HR Differentiation: Essential Yet Challenging Requirement of Strategic Decision Making

This essay evaluates the concept of HR differentiation, its importance, and challenges faced by companies while implementing it. It also discusses the impact of HR differentiation on stakeholders and the talent management process. The essay concludes that HR differentiation is an essential yet challenging requirement of strategic decision making.

HR Differentiation

In today’s competitive business world, the importance of effective human resource
management has increased substantially because the requirements of talented employees
have increased across the globe. The corporations focus on effectively managing their
human capital by implementing strategies policies in order to retain qualified employees in
the organisation which provides them a competitive advantage over their competitors. The
concept of HR differentiation is gaining popularity among organisations as more and more
companies adopt this method to improve their strategic HR policies and achieve common
corporate objectives. This concept focuses on the fact that HR service delivery in different
sections of a company differ from each other, therefore, implementing an HR trend towards
differentiated delivery system ensure that the needs of each segment of employees is
considered by the HR departments (Gelens et al., 2013). This essay will evaluate the concept
of HR differentiation and understand why it is essential yet challenging requirement of
strategic decision making. Moreover, this essay will consider the concepts of various HR
architecture and strategic choice along with their impact on various stakeholders in dynamic
organisational contexts.
The HR systems of a corporation are valuable when the HR department is able to recruit
highly talented people at the right time and build strong long-term relationships with them
along with optimising the quality of their interactions (Krausert, 2017). These policies enable
the organisation in gaining a competitive advantage over its competitors by leveraging its
HR capabilities. The concept of HR differentiation is playing a crucial role in managing
employees across the globe. The HR policies have come a long way due to divergence and
convergence view of the HR management which focuses on incorporating the HR policies
along with overall strategies goals of the company. The HR researchers focus on
implementing Best fit, and best practices approach in the corporation in order to align the
goals of the organisation along with strategic policies. The HR differentiation is considered
as the new strategic imperative which is focused on addressing the needs of different
segments of employees by evaluating the challenges faced by them and incorporating them
with the policies of the company. Disney is a good example since the company has
incorporated HR differentiation policies in the company due to which it invests more time
and resources in supporting, hiring and integration the employees who are responsible for
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cleaning the parks and people who wear the suits to become characters from movies and
television series (Cook, 2010).
This concept provides that employees operate in small posts have relevancy in the
organisation as well, and their performance influences the overall operations of the
company. In the case of Disney, the spot clean parks and friendly interactions with their
favorite characters is the main reason due to which the Disneyland is so popular among
children as well as adults. The concept of HR differentiation is a new way of thinking about
HR strategies in a company. Conceptually, the new way to address the HR issues is referred
as Differentiated HR. As per this concept, the HR department of the corporation invests its
resources on a differential basis while at the same time focusing on the position potential of
employees who are the key reason for delivering value to the organisation (Marescaux, De
Winne and Sels, 2013). These roles have a significant impact on the organisation’s strategy;
therefore, it is important that these factors receive more focus and utilisation which are
designed to optimise their contribution to the company. These policies are opposite to the
traditional approach of HR policies which provides that everyone should be treated at the
same level. It provides that HR managers should focus on driving the value of the employees
by engaging with them in order to achieve the goal of the company (Xiaolang, Shanshi, and
Hongli, 2015).
Although the implementation of HR differentiation policies has become an essential
requirement, however, there are various challenges faced by companies relating to strategic
decision making. One of the key challenges which are faced by the HR department is the
limitation of resources. The HR differentiation requires the HR department to focus on the
role of different segments of employees on the overall performance of the enterprise
(Schmidt, Pohler and Willness, 2018). They are also required to assess the needs of
employees and implementing separate policies to achieve the concept of HR differentiation.
However, these policies require the HR department to invest a large portion of their
resources and time which makes it difficult for the company. Most corporations did not
prefer to invest heavily in HR practices since they believe in investing in other resources
such as machinery or technologies. However, studies and examples of leading corporations
have shown that effective and positive relationship with employees is a successful way to
achieve the organisational goal.
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In the case of small corporations, this issue is more difficult since they already have a limited
budget, therefore, they cannot afford to invest heavily in implementing HR differentiation
policies. Another key challenge relating to HR differentiation is the tradition. The HR
department of a company is pressured to ensure that people practices and investments are
optimised accordingly to achieve effectiveness in the company by focusing on the key areas
of the highest gain while maintaining other elements of HR functions (Weis and Schaefer,
2012). As per the traditional approach to HR, equality should be maintained between
employees that mean that employees should be treated with fairness and equality. With the
growth in equity and diversity policies across the globe, the HR department has to ensure
that they treat people fairly and equally. Thus, changing the traditional view of HR is a key
challenge which is faced by corporations while implementing HR differentiation policies in
the company.
Moreover, the implementation of HR differentiation has a significant impact on the talent
cycle of employees which creates various issues for organisations. The talent cycle of a
company started at the recruitment stage, therefore, the HR department has to focus on
identifying candidates who are high value and critical for the organisation. Thus, the HR
department has to invest in the best possible hiring process which resulted in sacrificing a
large amount of resources and time to maintain the quality. While making this strategic
choice, the HR department finds it difficult for engaging with current employees in the
company since they are focused on potential future employees that adversely affect the
relationship with current employees (Huselid and Becker, 2011). The HR architecture
focuses on high uniqueness rather than loss uniqueness in order to hire knowledge
employees who are treated as alliance partners. The HR differentiation model focuses on
both intrinsic and extrinsic quality of employees’ work and overall performance. It is easier
for the HR department to evaluate the extrinsic values of employees; however, they find it
challenging assessing intrinsic values of employees. Thus, there are various challenges which
are faced by the HR department while implementing HR differentiation policies in the
organisation.
The key stakeholders who are affected by the implementation of these policies include
employees, shareholders, and customers. Shareholders are affected because the
implementing of HR differentiation policies requires parties to invest heavily in hiring and
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retaining talented staff members that reduce their dividend. On the other hand, the
implementation of HR differentiation policies has both positive and negative impact on the
customers. Effective implementation of these policies ensures that customers receive high-
quality products and services because employees work at their highest capacity (Krausert,
2017). On the opposite side, this could create a feeling of discrimination between existing
and new employees which could adversely affect the customer relationship because
employees did not treat them fairly. Lastly, the key stakeholders are the employees since
they are more likely to receive the benefit from this concept. The talent management
process of the organisation affects the employees and their performance. The HR
differentiation policies include various aspects of talent management which include
recruitment, performance management, critical skills, workforce planning and others
(Schmidt, Pohler and Willness, 2018). Thus, while implementing HR differentiation policies,
the senior level executives of the company are required to evaluate the potential impact on
different stakeholders in order to establish a competitive advantage in the company.
Based on the above observations, it can be concluded that the concept of HR differentiation
is gaining popularity among corporations, and they focus on implementing these policies in
order to gain a competitive advantage over their competitors. The concept of HR
differentiation requires the HR department to focus on different segments of employees
based on their ability to deliver value to the corporation. There are various challenges faced
by companies while implementing these policies which include limitation of resources, time,
conflict with tradition HR approach, negative relationship with current employees and
others. This concept focuses on the talent management process and evaluating various
elements of it in order to achieve the HR goals. These policies implemented by the HR
department are strategically focused on achieving the overall goal of the organisation by
hiring and retaining talented staff members and encouraging them to achieve common
organisational goals. Thus, corporations are required to overcome these challenges in order
to implement HR differentiation policies in the company which provides them a competitive
advantage in the firm.
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References
Cook, I.J. (2010) Differentiated HR: The new strategic imperative. [Online] Available from:
https://peopletalkonline.ca/differentiated-hr-the-new-strategic-imperative/ [Accessed on
20th August 2018].
Gelens, J., Dries, N., Hofmans, J. and Pepermans, R. (2013) The role of perceived
organizational justice in shaping the outcomes of talent management: A research
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Huselid, M.A. and Becker, B.E. (2011) Bridging Micro and Macro Domains: Workforce
Differentiation and Strategic Human Resource Management. Journal of Management, 37(2),
pp. 421-428.
Krausert, A. (2017) HR differentiation between professional and managerial employees:
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Marescaux, E., De Winne, S. and Sels, L. (2013) HR practices and affective organisational
commitment:(when) does HR differentiation pay off?. Human Resource Management
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Schmidt, J.A., Pohler, D. and Willness, C.R. (2018) Strategic HR system differentiation
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Weis, P. and Schaefer, R. (2012) Enhancing recognition as HR-Business Partner by
implementing Workforce-Differentiation?. Journal of Applied Leadership and
Management, 1, pp.53-76.
Xiaolang, L., Shanshi, L. and Hongli, W., 2015. Workforce differentiation and human resource
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