In The Joy of Segmentation, two Mercer consultants contend that:
Typically, “good” reward strategies focus on organizational performance and market rates – the old reward strategy that every company seemed to centre on “reward to recruit, retain and incentivize the best talent”. However, in our view, the best companies also focus on […] meeting employee needs.
The challenge of segmenting your workforce
So how do you go about determining what employees value most in your reward strategy?
We hear a lot these days about companies using analytics and Big Data in order to improve on their human capital decisions, with excellent examples coming from Google and its famous People Analytics team, 3M, or even huge organisations like Starbucks. But what if you’re a much smaller organisation, and don’t have a huge HR team? Or if you don’t have yet fully integrated or sophisticated HR tracking systems?
Well, maybe you cannot conduct an analysis inspired by consumer-marketing approaches. Or maybe you don’t have a large budget to engage the services of one of the big rewards services providers. But you can surely design a survey asking employees for their feedback on the elements of their package, and what else they would like to get.
Identifying potential criteria for the employee segmentation
Have a look at your employee population, maybe through some past engagement survey responses, and you surely already see some clusters.
For instance, you may want to analyse by broad employee category (blue collar, staff, professionals, management), by function (production, R&D/engineering, sales, support), by gender, by nationality (expat/national – very useful in Dubai and the GCC where I operate), by tenure in the company, or by age bracket. These traditional segmentation criteria cover some very objective and relevant categories of employees.
I recommend, however, to map these out along other criteria, especially if your organisation is in transition or reorganization phase. Focus on employees with critical skills or in key roles, or on your high potentials, or on pockets with high employee turnover, separately from the rest of the employee population.
Sending out and analyzing the survey
A client once asked me how to do these things through an anonymous survey. I suggested two approaches :
- You can send your survey in two waves, for example the first wave sent to the top performers of the company, and the second one sent to the remaining employees.
- Or you can send the survey to all employees at the same time, but in reality send out two different surveys. Just include an extra question, with mandatory answer, for the critical group you are targeting, so that you can identify their replies.
Remember that the clusters should be large enough to produce relevant statistics. So don’t go overboard with the fune-tuning of your segmentation, especially in mid-size organisations!
Simple pivot tables and graphs will then be useful to analyse the results. This analysis will enable you to identify which criteria are the most relevant for grouping your employee population. For example, maybe age bracket does not produce big differences in what employees value, but gender does.
You can then easily apply the feedback from the survey to know which areas of the pay package to focus on in order to bring more value to each employee segment, or at least create more awareness of what is made available to them.
And that’s it! This is how, as a mid-size organisation, you perform a proper segmentation of your employee base for the purpose of refining and improving your total rewards approach.
Sandrine Bardot, owner and founder of Compensation Insider, is a trainer, consultant and speaker on the topics of Performance & Reward. For 20 years, Sandrine took on international positions with increasing responsibilities in Compensation & Benefits
She is now offering specialised C&B training, consulting and keynote speaking services throughout the GCC and Asia. Sandrine learned how “good” Compensation & Benefits approaches support your company strategy, improve employee engagement and retention, and increase control over human capital costs. She shares hands-on, pragmatic approaches with her clients, ensuring that the projects will have immediate impact and business value and don’t remain “an idea on the shelf”.
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