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Over the years, segmentation has been a critical tool used by business strategists, whether to study customer trends and demographics, client satisfaction or high-value customers. However, today it has become imperative to apply these strategies and principles to segment the organisation’s human capital to identify 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 is good to place trust in the market supply/demand equation.
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. The extent to which we can differentiate between employees and the impact of such differentiation on these employees is a long-standing debate in HR.
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 are thus more critical to the success of the organisation.
Workforce segmentation helps organisations recognise the business contribution these jobs make to their future, differentiate compensation levels to attract and retain 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. Some senior management jobs are business-critical jobs but not all business-critical jobs are senior management jobs.
Typically, there are four broad workforce categories in an organisation with varying levels of demand and business impact; Value added specialist, administrators, core jobs and business critical jobs.
Value added specialists are in high demand but have lower business impact. These roles require specialist training and can be scarce skill sets in some labour markets.
Administrators, typically the ‘doers’, are lower in demand and business impact and are more routine and administrative in nature. Core jobs are also of lower demand, but have high business impact; roles that are repetitive in nature but at the heart of the organisation’s core business.
Finally, business-critical jobs are of the highest demand and have most business impact – typically the ‘thinkers’ that drive the future strategy of the 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 jobs.
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 to classify the right talent as business critical. Here are some key questions that can be asked to help facilitate that decision making:
• 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 potential revenue loss?
• Are these jobs doing something that has direct impact on the firm’s reputation?
• Are these jobs contributing to building organisation capability that will prevent future jeopardy?
Approaching workforce segmentation
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; any changes in the business strategy, therefore often warrant a revision of the matrix. So what key steps are involved in this process?
1. Understand the current and future business needs working in close collaboration with business leaders.
2. Develop criteria for classifying business critical roles along with a scoring mechanism.
3. Gather a team of experts from the business and jointly score the jobs against the set criteria.
4. Discuss the outcomes with the senior leadership team and get an independent perspective.
5. Align the findings to the talent management environment.
We know that 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 will be the quality of its talent management framework.
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.
Source: Rajiv Ramanathan, Special to Gulf News
The writer is Associate Partner at Aon Hewitt Middle East.