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The Wall Street Journal
Human Resources
The Work Force of One
A single set of rules for employees may have made sense in an earlier era. But these days,
it no longer flies.
By SUSAN CANTRELL
June 16, 2007
When it comes to human resources, one size no longer fits all.
For years, companies used standardized human-resources plans for recruiting and
managing workers. One set of rules dictated everything from the kinds of benefits and
rewards the company offered to how employees were trained and evaluated. That
approach made things easier for the human-resources department and ensured a degree of
efficiency, equality and fairness.
More companies are giving their Human Resource departments flexibility when it comes
to policies in an effort to better serve employees. Now some executives are finding that
this model isn't adequate for getting the most out of existing talent or attracting and
keeping new people. To be competitive in the marketplace and in the race for talent,
companies must understand and address the diverse needs of their work force. In fact,
they must treat each employee as a "work force of one."
Why is a new approach necessary? Competition for talent is tougher, and the work force
is growing more mobile and diverse, in terms of culture, education and individual
aspirations. Workers today, increasingly accustomed to more-tailored offerings as
consumers, are more likely to be attracted to and remain at a company that provides
more-tailored offerings to them as employees -- flexible schedules, for instance, or a
customized career path.
Surveys and interviews with managers and human-resources executives at 51 companies
showed four techniques that organizations are using to achieve high performance by
better addressing employees' needs. Some companies group together employees with
common needs and preferences and provide solutions that are tailored to each set, such as
different schedules or compensation plans. Others give all their workers a range of
options and let them choose what suits them best -- everything from their benefits to their
work environment.
In some cases, these new plans involve replacing specific human-resources mandates
with simple, broad policies that can be applied in a variety of ways to suit individual
needs, such as flexible budgets that let line managers use their own discretion to set
salaries. Other arrangements focus on general management practices that recognize the
individual, such as coaching or mentoring.
AT HOME IN THE OFFICE
Where Things Stand: Many companies are using an old model of human resources -setting down centralized rules that govern everything from benefits to recruiting.
Why It Doesn't Work: Workers are becoming more mobile and diverse, with differing
interests and backgrounds. One-size-fits-all approaches simply don't fit the reality of the
modern work force.
What to Do: There are four basic strategies companies are using to be more flexible about
human resources. For instance, some group together employees with common needs and
preferences and provide solutions that are tailored to each set.What follows is a look at
the four methods and how they can help companies -- along with a discussion of some of
the hurdles companies may encounter as they put these plans in place. Some of the
practices described here are now commonplace, and some are unique. But they are all
examples of a growing trend toward a more individualized approach to people
management. By applying one or more of the techniques, companies can create new and
innovative practices that will keep employees satisfied and productive.
SEGMENT THE WORK FORCE
Just as marketing departments organize customers into groups, human-resources
departments can segment employees in different ways to boost worker productivity and
satisfaction -- and make the organization more effective.
Segmenting takes a variety of forms. Procter & Gamble Co. uses segmenting when
recruiting, crafting targeted messages for certain types of potential employees. Many
companies, such as those in the consulting and advertising industries, provide customized
offerings for employees -- consultants are often equipped to work remotely, for example,
and writers and artists sometimes receive unique incentive schemes and work
environments designed to elicit creativity.
In recent years, a number of employers have begun to segment based on the employee's
value to the organization. Labeling certain employees "high potentials" or "A players"
based on past or predicted performance has given way to segmenting employees based on
their relative contribution to the company's performance. International Business
Machines Corp., for example, offers specialized development opportunities to employees
in critical job roles.
A number of employers are designing more unusual segmentation strategies designed to
play to individuals' varied needs. One research-and-development group at a technology
company created several distinct roles for its engineers based on their personality and
interests. The standard role is designed for engineers who prefer to concentrate on one
project at a time. But those who don't like that work style have a chance to become
"parachutists," dropping in on projects and solving problems for short periods of time.
Meanwhile, those who are good at representing the company's work to outsiders can
become "ambassadors."
Although it is relatively easy to segment employees based on job characteristics, such as
where they're located or how much they travel, companies must be careful when
segmenting employees based on traits such as age or personality. Employment law
protects many classes of people based on such traits. When segmenting people based on
personal traits -- for example, giving special consideration to older workers who need
flexible schedules -- companies should only suggest such considerations and offer
employees options, never force them to make certain choices.
OFFER CHOICES
An alternative way of creating customized employee experiences is to allow employees
to choose from a standard set of choices defined by the human-resources department. In
recent years, for example, a growing number of employers have provided full-time
employees with "cafeteria" benefit plans, which allow people to pick the options they
value most.
Now companies are becoming creative about offering choices in other areas. Sun
Microsystems Inc. asks employees to identify the type of physical setting that suits them
best -- a private office, team room, satellite center or their home office. Microsoft Corp.
goes so far as to ask certain types of employees to design their own career paths. The
company offers software engineers both a management-focused and technical-specialist
career track and allows them to move back and forth between the two.
FOR FURTHER READING
These related articles from MIT Sloan Management Review can be accessed online
• Building Competitive Advantage Through People
By Christopher A. Bartlett and Sumantra Ghoshal (Winter 2002 issue)
Companies are discovering that human, not financial, capital must be the foundation of
any successful strategy.
http://sloanreview.mit.edu/wsj/insight/pdfs/4323.pdf10
• Why Leadership Development Efforts Fail
By Douglas A. Ready and Jay A. Conger (Spring 2003)
Many corporate development programs fall victim to three pathologies that render the
investments of time and money worthless.
http://sloanreview.mit.edu/wsj/insight/pdfs/44311.pdf11
• Decision Downloading
By Phillip G. Clampitt and M. Lee Williams (Winter 2007)
Organizations often try to include as many people as possible in the decision-making
process, but sometimes it's just not possible.
http://sloanreview.mit.edu/smr/issue/2007/winter/15/12
• The Hidden Leverage of Human Capital
By Jeffrey A. Oxman (Summer 2002)
In fallow or transitional times, there are four critical ways human resources can be
leveraged to prepare for a new stage of growth.
http://sloanreview.mit.edu/smr/issue/2002/summer/8/13BE FLEXIBLE
Many companies are saddled with human-resources policies that are so specific that they
are no longer relevant. They then become bureaucratic barriers to effective management
and undermine performance. Increasingly, companies are creating more general humanresources policies that give workers greater discretion, within clearly defined limits, to
apply the policies in ways that suit their unique needs.
"Broad-band compensation," used by Merrill Lynch & Co. and Nike Inc., among others,
is a common example of such an approach. In this plan, companies use fewer, wider
salary ranges rather than many specific job classifications and pay grades. This gives
managers more latitude to compensate top performers, for instance, or to offer more
money to land a star. Similarly, car-rental company Avis Budget Group Inc. allows
department managers to control their budgets within pre-set limits. If managers want to
reward one employee with a big chunk of that money, they are free to do so.
Some companies, meanwhile, are setting up loose, "cascading" performance goals for
their workers. Clothing chain Men's Wearhouse Inc. establishes sales targets for its
stores, but doesn't dictate how employees should reach those targets, as other chains may
do. "There are a variety of ways that stores meet these goals," says Charlie Bresler,
president of Men's Wearhouse. Some stores have a few "wardrobe consultants" who
excel at selling, for instance, while other stores have their consultants sell in teams.
"Stores hit their goals in different ways, and that is not only tolerated but encouraged,"
Mr. Bresler says.
Some organizations are even redefining the norms around work. At Best Buy Co.
headquarters in Richfield, Minn., about a third of the 4,000 or so employees are allowed
to set their own work hours and to decide whether they work from the office or home -provided they can get the job done on time. As a result, Best Buy says, it has seen job
satisfaction and productivity rise.
GET PERSONAL
The preceding options are all primarily driven by human resources. But employee
performance can be improved just as much if not more by general management practices
that recognize the individual. Managers might offer one-on-one coaching or mentoring,
or redefine a job's focus to line up with an employee's strengths.
Men's Wearhouse has largely replaced traditional training methods with an
apprenticeship model, which the company has found to be far more effective. Store
managers are encouraged to demonstrate effective sales approaches and to coach
employees to develop a personal style of their own.
Likewise, some companies are reconsidering how they approach performance reviews. In
traditional settings, human resources controls how and when the performance appraisal
takes place, and managers are directed to evaluate how well employees have mastered the
fundamental requirements of the job. But as work becomes more team- and projectbased, it is becoming more difficult to have a standard set of requirements.
So, many companies supplement traditional performance reviews with continuing
discussions with employees about goals and progress. This has a number of advantages.
Problems can be caught earlier on, and feedback can be much more specific than with a
traditional annual review. And employees are more likely to learn from feedback if they
receive it soon after a noteworthy event and in the context of their regular workday.
Microsoft, which has a similar program in place, supports it with an information system
that lets managers and employees record informal feedback confidentially. The
information isn't reported to human resources and doesn't follow the employee from job
to job. Instead, employees and managers use the information for their own reference. This
system makes it more likely that managers will say what they really think -- and thus
provide helpful guidance to employees.
***
Of course, these approaches come with a number of caveats.
For one thing, implementing any of these practices will mean big changes for companies
with traditional human-resources departments. In some cases, human resources' primary
role will be to support the line managers and employees who have the responsibility for
carrying out the new plans, encouraging and facilitating good management practices and
building a culture and work environment that support them. Software company SAP
Americas, a division of SAP AG, makes sure that human-resources professionals focus
on coaching managers on how to provide informal feedback to their employees through
coaching or mentoring. Corning Inc. seeds some of its best people-managers throughout
the organization to model and teach effective practices.
These practices can also require a difficult balancing act. In environments where
managers treat individual employees differently, maintaining a sense of fundamental
fairness is crucial. Managers need to take workers' concerns seriously, recognizing that
negative feelings can be extremely harmful to the business.
The best way managers can respond to employee concerns is to be as open as possible
about how they make decisions, and to have a clear rationale for decisions and policies.
It's also important to be consistent about how decisions are made and to respond to
questions in a sensitive, respectful way. And management should take steps to ensure
employees that the company is strongly committed to equal opportunity and that legal
protections against discrimination remain in place.
Finally, these practices work better in some contexts than in others. Government
regulation is one critical factor. Many countries, such as Belgium and France, have strict
labor rules that may make more customized practices difficult or impossible to introduce.
Even in the U.S., some customized practices may bump up against rules about equal
opportunity or retirement-plan security. Therefore, many companies use flexible policies
to supplement, rather than replace, established programs.
In addition, some industries are more open to customization strategies than others.
Advertising, consulting, financial services and entertainment, for instance, need highly
independent and driven people to be successful. In return, these industries have been
more than willing to offer work arrangements tailored to individuals to attract and retain
top talent. Indeed, even particular departments inside companies are better suited for
work-force-of-one policies than others. Positions that are knowledge-intensive, such as
copy writing, tend to be a better fit for these policies than those that are more routine, or
location-based, such as call centers.
The culture and history of the company itself also matter. Small, younger companies
often operate without formal human-resources structures as a matter of course. The four
techniques are thus more appropriate for larger companies seeking a way to introduce
customization and flexibility without abandoning control and structure.
It's difficult to make the change from a one-size-fits-all approach to a more customized
one. Doing so requires senior managers to discard familiar policies and practices and
adopt a new, more responsive system from the ground up. However, companies that do it
right will have unprecedented opportunities to develop the talent they need to become
more competitive, high-performance organizations.
--Ms. Cantrell is a fellow with the Accenture Institute for High Performance Business in
Boston. She can be reached at [email protected].