Maximizing the value of the workforce through increasing relevancy

As the world hopefully comes out of recession companies will increasingly refocus on driving growth through an effective use of their workforce. There is a general acceptance that a range of factors mean that:

  • Whilst numerous studies show that there is a link between engagement and productivity, for many firms employee engagement levels have been reduced through recent cuts
  • In many countries the demographics point towards a tightening in several key areas of the labour market
  • Many employees realize that in many respects it is a seller’s market where they hold the upper hand and that they are a free agent.

Like the shopper who can seek the best deal or select the most relevant product from competitors hungry for their business, so too can the same individuals seek the best option for themselves in their working life.

For employers to compete effectively they must make themselves more relevant to their employees than their competitors.

Marketing has for long tackled such an issue by understanding and measuring consumer needs. The study of consumer behavior has provided answers to when, why, how and where people do or do not buy products or services. Central to this is an assumption that individuals seek to maximize their total utility. As two key constraints are their time and their money, how they wish to balance work and non-work parts of their life must be interdependent.

The way employees behave, how committed they are, whether they stay or leave depends on how their work fits with their overall ambitions for life. Their attitudes to work depend on how they seek to maximize their overall utility. For some, work is purely a means to an end – they work only to get paid and the cost is lost time. For others, it provides social status, friendships, fulfillment.

One conclusion that could be drawn from this is that everybody wants to achieve a different thing from work. While in the purest sense this is true, this is probably unmanageable for any firm to provide. Instead, we must look for a workable framework. In marketing, that framework is segmentation.

Segmentation is an analytically-driven framework to break a large population into groups which are more likely to respond to similar targeting and positioning. There are numerous ways to achieve this; historically demographics or societal groupings (ABC, etc) have been used. Increasingly segmentation is based on consumer needs, gathered from a variety of research methods.

Just as segmentation helps marketers sell more product, either by efficiently attracting new customers or increasing the share-of-wallet of existing ones, so can employers use segmentation to help maximise the return they achieve from their organization.

Such an approach can be used to understand the range of organizational issues including recruiting, increasing productivity, increasing retention and to understand the likely organization behaviour impacts of any necessary change. Furthermore, it is a concept and set of techniques that is accepted and understood by senior management.

How do we use segmentation within the workforce?

  • The universal start is to define what is the business objective that needs to be achieved. Unfortunately it is not possible to define one universal segmentation model that can apply to all instances. Not only are segments issue-specific but they will evolve over time.
  • At the heart of a good segmentation exercise is a research phase, gaining insight into how employees can be usefully classified. Data will typically come from two sources; from the vast stores of data organizations typically have within HR systems. Secondly new, often more qualitative data needs to be collated to give better meaning to what can be observed. Insight is gained from analyzing both data types in combination
  • Typically an organization wishes to target certain employee groups more than others. For example it may want to focus on high-performers, or to retain groups of employees who are particularly hard to recruit. This can be done by looking at segment distribution within groups. The objective is to find levers towards which the target group will respond favorably.
  • In many locations there are legal restraints prohibiting treating certain groups differently to others. However, just as marketers will create promotions to which their target group is more likely to respond, it is possible to define initiatives that can be offered to all but are more likely to be of interest to the target group. Naturally, where there is no legal constraint, direct targeting is often the best way of proceeding.

Our goal in launching OrganizationView is to provide employers with a new framework to see their organization and by doing so increase the value they realize from their workforce. We are constructing a team which can provide the analytical techniques and ongoing services needed to apply this marketing-based approach to employees.