Theme 4 HR differentiation

Question 1

How does differentiation between employees occur?

Answer 1

It occurs based on employee occupation, fostered expected future performance, contribution in implementing the firm’s business strategy, etc.

Question 2

What do the best fit approach and workforce differentiation have in common?

Answer 2

Both concepts suggest that there is no best set of HR practices for every employee within a firm.

Question 3

What is the underlying idea of workforce differentiation?

Answer 3

Workforce differentiation helps organizations make their HR investments more effective.

Question 4

Explain the HR architecture model.

Answer 4

Employees are differentiated based on the added value and the uniqueness of their human capital.

• Added value: what do you add to the firm? e.g., employees differ in the degree to which they can help firms offer lower cost or provide increased benefits to customers.
• Uniqueness of human capital: the specificity of the employee’s skills.

Moreover, the model gives rise to four distinct employee groups that differ in their employment systems and relationships, and in the HR systems used to manage them.

Question 5

What are the four groups of employees according to the HR architecture model?

Answer 5

1. employees with human capital that is both valuable and unique -> core employees
2. employees who do add value, but their skills are not organization specific -> widely available throughout the labor market
3. employees who score low on uniqueness and added value -> temporary employees, short term economic exchanges
4. employees who posses unique skills and capabilities but do not add value to the organization (e.g., specialized skills that are only needed temporarily) -> employment relationship based on partnerships.