1. Workforce Differentiation
MGN443 Talent Management
Workforce Differentiation
Week 2

2. MGN443 Framework Talent Management Overview HR Differenti-ation
Approaches HR
Architecture

3. Talent Management
. . the activities and processes that involve the systematic identification of key positions which differentially contribute to
the achievement of sustainable competitive advantage,
the development of a talent pool of high potential and high performing incumbents to fill these roles, and
the design and development of a differentiated human resource architecture to support these aims
(Collings & Mellahi, 2009)

4. Strategy
Strategy is concerned with creating competitive advantage-doing things that your customers value in new, different ways.
Doing exiting things differently
Doing new things
Strategy is about differentiating on the outside
To successfully differentiate on the outside, you need to differentiate on the inside (workforce differentiation, how you execute your strategy)

5. Three basic paths to Competitive Advantage
Operational Excellence
Low cost provider via operational systems that continually reduce cost/price, while offering a quality product that consistently adds greater value than its competitors.
E.g., Federal express, Wal-Mart, Dell, Home Depot
Product Leadership
Requires innovation in product and/or services to create its competitive advantage.
E.g., 3M, Nike, Glaxo, Apple.
Customer Intimacy
Firms following a customer strategy offer unique solutions that enable their products or services to be readily customised at the lowest level of customer interface.
E.g., Four Seasons, McKinsey & Co, PWC.
(Treacy & Wiersema, 1995)

6. Strategy and Workforce Differentiation
Following successfully differentiation on the outside (strategy), you need to differentiate on the inside - how you execute your strategy.
WD: Disproportionate investments in human resources where you expect disproportionate returns.
Not all employees possess skills that are equally unique and/or valuable to a particular firm. So the investment in human capital will vary for different types of human capital
Firms can optimize their investments in HR when it is differentially invested.
(Becker et al., 2009; Boudreau & Ramstad, 2007)

7. Strategy and Differentiation
Operational excellence
Product leadership
Customer intimacy
Strategy
Workforce Strategy
Stage 1
Stage 2
Stage 3
Stage 4
Differentiation

8. Four Stages of Differentiation
Source: Becker at al. (2009)

9. Stages of Workforce Differentiation
One size fits all
HR best practices
HR bundles
High-performance work systems (HPWS)
(Wu et al., 2015)
Generic fit
Begins to achieve a fit between business strategy and HR strategy
Diff. by strategic capabilities
Business processes (inc. org. systems and talents) absolutely essential to executing a firm’s strategy
Ex: R&D process, logistics and distribution capability
Diff. by jobs within strategic capabilities
Continues from stage 3 to differentiate at the level of the job.
A, B and C jobs

10. Article
(Treacy & Wiersema, 1995)

11. Strategic Capabilities
Business processes that execute the firm’s strategy and are the source of any competitive advantage.
An organizational asset that combines talent, information, technology, and routines.
Ex: alliance management, acquisitions and mergers, supply-chain management

12. Strategic capabilities
Differentiation
Strategy
Strategic capabilities
Strategic positions
Players A, B and C
Action plan

13. Differentiation Determine strategic choice
Identify strategic capabilities
Identify strategic positions
Assess players in positions
Plan action for all players in strategic positions
Operational excellence
Product leadership
Customer intimacy
List possible strategic capabilities
Review strategic capability criteria
Assess each for present and future strategic impact
Determine 3-5 strategic capabilities
List positions within each strategic capability
Assess each position on strategic impact and performance variability
Finalise strategic positions
Review other positions (not in strategic capability for strategic impact potential)
Develop A, B and C
Apply A, B and C criteria to all positions
List all positions by A, B and C designation
Assess all employees in positions
Determine percentage of A, B and C players in all positions
Remove C positions
Remove C players from A positions
Put A players in A positions
Develop B players in A positions into As

14. References
Becker, B., Huselid, M. A., & Beatty, R., W. (2009). The Differentiated workforce: transforming talent into strategic impact. Boston, MA: Harvard Business School Publishing. Boudreau, J. & Ramstad, P. (2007). Beyond HR. The new science of human capital. Boston, Massachusetts: Harvard Business School Press. Collings, D.G., & Mellahi, K. (2009). Strategic talent management: A review and research agenda. Human Resource Management Review, 19(4), 304–313. Treacy, M., & Wiersema, F. (1995). How market leaders keep their edge. Fortune, 131(2), Wu, N., Hoque, K., Bacon, N., Llusar, B., & Carlos, J. (2015). High‐performance work systems and workplace performance in small, medium‐sized and large firms. Human Resource Management Journal, 25(4),