Differentiating Your Workforce Strategy

Differentiating Your Workforce Strategy

3/14/2005
Even the best managers often forget to craft a workforce strategy along with their overall company strategy, but the two really need to be linked. An excerpt from the new book, The Workforce Scorecard.
by Mark A. Huselid, Brian E. Becker, and Richard W. Beatty

In Chapter 1, we outlined three challenges companies face as they attempt tomanage the workforce as a strategic asset. The first of these, the perspective challenge, is the focus [now]. At the foundation of the perspective challenge is an increased emphasis on differentiation—of employees, jobs, and performance. Such a shift in focus may represent a new approach to workforce management for most firms. Indeed, we find it interesting that while most managers appreciate thevalue of differentiation as an attribute of products and services, we don't observe the same emphasis on the role of differentiation in the execution of workforce strategies. For example, managers routinely evaluate the key elements of their customer value proposition or marketing strategies and readjust when necessary. Yet they rarely apply the same discipline to managing and measuring thefoundational driver of strategy execution: workforce performance and the HR management processes and systems that drive it. [...]

Differentiating the execution of workforce strategy
Execution is the second dimension of workforce strategy. Just as the content of workforce strategy requires more differentiation, so too does the execution of that strategy. They are related in part because increasingdifferentiation in the content of the workforce strategy implies increased differentiation in the execution of the strategy. Not all positions have the same strategic importance, and being able to identify and act on differential performance within those "A" positions takes on even greater importance when the firm has developed a detailed and specific business strategy. Therefore, while execution of theworkforce strategy is in part a shared responsibility of line managers and HR professionals, it is foremost the responsibility of line managers. It falls to line managers to adopt the principles of differential execution if the workforce strategy, and ultimately the core strategy, is to be successful.

The problem
Firms that don't emphasize differentiation in the execution of their workforcestrategy will underperform, but the source of the problem won't be obvious. Without the right perspective, the line of sight between the execution of the workforce strategy and firm performance is in most cases simply too indirect. In our experience the simplest indication that there is a problem is in how HR generalists allocate their time. In "low-differentiation" firms, HR professionals spend toomuch time on employee performance problems; specifically they spend too much time on employees who should no longer be with the firm and should never have been hired in the first place. This marks a failure to differentiate by HR at the point of hire, but perhaps more importantly a failure to differentiate by line managers once the performance problem is obvious.

|The responsibility for a newperspective on workforce strategy falls squarely on |
|the shoulders of the line manager. |

The misallocation of HR resources follows directly from the workforce decisions of line managers. HR managers respond to requests of supervisors and managers to solve specific workforce performance problems—especially of underperforming employees. These areproblems that should be solved between the individual employee and the line manager, but many of these problem employees become HR's problem. The key is to deal with the root cause—never to hire low performers in the first place—and secondly to have measurement and information systems that enable and encourage line managers to quickly fix or exit problems in the workforce.

The responsibility...