Over the years, segmentation has been a crucial tool used by business strategists to study high-value customer trends and demographics, and client satisfaction. Today, it has become imperative to use segmentation to study an organisation’s human capital in order to identify the business-critical workforce.
When it comes to workforce segmentation, compensation has always been a market maker of sorts—in other words, if an individual is being paid more, the role is more critical. In many cases, this holds true and it’s good to place trust in the market supply/demand equation, hoping the cream of the talent will rise to the top and command a higher pay.
But higher pay does not always equate to a business critical job. Many organisations apply the “jam on toast” theory, where everyone gets the same treatment—identical pay and opportunities for the same role. However, as businesses are getting more complex, the need for segmenting the workforce is becoming even more pronounced. All employees are important and serve a purpose towards achieving organisational objectives; but there are a few roles that help drive the strategy, and therefore, are more critical to the success of the organisation.
How does workforce segmentation help?
Workforce segmentation allows HR to:
- recognise the business contribution these jobs make to the future of the organisation;
- differentiate compensation levels to attract and retain the best talent in these jobs; and
- proactively plan succession in these roles to minimise business disruption.
Organisations are often tempted to equate senior management roles with business-critical roles. Yet while some senior management jobs are business-critical jobs, not all business-critical jobs are senior management jobs. To understand this better, let’s look at the four broad workforce categories in an organisation:
Business-critical jobs are those that are critical to the next 5-10 years of the organisation. In many technology companies, Design Engineers or Product Engineers who are working on the “next big thing” are considered business-critical. In the pharmaceutical industry, researchers working on the next big patent are critical to the survival and future growth of the organisation. At times, these jobs are detached from day-to-day business activities, but in some organisations a key client manager who is entrusted with managing a marquee account can also qualify for this category.
How do you spot business-critical jobs?
Having HR departments work in close collaboration with business leaders is often the recipe to success of classifying the right talent as business-critical. Some questions that HR should be asking business leaders include:
- Are these jobs working on projects/products that will drive the future growth of the business?
- Are these jobs performing activities that others in the organisation cannot do or are not equipped to do?
- If we lost someone in this job, will it result in business disruption or potentially loss of revenue?
- Are these jobs doing something that has a direct impact on the reputation of the firm?
- Are these jobs contributing to building organisation capability in a way without which the future of our business will be in jeopardy?
Segmenting the workforce is not an exact science, nor is it one that is rigid and impervious to change. For the most part, an organisation’s approach to workforce segmentation should be closely aligned to its business strategy; such that any changes in the business strategy will often warrant a revision of the matrix.
Ultimately, all employees are different and each has a different contribution to the business. The more an organisation is able to understand these differences and nuances, the better the quality of its talent management framework will be. Workforce segmentation gives organisations the ability to fine-tune its talent, identify inefficiencies, develop talent in the right direction, and equip employees to contribute positively to the growth and success of the organisation.
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