Drafting different HR policies and practices for distinct role types goes a long way towards ensuring people budgets are maximised, according to a workforce planning expert.
Segmentation and differentiation are universal concepts used in a range of fields including marketing and manufacturing, but less so in people management, Advanced Workforce Strategies managing director Colin Beames tells a recent HR Daily Premium webcast.
In the field of workforce planning, where roles and employees come in all shapes and sizes, these concepts help employers treat their workforce assets strategically, and maximise ROI.
They're more useful than organisational charts, which tend to explain reporting arrangements and relationships between functions but don't necessarily indicate role importance, he says, noting it's a common mistake to assume roles at the same level in an organisation contribute equally to business outcomes.
Similarly, employers should resist relying on job evaluation methodologies to identify the value and contribution of various roles to business strategy.
Job evaluation methodologies can also be static and inflexible, with too much focus on internal equity and insufficient focus on the future, Beames says.
Instead, employers should use two models together: a skills-based segmentation model and a pyramid model of capabilities and competencies.
The important difference between 'make' and 'buy' roles
A key feature of the segmentation model is the way it distinguishes between critical roles and those suitable for outsourcing, and between 'make' and 'buy' roles.
'Make' roles are those where the employer needs to develop people from within to obtain unique knowledge and skills relating to the organisation, whereas 'buy' roles are those that can be readily filled and require less investment in training and development, Beames says.
"The importance of differentiating between 'make' and 'buy' roles is [that] different employment value propositions, different HR policies, different turnover costs, [and] different levels of investment in training and development apply to these roles," he says.
He warns that misclassifying roles can have "dire consequences", including performance deficits and retention issues.
Classification must also consider how valuable and unique the skills associated with a role are.
Employers can then divide their workforce into four quadrants: criticals, specialists, professionals/skilled/semi-skilled, and doers, and manage the roles based on the value and uniqueness they contribute to the organisation and how difficult they are to fill, Beames says.
The more unique a skillset is, the more time it can take to acquire or develop it, so it pays to invest more in retaining 'critical' roles than in roles that are easily filled.
In fact, different HR policies should apply to different skill segments, Beames says.
Appraisal systems, compensation and reward systems, and investment and training opportunities, for example, might vary by role depending on its quadrant.
"Similarly, in terms of recruitment/acquisition, different approaches will apply in terms of investment in recruitment," Beames says.
For criticals and specialists in particular, "you want to get that decision right, because otherwise you might invest in training and development and find the person leaves or they're unsuitable for the role, so that investment is down the drain", he says.
"You want to spend more money and more time and effort in making sure those recruitment and selection decisions are better, higher quality, more accurate, because the implications of getting it wrong are much more adverse."
HR Daily Premium subscribers can click here to watch the full webcast, which also explains the pyramid model and how to integrate the two, and includes case studies about role recognition deficits and disconnected strategies. Free subscribers can upgrade here for access.