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By Ellen Pearlman
Strategic Thinkers: Brian Becker, Mark Huselid, Richard Beatty
Credentials:
Becker is Professor of Human Resources and Senior Associate Dean in the School of Management at the State University of New York at Buffalo; his writing and research focuses on the financial effects of employment systems, and the relationship between HR systems, strategy implementation and firm performance.
Huselid is Professor of Human Resource Strategy in the School of Management and Labor Relations at Rutgers University; he focuses on the linkages between workforce management and measurement systems, strategy execution and firm performance. He is the former editor of Human Resource Management Journal.
Beatty is Professor of Human Resource Management at Rutgers University; his research interests are in human resource strategy and measuring all aspects of workforce performance.
Big Idea: Creating a competitive, strategically focused workforce requires investing heavily in the jobs and people that create the most wealth for your organization.
Book: The Differentiated Workforce: Transforming Talents Into Strategic Impact, published by Harvard Business Press, April 2009,
Website: www.bhbassociates.com - Beatty-Huselid-Becker Associates, a consulting organization founded by the three authors.
Do you agree or disagree with this statement: "The workforce is the most expensive yet poorly managed asset in most organizations." When I read that sentence in The Differentiated Workforce, a new book on workforce strategy, I couldn't help but nod my head vigorously in agreement. Now many of you may say your company does have a workforce plan, but what often masquerades as strategy, is actually a talent initiative and a one-line statement somewhere in the corporate literature that says, "People are our most important asset."
While the lack of a strategic workforce strategy represents a problem for many companies, it also provides an opportunity. By developing a strategic workforce strategy aligned with business strategy and managing it effectively, companies can improve their performance and create new wealth.
The authors of The Differentiated Workforce, Brian Becker, Mark Huselid and Richard Beatty, have done extensive research in the last decade and found that "firms with high-performance HR systems were more successful on every measure of financial performance." In fact, their research showed that firms using high-performance work systems averaged $90,566 greater sales per employee and $348,817 greater market value per employee from 1991 to 2004. At a time when differentiating your company from its competitors is critically needed to improve the bottom line, taking a fresh look at managing your company's most important asset is sorely needed.
The authors believe that most workforce initiatives "begin with people, rather than strategy." But they believe that building competitive advantage requires a different model, one that puts the business strategy first and then develops the best workforce to execute on that strategy. This means putting "disproportionate investments where you can expect disproportionate return" by identifying the specific jobs and people that help create strategic success for your organization. This doesn't mean spending more money on people, it means spending more money on the right people. "Too many organizations underinvest in high-return (truly strategic) talent and overinvest in nonstrategic talent," the authors say.
But before a company decides it needs to create a new workforce strategy it needs to be sure it has already identified its strategic goal and has a clear statement of how the company will achieve that goal. Without clearly stated strategy goals, a company cannot create a workforce plan that will achieve them. Moreover, a company needs to understand what it does to gain competitive advantage or what its strategic capabilities are. Then it needs to figure out how the company's employees drive these strategic capabilities. Only then can a workforce strategy be developed.
The answers to two questions are critical to developing a workforce strategy: How does the workforce contribute to the firm's competitive advantage? How should the workforce be managed to realize that value? The authors are clear that it's "not the people that are the strategic asset," but your organization's ability to "manage that talent strategically."
An important step in creating a differentiated workforce plan is to develop a talent map that identifies how talent helps to drive the execution of the company's strategy. This helps to hone in on the part of the workforce that has the greatest impact on achieving the company's strategy. This naturally leads to a discussion of the jobs and roles that are most critical to executing on this strategy and to identifying your "A" team jobs (See the accompanying slideshow on "A" Player Assessment). This can lead to some surprising conclusions about which jobs are strategic. For example, at Nordstrom these jobs are held by its personal shoppers, at Wal-Mart it's the distribution and logistics specialists, and at a retail bank it's the relationship managers. "Managers often misdiagnose the truly strategic positions," the authors say.
Ultimately you want to be sure that your "A" players are in "A" positions for "A" customers, where they can deliver the most value. "B" and "C" positions need to be managed too: "C" players should not be in "A" jobs, "B" players in "A" positions must improve their performance, and "A" players in "B" jobs might move into "A" positions. The authors say it is important to note that while all a firm's jobs are important, "not all are strategic." Typically fewer than 15 percent of a firm's jobs are strategic, the authors add, and those jobs can appear at any level throughout the organization.
Next: The Quickest Route to Shareholder Wealth
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