Differentiation and segmentation are among the strategies that firms adopt as part of their efforts to capture the market. The effectiveness of these strategies has inspired firms to expand their application. Today, firms are using differentiation and segmentation in how they manage their human resource affairs. In particular, these strategies are being employed in the design of compensation packages. Thanks to the strategies, firms are able to target different employees with different incentives as they seek to promote engagement, satisfaction and engagement. The organization for which I work attributes the success that it has achieved to the adoption of differentiation and segmentation in employee compensation.
Before addressing the role that differentiation and segmentation plays in human resource management, it is critical to begin with an exploration of their essence. Basically, these strategies involve grouping employees on the basis of such factors as the value that they create for the organization (“Topic 2: Segmentation”, 2018). The primary purpose of these strategies is to align compensation packages with the unique needs and preferences of employees and the contribution that they make to an organization’s growth. My organization segments employees along different lines. Some of the factors that are considered in the segmentation process include the level of experience, length of stay at the company and the level of productivity. In general, employees who have been with the company for years and have demonstrated dedication are segmented apart from other employees and offered more attractive rewards. I have observed that this method of segmentation has yielded mixed results. On the one hand, it incentivizes the employees to improve their productivity and loyalty levels. The employees work hard in the hope of receiving rewards. On the other hand, the segmentation approach has also created an environment defined by hostility and unhealthy competition. There have been cases where the employees go extreme lengths to be placed in a segment that receives greater reward. For example, there are some employees who work extremely long hours at the expense of their health. Gender appears to be another factor that the firm uses to segment its employees. Males tend to receive greater pay compared to women in the same job categories. I think that the sexist approach that the firm has adopted depresses employee productivity and could set the stage for low employee engagement and productivity.
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My organization understands that it is not the only player in the industry. It has taken steps to differentiate its employees from the workforces of other firms that operate in the same industry. Training and attractive compensation are the primary differentiation strategies that it has implemented. The purpose of the training is to equip the employees with the competencies and perspectives they require to compete with others in the industry. Furthermore, the firm supports the efforts of employees who wish to advance their education. It invests in employee education and training in the hope of creating a workforce composed of highly competent and productive employees. In offering competitive compensation, the firm aims to drive up the levels of satisfaction, commitment and productivity of its employees. A review of research shows that the programs that the organization has adopted as part of its employee differentiation strategy are founded on solid ground. Such scholars as Aguenza and Som (2012) have observed that attractive compensation fuels employee productivity and engagement. It is not surprising that most of my company’s employees are highly engaged and productive. However, as noted above, the segmentation approach that it has adopted poses serious threats to employee wellbeing and should therefore be revised.
In conclusion, differentiation and segmentation have proven to be some of the most effective strategies for managing the workforce. However, as the situation at my organization reveals, these strategies should be adopted with caution. Firms should ensure that the process of implementing these strategies is guided by values like fairness and with the goal of promoting employee engagement. The strategies should be combined with competitive compensation. As they leverage these tools, firms will provide their employees with reasons to be committed. More importantly, these tools enable firms to set their employees apart from those who work for other organizations.
References
Aguenza, B. B., & Som, A. P. M. (2012). Motivational factors of employee retention and engagement in organizations. International Journal of Advances in Management and Economics, 1 (6), 88-95.
Topic 2: segmentation of the workforce. In Module 4: designing and implementing a total rewards program.
