Organizations have realised that one shoe does not fit at all. Workforce segmentation is not different from customer segmentation
The demand-supply gap in talent impplies that there should be a Strategic Talent Management approach to ensure right sourcing, effective development and right retention
In a globally competitive marketplace comprising of workforce that includes inter-generational employees with diverse background, values, lifestyle demands and skill set, companies that want to attract and retain the best of talent need to treat every individual employee as a ‘workforce of one’
Organizations never fail to acknowledge that employees or for that matter workforce are their greatest asset and more so in a knowledge driven economy. Despite agreeing to the fact that people are the only sustainable and differentiated source of competitive advantage, organizations are yet to fully understand as to how to capitalize on people’s full potential. Employees, despite their unique needs, aspirations, and preferences, are more often than not treated as a monolithic entity. In a time of heated global competition, ever more complex knowledge work, shortage of qualified workers, and the need to allocate precious resources in the most effective way possible, generic HR practices need to be reconsidered. If organizations are to fully unleash the potential of its workforce, it is important to treat each one of them as individuals, ‘workforce of one’, and not as statistics. Segmentation, as a marketing principle, has worked wonders; it is time to apply the same revolutionary principles and analytics to human capital.
Why the need for ‘workforce of one’?
In a globally competitive marketplace, comprising of workforce that includes inter-generational employees with diverse background, values, lifestyle demands and skill-sets, it has become all the more important for companies that want to attract and retain the best of talent to treat every individual employees as a ‘workforce of one.’ As companies have successfully used the individualized experience to treat customers as ‘market of one’ on the same lines they have to work towards replacing the age old generic approach of treating employees based on cookie cutter people practices with strategies that are uniquely tailored to suit each employee’s strengths, motivations, interests, learning style and career desires.
Although there is a significant correlation between extensive adoption of best practices and business results, what matters more to business results is the extent to which employees feel supported by human capital management practices and policies. Employee survey conducted by Accenture across 60 organizations found that in most organizations, employees did not feel well supported, even when their organization had adopted human capital management best practices. One amongst the greatest obstacles to employees’ feeling supported is a rigid, one-size-fits-all approach to human capital management. In fact best practices in human capital management sometimes fail due to a standardized approach, as not everyone thrives under the same conditions or is motivated by the same things.
It is time to discard the general belief of treating the workforce as monolithic and one, and recognize diversity. The concept of ‘workforce of one’ - the result of an extensive research conducted for over 2 years in over 100 organizations (including PepsiCo, Nike, Men’s Wearhouse, Campbell Soup, P&G, Best Buy and Microsoft), is a revolutionary idea based on the premise that no two individuals are similar and helps in attracting and retaining talent amidst war for talent.
What is ‘workforce of one’?
It is an approach to talent management that tailors people practices and policies to individuals and groups of employees throughout the organization, with the goal of improving individual and organizational effectiveness. As a model of human capital management, it requires new roles and responsibilities not only for HR and senior leaders, but for line managers and employees as well.
The ‘workforce of one’ approach is developed based on research on how actual organizations can maximize the performance of their people, and thereby their business results.
As organizations change their operating model, it is important to put in place the concept of talent, which is critical to workforce. Of late, there is a lot of discussion about the notion and definition of talent which is undergoing constant change. While organizations have come up with ‘centers of excellence’ to take care of talent at all levels, there is a need to extend the same definition to partners as well. Thus, while organizations are focusing on vertical development of talent, it has become equally important to extend the mindset and lay emphasis on the horizontal development of talent too. If organizations are really worried about retaining talent, then the concept of segmentation of talent must be extended to business partners, franchisee, and others. The same set of best practices must be in place across the franchisee. They must be treated as the organization’s own talent so that the organization can have a lean six sigma mindset as required. In this aspect, there has been a fundamental shift.
It is important to put HR into the hands of the business leaders. While mobility within the organization needs to be encouraged, it must be thought through more strategically. In the context of talent management, the organizational structure at times itself creates a barrier. As all are competing with each other for the same talent pool, an integrated thought process must be institutionalized so as to treat talent as a critical success lever. A common language around talent needs to be built and at the same time organizations must leave some control with the region. As all organizations are competing for the same talent pool, talent war implies that people are getting poached and hence the importance of building a great employer brand and the need of customization of talent. When an organization hires a person, it must hire the whole person – work experience, abilities, attitude and values. With technology as a key enabler, it (for example, social network) can be used to assess people. Alumnus services, a critical factor, too can be used to track and be in touch with alumnus.
How will segmentation help?
The changing expectations makes it necessary to customize HR functions; as organizations talk about individualization, there is a shift from the monolithic entity. The talent today has very different expectations and segmentation need not be merely based on age or gender but it must also cater to the mobility expectations. Line managers are critical as they are the source of one-to-one conversation and they must take up the charge of development and make customization possible.
The power of customization (individualization) is not only good for the employees and the organization, but also good for the customers. Instead of a monolithic entity organizations need to switch to ‘workforce of one.’
How does customization help?
The whole job of HR fraternity is to make people realize that they are not numbers, statistics, robots, they are human beings. Customization has immense benefits both for the organization’s employees as well as customers. It can be driven by operational leadership and technology can act as a catalyst in the process.
- Increases workforce performance and productivity.
- Improves employee engagement.
- Helps in attracting as well as hiring the most talented employees; a large and diverse workforce would help breed innovation and help serve a diverse customer base.
- Improves in employee retention thereby reducing turnover costs.
- Help building a competitive talent pool; a customized employee experience would be difficult for competitors to duplicate.
- Customization would eventually help in being flexible enough to respond to emerging business dynamics and changing employee preferences.
- Increase in revenue and also increase in value for existing customers.
- Easier to acquire and retain profitable customers.
- Better use of marketing resources.
- Reach a larger and diverse market.
- A customized customer experience would be difficult for competitors to duplicate.
Bottomline: Customization helps in reallocation of resources. Customizing talent management can have substantial returns: a more committed and satisfied workforce, lower turnover, and a greater ability to attract workforce stars. Customization gives organizations the performance and productivity boost they need when they must do more with less.
The 4 ‘workforce of one’ approaches to customization
Having undertaken an extensive study of more than 100 companies, Accenture has come up with four distinct approaches that can help an organization customize its people practices in a structured and rule based manner. The four approaches are not mutually exclusive and can be used either in silos or in combination.
1. Segment the workforce: Segmentation primarily means turning the lens on to the employees based on shared preferences such as value to the company, role, or generation and then accordingly tailoring people practices to each group, for example, club mate.
Organizations can use segmentation depending on either contextuality or on the utility it provides, for example, opt-in segmentation - wherein employees must be pulled in a segment rather than pushed in a segment. It is advisable that employees be allowed to gravitate themselves towards a particular segment (for example, interest group). Taking help of advanced analytics organizations can group employees based on learning styles, values, personality, wellness profiles, mobility, behavioral patterns and even networking and communication styles. As has been observed, the segmentation approach works best if the affected parties are also involved. However, it must be taken into account that customization is not a one-time issue.
The limitation of segmentation is that it must make business sense. The proposition of segmentation must fit the organization.
2. Modular choices: This allows the employees to select from a predefined set of options and tailor their own people practices. For example, just as Dell customizes computers by offering customers a menu of mix-and match options, companies can offer a predefined list of organizationally defined options for employees to customize their work experience. Similarly, employees at Capital One and Microsoft choose from a variety of mix-and-match work setting options based on their individual needs and changing work tasks.
3. Define broad and simple rules: This calls for creation of a broad organizational role, which gives ample space for flexible interpretation in diverse ways by the individuals. That is rather than creating a large variety of people practices, organizational should emphasize on creating an organizations rule so broad and simple that it can be interpreted in many different ways by workers or managers. For instance, Best Buy sets a broad rule “Get results” and lets employees decide how to accomplish it.
4. Foster employee defined personalization: In this case, the HR takes more of a supporting role by allowing individuals to define their own career paths. That is, just as consumers have the option of defining and creating their own content using YouTube, etc., employees too can create and define their own set of people practices.
With reference to the table above; customization as a phenomenon moves from being driven by HR to being driven by the employees. While there is more control and less of customization when the entire initiative is driven by the HR, there is more customization and less of control when driven by the employees.
How much of customization is enough?
To what extent should an organization go ahead and create customization depends on how much of business sense does it make and whether the organization wants it for the long term or the short term. By exploring the advantages and disadvantages of each customization approach, companies create their own ‘workforce of one’ blueprint, one that meets their unique needs. Employees will support differential treatment and practices if there are clear, logical and well - communicated reasons why they exist.
Customization would ideally depend on where the organization is on the growth curve; and then decide as to what it expects and which model can be applied in silo or in combination taking into consideration the business synergy. There has to be a balance between theory and a pragmatic normalized approach.
As the war for talent gains momentum, it becomes increasingly important for organizations to cater to the needs and aspirations of its workforce while treating them as individuals. While customization may not be the killer application that can win this war for the organization, it definitely can provide them with a competitive advantage against their competitors.