Friday, 27 March 2009

The Differentiated Workforce (Put Strategy, Not People, First)

 

     I've just read the first chapter of Becker, Huselid and Beatty's Differentiated Workforce.  I agree with a lot of the the book's suggestions, but disagree with some others.

 

Differentiated strategy, differentiated workforce (they're too different things!)

I agree that "most firms don't really have a workforce strategy" and clearly, this is a bit of a problem!  I agree that "Despite the tremendous attention in recent years to measuring the financial contribution of HR and talent, there is much less attention to getting the underlying workforce strategy right".  I've made this case several times - measures are important, but it's what you do with them that counts.

I also agree with the need to differentiate workforce (or people management) strategy.  I like the authors' point: "Just as any good business strategy involves making the right choices and the right investments, the same is true of a workforce strategy", and also Lucien Alziari's comment in the endorsements: "If you read your company's HR strategy, would you be able to tell which company it was written for?".  I'm a firm believer that you should be able to do so.

And I also believe in differentiating the workforce.  So, for example, I was fairly unimpressed by Paul Turner's comments at the recent CIPD conference that best practice in talent management is the inclusive approach - treating everyone as talent - and that this is what the majority of organisations do.  Firstly, because just because most organisations do this (based on a very limited sample), doesn't make it best practice.  Secondly, because I believe that organisations need to identify best fit solutions, rather than rely on best practice (which supports the points the book makes that I address above).  And thirdly, because I also believe that exclusive approaches - identifying a small group of people as talent - tends to be the right approach for many, if not most, organisations.

But not necessarily all.  What about an organisation that has an organisational capability around inclusivity.  They're not going to want to differentiate, are they?  The authors promote best fit over best practice, but then promote differentiation as a best practice that all organisations can use.  I don't think that logic works somehow.

A bit like Boudreau's belief in pivotal talent, the authors seem to assume that a strategic approach has to involve differentiation of the workforce.  They state that "differentiation is not just a feature of a successful workforce strategy, it is the most important feature" and "Differentiating the workforce strategy ultimately means investing disproportionately in certain employees and groups of employees, based on their strategic roles".  Why, and where's the evidence for this?  The closest they get is to say that: "Just as strategic differentiation reduces external homogeneity, internal homogeneity should also become much less important".  But I don't think this closes the case.  In fact, despite my comments above, I actually think that the global reset is pushing us towards greater inclusivity, eg towards reduced reward differentials, so we need to be careful not to extend a differentiated approach too far.

There are some other recommendations I don't totally support as well.

 

Strategy is more than just differentiation

One of my problems with the book is that its approach to people management strategy is purely adding value (requiring that "line managers define success but that HR professional deliver the solution" by identifying the 'strategic capabilities' - business processes - which best align with the business strategy).  I agree that adding value is essential but to me, people management can only be truly strategic when it creates values too (ie it identifies other capabilities which will inform not merely support business strategy).

The authors seem to disregard the opportunities for creating value by competing on intangibles by explaining that "the line line of sight between workforce strategy and strategic success is typically so indirect that figuring out how to get from here to there is difficult... There are few instances where a selection system, a performance management system, or leadership development has a direct impact on the firm's bottom line, making it hard to see how these decisions translate into strategic success."  I agree with the authors here - it is hard.  But this doesn't mean that we shouldn't try to do it.

And I believe that HR will have much more of an impact if it improves the capability of the whole workforce - in line with an overall human capital management strategy, rather than by just enhancing the capability of those people in the most strategic jobs.

 

Of course, I may change my opinions on the book once I've read the later chapters.  I'll let you know if I do - or we'll probably be discussing the book in the next episode of TalkingHR.

 

 

  • Consulting - Research - Speaking  - Training -  Writing
  • Strategy  -  Talent  -  Engagement  -  Change and OD
  • Contact  me to  create more  value for  your business
  • jon  [dot] ingham [at] strategic [dash] hcm [dot] com

    .