Most businesses say they value their employees. Not all live up to that. The workers most responsible for their success are often treated no differently than those who always seem to do just enough and little more. The business unintentionally drives away high performers because they don’t make enough of a distinction between them and other performers. Workforce differentiation is a strategy they can use to not only prove they value their workforce but also drive unequaled business success.
Workforce differentiation is championed by Brian E. Becker, Mark A. Huselid and Richard W. Beatty in their book, The Workforce Scorecard. It outlines the process of moving strategy execution through the workforce and has been implemented by many businesses to establish a brand of market success.
What is Workforce Differentiation?
The process of identifying and rewarding individual employees for different levels of performance, potential or impact on the business.
To achieve workforce differentiation the actual performance behaviors required by the workforce and managers must be identified. These are:
Workforce Success – Defined as culture, mind-set, competencies, and behaviors that drive operational, customer, and financial strategies that drive organizational success.
Workforce Mind-set and Culture – Culture shapes employee behavior and the behavior shapes the culture. Culture can also be measured and assessed in terms of its impact on the business’s financial success.
Workforce Competencies – Competencies represent the knowledge, skill, and ability of employees. Competencies for each employee can also be measured and monitored.
Workforce Behaviors – Leaders and employees must behave in ways consistent with the strategy for it to be executed. These behaviors can be defined and measured to ensure that leaders and employees do what strategy suggests needs to be done.
Why Workforce Differentiation?
• Businesses that don’t emphasize differentiation in their workforce strategy execution underperform.
• Misallocation of HR resources is the direct result of workforce decisions by line managers.
Workforce strategies must be internally diverse. Different parts of the business will use different strategies.
Employer of Choice strategies may not be the best strategy. They only work if the right applicants are attracted to the business and the wrong ones choose to look elsewhere.
There must be a strong differentiation between High and Low Performers. If low or no differentiation your high performers are more likely to leave while low and average could be overcompensated and less likely to leave. This causes your business to underperform.
The strategic benefits of improved workforce performance represent a significant opportunity for overall business performance.
What Are The Challenges To Workforce Differentiation?
Perspective Challenge – The need for managers to undergo a shift in their thinking about the workforce; from a cost to be minimized to the primary source of growth and value creation.
Metrics Challenge – Requires developing metrics to assess and help guide the execution of workforce strategy. For line as well as HR Managers the strategy and metrics should focus on the workforce and not just the HR function.
Execution Challenge – Involves helping managers use workforce data to improve the quality of decision making in their own businesses.
The unmentioned challenge is the business having the right competencies in its Leadership and HR staff to accomplish the differentiation strategy. A highly skilled HR team, an agile and effective leadership team and a business strategy that is more than just words must exist. If they aren’t present, they must be developed and become part of the implementation process. Strong professional assistance is necessary.
Workforce Differentiation Drives Strategy Execution.
To establish a Workforce Differentiation Strategy for your business you will need 3 Strategies:
- A Business Strategy
- A Workforce Strategy
- An HR Strategy
The reward is a high performing business that attracts employees of choice. Mediocre applicants are discouraged from applying because of the brand the business has created for excellence and its intolerance for poor performers. In other words, instead of the high volume of applications, you receive by becoming an employer of choice you attract a smaller volume of high performers; you attract employees of choice. The former wastes time and resources sorting through them to find the gems; the latter attracts the gems making your recruiting and retention efforts more productive and value added. The actual outcomes you will realize are:
- Business strategy execution improves.
- Shareholder value increases.
- Strategic managers follow strategic workforce issues as closely as they follow financial ones.
- Line and HR Managers are able to determine workforce investments that matter instead of following the latest fad.
- Workforce investments are targeted where the greatest return is and not where a low or nonexistent return is.
- Your HR processes will be strategically focused instead of administratively efficient focused.
- The strategic contribution of your workforce will be obvious and measurable.
If you truly believe your workforce is your greatest asset, then this is the right step for you and your business.