A., Becker, B.E., & Beatty, W. (2005). The Workforce Scorecard. Harvard

Business School Press, Boston.MA.

Kerr, S. (1975). On the Folly of Rewarding for A, while hoping for B. Academy of

Management Journal, Vol.18., pp.769-783.

Kaplan,R.S., & Norton, D.P. (2000). Having Trouble with your strategy? Then Map It. Harvard

Business Review., September 2000, pp. 167-176.

Lewis,M. (2003). Moneyball. New York, Norton.

Pfeffer, J., & Sutton, R.I. (2000). The Knowing Doing Gap., Harvard Business School Press.

Boston,MA.

Porter, M. (1996). What is Strategy?., Harvard Business Review, November-December.,

2000.pp.61-78.

Schuler, R.S. (1992). Strategic Human Resource Management: Linking the people with the

strategic needs of the business., Organizational Dynamics, Vol.21., pp.18-32.