Maintaining a high-return workforce

Professors Mark A. Huselid, Brian E. Becker, and Richard W. Beatty published a new book, The Workforce Scorecard, on the often overlooked issue of workforce strategy. HBS Working Knowledge published an excerpt from the book on its web site.

[I]f seniority and job level explain 90 percent of the variation in pay in your organization, you probably need to take another look at how jobs are valued in your firm.

The book emphasizes looking for key contributors outside of the structure of an org chart.

By treating all jobs more or less equally, the organization underinvests in high-return (“A”) positions and overinvests in low-return (“C”) positions. These losses are compounded by underinvestments in high-return employees (“A” players) and overinvestments in low-return employees (“C” players). As a result, high performers leave and low performers stay, which over time creates a drag on firm performance and the need for significant, and often unfocused, layoffs.

Human resource departments are often focused on correcting employees who are not a good organizational fit instead of creating an environment to nurture top performers. Low-return employees drag the performance of the organization down.

The excerpt mentions IBM‘s methods of identifying and enabling high-return positions throughout the organization. IBM is an on-demand business and attempts to create an on-demand workforce.

Key elements that help to create an on-demand workforce include deploying programs that recognize accomplishments, regarding people development as an investment, differentiating performance and rewards, nurturing leadership capacity, driving accountability, and balancing its human asset utilization.

Overall a really good article and in-line with my way of business thinking.