Employee Segmentation to Bring out the Best in Your Workforce

A European utility company had been trapped in a bind for years. The solution arose from a survey by the company to gauge whether any of its employees would want to work extra hours at short notice or evenings and weekends if asked.

The answer was yes: groups of field workers within the union membership were interested in work flexibility. In addition, by improving service levels, the utility remained highly competitive, boosting growth and enabling the union to maintain its membership.

Most companies recognize that not all customers are alike and offer different value propositions based on the preferences of various groups. By grouping employees according to their needs, some companies have begun to tailor everything from terms of employment to incentives for different segments (employee segmentation). By learning what motivates each group and offering a customized program that delivers what matters most, companies find that employees are willing to work more effectively and devote more discretionary thought and attention to their jobs. Whether companies apply the approach with call center agents, field force workers, or any other employee group, it can deliver positive results.

The employee survey that prompted changes at the European utility showed an unexpected diversity in the way employees viewed their jobs, what motivated them, and which employment options they would consider. They were generally dissatisfied with their employment package, but they could be motivated by performance-based pay. Service-focused employees were strong performers and eager for performance-based pay and overtime, and they were willing to work less-typical shift patterns in return for greater rewards. Experienced Craftsmen had the longest tenure and highest work quality, but accompanied with a lower work rate and the most absences.

Identifying different interest groups helped the company influence contract negotiations to the point where the union was willing to include flexible working practices. The segmenting effort served as an important part of a broader performance improvement program that delivered a significant increase in work quality and customer loyalty scores.

Boosting field performance thru Employee Segmentation

In Asia, a major telecom company used the same approach to offer different incentive plans to its field force, in addition to different work schedules. It had three objectives: improve service levels, make its cost base more competitive, and engage its employees more in their jobs. The company hoped to improve upon the acceptance rate of an earlier pay-for-performance incentive plan that it had offered to all employees. That led the company to perform a deeper analysis to identify different segments for which it could construct tailored incentives packages.

This time, the company surveyed its employees beforehand in order to fully understand their needs and attitudes. For example, some workers strongly preferred the security of stable cash flow, while others said they would welcome a plan that allowed them to increase their income if they worked longer hours and met quality targets, as long as there was sufficient downside security. The company designed bundled employment structures and incentive packages to appeal to four basic employee segments, each a different psychographic group. Then, just as a consumer products company would communicate its products’ value propositions differently to different customer segments, the company targeted its messages to each of the employee groups.

Employee acceptance of the approach was overwhelmingly high, and the results exceeded even the most optimistic expectations. The company reduced costs by reassigning “Waiting for Retirement” employees to part-time schedules—these employees could be brought in on short notice only when they were needed. The improvements in quality and availability led to higher customer satisfaction scores. Segmenting helped the company increase field force performance by 70 percent and reduce unit costs by 30 percent. For example, it could focus training efforts on employees who truly wanted to improve productivity or target voluntary separation programs to the right employees.

When another Asian company used segmenting, it learned that members of one group, “Go Getters,” who earned high pay through pay-for-performance incentives, served as an inspiration for the less-motivated “Lifestyle Focused” workers. These were people who understood the technology and possessed the job skills but, suddenly, did not represent a fixed cost to the company. When a company considers everybody’s needs, everybody wins: customers and employees feel satisfied and financial performance improves.


Posted in Aerospace and Defense, Automotive, Business Transformation, Consumer Products, Healthcare, Industrial Manufacturing, Lean Six Sigma, Manufacturing, People, Pharmaceuticals and Medical Products, Strategy.