More sophisticated thinking: marketing versus HR
Marketers started doing real customer segmentation work back in the 1950’s. Based initially just on demographic data, the fast growth of market and psychographic data in the 1960’s and 70’s and then the proliferation of real-time purchase data in the 1980’s and 90’s led to the growth of purchase-behavior segmentation. This gave companies the ability to segment customers based on their age, income, psychographic profiles and past purchase behavior. It helped them communicate with and market to different customer segments in a more effective way.
By contrast, HR has done relatively little work in segmenting employees in the same way. This has been particularly true with regard to employee engagement. Many firms still look at all employees as one pretty homogeneous mass, trying the same engagement approaches with the whole group and doing little to segment their efforts to connect with, communicate with and optimise the performance of very different employee clusters.
All employees are not the same
From an employee perspective, this is a particularly strange approach. Any survey data set will tell you quite quickly that different groups of employees are, well, quite different! From an engagement perspective, we know that:
- Various groups of employees will have different levels of engagement
- Certain clusters of employees will have different engagement drivers
- Particular sub-sections of the employee population will have different needs and wants when it comes to how they want to be led, managed, communicated with or developed
And yet most companies look at their employee survey results as one big mass of data, with a single engagement score or a single set of drivers to act on (if they are lucky!). Having analysed hundreds of these datasets, our view is that taking this simplistic approach is just not enough any more. Smarter companies need to be segmenting their people in the same way they segment their customers. Only then can firms help to optimise engagement amongst all their people.
Types of employee segmentation
We find there are generally three types of employee segmentation being used (although, sadly, still in a very few, limited number of forward-thinking organisations). These are:
1. Simple employee demographic segmentations
- This takes the simplest approach to beginning a segmentation and focuses on some basic demographic splits in the population to assess how best to engage certain groups
- A good example is from a large UK-based retailer we have worked with recently. With over 70,000 employees, the firm had spent many years conducting employee survey work where the levels and drovers of engagement were only assessed at an overall level. We worked with the firm to start looking at how engagement (and the ways to optimise it) differed with even some simple splits of the workforce.
- For example, we started by looking at their three largest groups of employees: those in retail stores, those in logistics and those working in head office environments
- It was hardly any surprise to find that the levels of engagement amongst those working in a store, depot or office environment had different levels of engagement. However, looking at the drivers of engagement for the three sub-groups revealed that:
- There were certain core engagement drivers that impacted on all three segments. For example, exemplary leadership and role modelling had a big impact in all three environments
- There were certain drivers which were very unique to certain employee segments. For example, in stores, the role of the line manager in a department (particularly in larger stores) was very pivotal to how engaged people were. In logistics depots, the team camaraderie of people working in tough physical, depot environments, was a much stronger key driver of engagement. While in a more professional based, office environment at HQ, career development was a much bigger driver
- This helped the organisation begin to segment its employee engagement strategy and actions to optimise levels of engagement within and across the groups. Without even this simplest segmentation, the old 'single hammer blow' approach would have been much less than optimal.
2. Attitudinal employee segmentations
- A second approach is to segment employees on the basis of their attitudes towards the company; for example with regard to how they view the company as an employer, in terms of how it communicates with them and in terms of how their careers are developed.
- We worked with a second, larger UK-based retailer taking this approach. Using employee engagement survey data from over 150,000 colleagues, we looked at what 'natural' clusters of employees existed within the organisation using segmentation analysis.
- We found four types of colleague:
- 'Social teamsters': this group were mainly engaged by working as part of a close-kit team within a store and by having customer contact; with a more heavily female profile, this group were motivated by the flexible working arrangements that the employer could offer
- 'Careerists': Younger and more ambitious, this group were engaged by the career development opportunities offered by the retailer. These colleagues were motivated by the ability to work in different areas, progress into management roles and do the best possible job for the customer.
- “Short-termers”: this group tended to be working part-time in stores on certain shifts or at weekends and, while keen to help customer while at the retailer, they had no long-term commitment in terms of building a career.
- 'Loyalists': this group were more likely to have very log service records and be engaged by the feedback they get from both colleagues and customers. They are particularly motivated by the variety and challenge of their role.
- This retailer used the segmentation to help educate store managers about how to best engage and motivate particular groups of people working in their units and how to best optimise their time with them to get the best performance from them.
3. Customer-oriented employee segmentations
- Finally, some organisations are starting to use a customer-oriented employee segmentations approach
- For example, we have been working with a UK-based utility firm to help understand how they can better segment call centre employees to optimise their performance. For example, we have looked at the linkages between certain employee segments and certain customer segments to assess which types of employee will perform best in the face of certain customer needs.
- This is helping the firm to understand how best to select, train and retain talent in order to provide the best possible customer experience. It is also starting to help them think through smarter call-routing strategies to match the most suited employees to customers whose needs they will best be able to meet.
All of these examples show how using employee segmentations (from a simple to a more sophisticated approach) can help organisations better understand, engage with, communicate with, lead, manage and develop their own people. It’s about getting to understand them as individuals and smaller groups rather than 'en masse'. The performance implications are clear to see. The question is: when will more firms start to sue this approach?