The framework I'm going to present to you in this video always stirs up controversy in my classes. That's because it seems to suggest that some people are more important to the organization than others, and should therefore be treated better than others. What do you think? Does the idea that some people are more important to the organization than others bother you? In this video, I'll outline a strategic approach to HRM that ensures your people management strategies are aligned with your business strategy. First, I will explain what I mean by a strategic approach through HRM, and then I'll introduce you to the central conceptual framework for this week, discuss its implications for organizational leadership. So what do I mean by a strategic approach through HRM? The word strategy gets thrown around a lot without necessarily meaning very much at all. What I mean here, is that a strategic approach to HRM is focused on ensuring that your people practices enable your business strategy. Sounds straightforward enough. However, adopting a more strategic perspective to the HRM involves at its core, an acceptance of the fact that time you have to spend, an investments you can make in developing and retaining your workforce are finite. As a leader, you therefore need to make strategic choices about where to focus your biggest efforts and investments. Here's an example of this very important idea. I recently heard about a very interesting question that was asked during a recruiting interview for a senior leadership position at a financial services firm. The question was, if you had six people in your team and two of them were high potentials who were doing extremely well. Two of them were doing okay but had some significant development needs, and two of them were really struggling. Where would you focus your development efforts? What do you think? Would you focus on ensuring that your two high potentials became absolute top performers? Or would you primarily focus on the two people who are struggling? Or would you try and spread out your time evenly across all six? From an overall team performance perspective, I would personally focus on the middle two, because by focusing on them, I could develop a team of four very strong performers. However, this is not necessarily the best answer, it all depends on your priorities as a leader. What is important about this question is that it forces you to consider the reality that you have limited time and resources at your disposal, and you therefore need to make strategic choices about where to focus your development efforts. This may strikes them as unfair, but it's not dissimilar to spending more effort and money on retaining your largest, most important customers, which everyone would accept as logical and normal. What does a more strategic approach through HRM look like? Professors Lepak & Snell, have developed a powerful framework for determining, which roles are most strategically critical to your organization, and how to adjust your HR approach for different types of roles. The consulting company, AWS, has taken this framework and developed into a more refined tool, which is now known as workforce segmentation. On the horizontal axis, you see strategic centrality. This is a scale for plotting the relative strategic importance of different roles across your organization. Just as important on the vertical axis, you see uniqueness. This is a skill for plotting how firm-specific the knowledge involved in a certain role is, and how easy it would be to source this knowledge from the labor market. These two-dimensions produce four quadrants, and Lepak & Snell central idea is that you should customize your HR practices specifically to each quadrant. Quadrant 1, you find roles that are critical for delivering your key capabilities and that involve a lot of firm-specific knowledge that's difficult to source in the labor market. These are roles that AWS has called, criticals. Below that, in quadrant 2, you find roles that are strategically critical, but that involve knowledge that's easier to source in the labor market. These are what AWS, calls, professionals. Moving on, in quadrant 3, you see what AWS calls, doers, roles that are not so strategically critical and that are relatively easy to fill because they don't involve a lot of firm-specific knowledge. Finally, in quadrant 4, you find specialists, roles that are highly specific to the organization in terms of their knowledge, and therefore not easy to source on the labor market. But that are not strategically critical. Looking at these different role groups, where do you think your job would sit in relation to the strategy of your organization? Would you be considered a critical, and what do you think the HR implications of that ought to be? Before I move on to discussing how to use this framework, it's important to note that the framework requires a considerable amount of judgments for two reasons. First, both the horizontal and vertical axis are relative scales rather than absolute ones. Rather than asking, is this roles strategically important or not, you need to ask, which roles are most critical for our key capabilities. If you don't do this, then you're likely to conclude that every role in the organization is important, which doesn't help you differentiate your HR approach. The second reason why this framework requires judgment is because it can be somewhat subjective. What is more or less strategically critical or more or less unique, can be a matter of opinion. Of course, there are surveys and scales that can help you with plotting the roles into this framework. But these are really just support tools. In the end, your leadership judgment is crucial.
