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I have spent a lot of my recent career focused on hiring and specifically technical hiring, I am always drawn back to People Strategy. People Strategy should be the foundation of everything you do in the people space.
In a recent article, I used a small insight I had about the differences between football and lacrosse teams to consider two very different people strategies a firm might employ (see here). This analogy helps us understand that there’s no one-size-fits-all approach to People Strategy.
A Practical Framework for Developing Your People Strategy
I wanted to discuss another framework that a management professor once showed me as a good way to think about people strategies. The framework is a simple 2 by 2 matrix which has been a useful tool for me over the past couple of decades.
The unit of analysis for the matrix would be each different group of employees, for example software engineers, truck drivers, data scientist, pilots, etc. The two axes evaluate each role/position on these dimensions: the importance to the organization’s business strategy and how unique or specialized or rare those workers are to acquire.
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Let quickly consider the two axes, starting with the y-axis because I think it is the easier of the two to understand. At the bottom, you have workers who don’t have particularly specialized skills, like recent college graduates, many hourly jobs like wait staff, general labors, call center staff, etc. This is not to say that they have no skills, but that the barrier to entry is low and there are lots of individuals who could potentially fill these roles. As you move up the y-axis, the specialization gets higher and demand increases making these workers harder to both source and potentially keep. So, at the top here, would be people like highly successful trial lawyers, specialized surgeons, and NFL caliber quarterbacks.
The x-axis is all about importance to organizational strategy. Now this seems straightforward enough, but, of course, not all business strategies are successful, they can and should shift overtime, and not all companies successfully link people and business strategies. This means from the outside, it is not always apparent how a companies business strategy will translate to a successful people strategy.
Case Studies: Walmart vs. Nordstrom People Strategies
So, for this discussion, let’s look at a couple retailers that have two very different business strategies and have translated that into two very different people strategies: Walmart and Nordstrom.
- Walmart’s People Strategy – Walmart’ strategy is summed up on its About page with this statement “Every Day Low Prices on a Broad Assortment – Anytime, Anywhere.”
- Nordstrom, on the other hand, focus on consumer fashion and is recognized for providing excellent customer service (slogan – “Closer to You”).
Strategic Investment in Your Workforce: Aligning your approach
In terms of people strategy, you have likely surmised that Nordstrom, with its emphasis on customer service, will seek to employ top tier salespeople, and you would be correct. Nordstrom uses a base pay plus commission model for its sales staff to help encourage outstanding customer service. It is also a win-win for the company and the sales staff as the commission-based structure is designed to incentivize excellent customer service and sales performance. To further help their sales staff, Nordstrom invests in training and development to ensure their sales associates have the product knowledge they need to best serve their customers.
You might have also surmised that Walmart has a very different people strategy. This is not to say Walmart does not want good customer service, the founder Sam Walton had a 10-foot rule for his sales staff which was to look any customer within 10 feet in the eye and ask if they needed help. While Walmart wants good customer service, I dare say all retailers do, it is the low prices and large assortment of goods that attracts customers. The store staff are not seen as being a strategic differentiator, so Walmart does not pay above market rates for them. They do have an excellent new employee training program as they expect and plan for some amount of turn-over in these roles.
So where does Walmart over invest in its labor force? One area that they have identified as a strategic advantage is in their statement above “Broad Assortment – Anytime, Anywhere.” So, you go to Walmart for the low prices, but you also expect the store to have everything you need and that requires a great supply chain. Essential to that supply chain are their truck drivers. Walmart is known for offering one of the highest pay rates in the retail industry to its truck drivers with some earning twice the median pay for truck drivers in the US. Walmart has very high standards for who they will hire requiring both a clean driving record and several years of experience. These requirements mean that we are moving up on the Y-axis, perhaps not to NFL Quarterback levels but up.
Insert chart – 2
Walmart also invests in training their drivers so they can perform to their standards and use their technology to find the best routes to ensure their stores remain stocked. To retain their drivers, they emphasis work-life balance ensuring that their drivers have regular and predictable time at home. They also invest in truck safety and technology that improves working conditions for their drivers.
When I investigated Nordstrom’s supply chain, I could find very little information other than disruptions due to COVID-19. I suspected, given their business and people strategy, they might rely heavily on third party providers rather than have their own fleet of trucks and drivers. While I cannot definitively confirm this, I did note that they are not currently hiring truck drivers and a Google Maps view of their warehouse facilities only showed third party tractor trailers. So, while I am not certain, I suspect that Nordstrom outsources much of their logistics to third parties as it is not a central component of their business and people strategy. This is a common strategy for firms to outsource functions that are not core to its business strategy, this could be software development, call centers, employee surveys, security staff, truck drivers, etc.
Conclusion: The Long-Term Link Between Business Success and People Strategy
Companies must both have a strong link between business and People Strategy, and that connection needs to be maintained as the business strategy inevitably evolves. The ability to adapt People Strategy in response to changes in business strategy is crucial for long-term success. In conclusion, aligning your People Strategy with your business goals is not just a one-time task but a continuous process that requires adjustment and refinement as your business evolves. By understanding the importance of each role within your organization and strategically investing in your workforce, you can build a strong foundation for achieving competitive advantage and long-term success.