The Idea in Brief
Superior talent gives your company its competitive edge. But your star performers can’t burnish your bottom line unless you deploy them in those few jobs through which you execute your high-level strategy. If you haven’t identified those “A positions,” you may be drastically mismanaging your workforce—rewarding high performers in nonstrategic jobs, or keeping B or even C players in mission-critical roles.
How to take a more disciplined approach to workforce management? Identify your A positions—those most essential to your strategy. Probably less than 20% of your jobs, A positions are likely scattered throughout your organization, at all levels. Then actively develop and generously compensate the high performers in those roles. Move C players out of A positions, replacing them with top talent. Help B players in strategic positions to elevate their performance to A level.
No company can afford to have A players in all positions. But by placing your very best people in strategic positions, investing disproportionately in them, and managing your B and C players shrewdly, you create a workforce that can carry out your strategy—and leave rivals scrambling.
The Idea in Practice
To manage your workforce strategically:
Identify Your “A Positions”
A positions are crucial to your company’s ability to execute some part of its strategy. To identify these positions, clarify the basis on which your company competes: Price? Quality? Mass customization? Then identify the technologies, information, and skills required to create your intended competitive advantage. Ask which jobs employ those critical capabilities in the execution of your strategy. Example:
Nordstrom and Costco both rely on customer satisfaction to drive growth and shareholder value. But Nordstrom’s strategy hinges on personalized service and advice, while Costco’s relies on low prices and product availability. Nordstrom’s A positions therefore include frontline sales associate jobs, while Costco’s includes purchasing manager roles.
Manage Your A Positions
Manage your A positions using these techniques:
- Evaluation. Determine what differentiates high and low performance in each A position. Measure people against those criteria.
Example:
At IBM, A positions include deal-making roles—where people assemble sets of products, software, and expertise that particular clients need. IBM identified 10 attributes (including ability to partner with clients) critical to these positions. It measures each attribute on a four-point scale delineated with behavioral benchmarks. Employees in those roles assess themselves on these attributes and are assessed through 360-degree feedback.
- Development. Actively develop people in A positions by providing training and professional development opportunities.
Example:
More than $450 million of the $750 million IBM spends annually on employee development goes to people in A positions. IBM requires them to define development programs for themselves. These programs are based on strengths and weaknesses revealed in performance evaluations and draw on intranet tools designed to improve performance on each attribute.
- Compensation. Generously compensate A players in A positions. At IBM, annual salary increases go to only half the workforce. Top-performing employees get raises roughly three times higher than simply strong performers.
- Succession. Build bench strength for each A position.
IBM invests heavily in feeder jobs for A positions. It regularly assesses feeder employees’ readiness for promotion into strategically important roles. It also identifies “pass-through” jobs where people can develop needed skills, and fills these jobs with A-position candidates.
Manage Your Workforce Portfolio
Intelligently managing your A positions isn’t enough: manage B and C positions, too. B positions can support A positions (think IBM’s feeder roles). Consider outsourcing or eliminating C jobs. At minimum, move C players out of A positions and help B players in those roles become A players.
A great workforce is made up of great people. What could be more intuitively obvious? Is it any wonder, then, that so many companies have devoted so much energy in recent years to identifying, developing, and retaining what have come to be known as “A players”? Firms like GE, IBM, and Microsoft all have well-developed systems for managing and motivating their high-performance and high-potential employees—and for getting rid of their mediocre ones. Management thinkers have widely endorsed this approach: Larry Bossidy, in the best-selling book Execution, for example, calls this sort of differentiation among employees “the mother’s milk of building a performance culture.”