Borrowing tactics from consumer marketing, one expert suggests employers revamp their traditional talent management strategy to optimize employee behaviors and performance.
A recent survey by the Economist Intelligence Unit found that more than four in 10 senior executives partially attribute their firm's failure to achieve key financial targets to ineffective talent management. One solution may be workforce segmentation, which categorizes current and potential employees into groups based on the value of their role and skills to the organization, as well as various personal and social characteristics.
"We've used segmentation in marketing since the 1950s. But essentially the concept of segmentation from a human perspective is recognizing that people are different [without a value judgment] in the role they fulfill in our business model. And it's the same thing from an employee perspective," says Ravin Jesuthasan, the global leader of talent management at Towers Watson.
Workforce segmentation determines employees' roles without creating a hierarchy, and applies compensation and incentive structures appropriate to those pivotal roles.
Traditional talent management is a one-size-fits-all strategy regardless of function, age and demographics. Jesuthasan argues that "it results in significant inefficiency because you have this mismatch between what the company is spending and how it's spending its dollars in the workforce relative to what's going to drive that employee or group of employees."
Employers can split the workforce into appropriate groups by answering the following questions. He recommends three to five segments for most organizations, based on two questions: What is the talent management strategy or deal that is relevant for everyone that works here? Given the employee's role, unique circumstances and choices, which structure engages them as much as possible?
Airline industry example
Take the commercial airline industry, for example. The airplane pilot is an essential job for the day to day running of business, but after achieving a certain level of performance, the pilot doesn't affect the consumer experience beyond a certain level. Jesuthasan says industry employers want the pilot to operate at certain FAA standards, "but [they] don't want pilots who are the absolute best at what they do because you don't want creativity, innovation or people pushing the bounds of their job in terms of overperformance."
In other words, you don't want Tom Cruise's character in "Top Gun" flying commercial planes. That's a performance level more appropriate for the Navy "because average gets you killed" in that arena, says Jesuthasan.
"The inverse [position] is the flight attendant, where you do want creativity, you do want people who are willing to go the extra mile, and you do want that superstar performer," Jesuthasan says. "The role of flight attendant has changed dramatically because they are now the only human touch point for most airlines." As Jesuthasan cites in his new book, "Transformative HR," flight attendants engage 60% to 90% of the average premium passenger's total flying experience, so they are pivotal in shaping the customer experience.
For this reason, airline employers look for top talent coming from retail companies with strong customer service backgrounds. They're "trying to bring that customer service orientation into the cabin," says Jesuthasan.
To find the best fit for the job, employers look to lifestyle and personality to determine why new hires join the company in the first place. Many airline flight attendants are attracted to this role directly after college because they want to see the world. For this demographic, employers can entice and incentivize them based on the individual's enthusiasm and passion for the role.
Another group attracted to this position is retired EMT specialists, such as ambulance drivers, because the job leverages their customer service and emergency skills and is part-time work. Since employers want a fresh pool of talent every three to five years, they can use the demographics' qualities to their advantage. These positions lend themselves to coaching, incentives and performance-based pay, but the management and compensation for the pilot role may be very different. Pilots need to develop skills and gain experience over a career; the employer could use competency-based pay or step wages to reward experience, not for individual performance or pushing the envelope.
When employers at CME Group, a premier financial exchange in Chicago, required specific skills new to their business, they focused on attracting unique talent to accomplish these goals. They segmented their workforce into two categories. New growth employees would join the organization for three to five years. If this group succeeded at the company proposition, they would earn significant wealth in a short period of time. But if they failed or didn't succeed as well as expected, then they would not become wealthy. It was a high-risk and high-reward deal.
The other group, called "core strength," would have access to mentoring and coaching. Though they didn't have access to the same immediate high rewards, they received a career-based deal.
"It's not that each group is going to get necessarily a much better deal in its entirety than the other; they're going to get a different deal, which may emphasize some elements over others," explains Jesuthasan.
In retail, for example, McDonald's typically gears its crew-member hiring strategy to teenagers. However, a study of 400 restaurants in the United Kingdom found that customer satisfaction levels were 20% higher in outlets that employed kitchen staff and managers over age 60. David Fairhurst, chief people officer for McDonald's in Northern Europe, attributed the result to the older workers' additional experience, work ethic and face-to-face customer relations skills, which influenced younger workers.
Instead of quickly and inexpensively filling employee turnover with younger workers, based on the above finding, "McDonald's should manage its inventory of older workers with longer lead times, larger investments in recruitment, a higher tolerance for surpluses and more urgency about shortages. Older workers in one store should be inventory for other stores, avoiding imbalances and keeping the numbers at about three per store," writes the co-author of "Transformative HR," John Boudreau, in CFO magazine.
"When [McDonald's] has some people over 60 working on crew, it has significant engagement in terms of the engagement of the staff, professionalism and community that permeates that work environment," adds Jesuthasan. The fast-food employer should consider potentially attracting and engaging people who are retired and make the workplace attractive to them to get better customer service results.
Jesuthasan advises companies to be agnostic to gender and ethnicity factors when considering how to attract and reward groups with different lifestyles and personalities. Employers should address segmentation equality by making sure that incentives or benefits provided are not better for one group, but are simply different, as appropriate.
"It's not saying that one group is more important than another or one role is more critical than another. It's about recognizing differences and customizing the proposition in a way that ensures those differences are recognized but doesn't disadvantage another group," he says.
The strategy can also be applied to wellness program incentives by finding the best motivations and rewards for individual demographics, income, age and lifestyle. "Companies use Nielsen data to identify how different employees engage with the organization and to influence what choices they make for health and wellness," Jesuthasan explains.
When implemented appropriately, workforce segmentation can motivate and reward different demographics and roles within the organization to produce the best results for the company. People, just like the positions they fill, are not uniform and, according to Jesuthasan, should be managed in the most successful and efficient way possible.
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