Given the realities of today's complex business environment, it is no longer possible to satisfy a workforce with one broad, standard approach to managing talent. A perfect storm of events and trends is pushing organizations to abandon the traditional employment compact along with the one-size-fits-all approach to human resources.

Not only has technology finally advanced enough to make the customization of employment practices possible for the first time. People are now expecting—even demanding—an individualized experience at work based on their own encounters with customization as consumers; this is especially true of Millennials (people born from roughly the late-1970s to the early 2000s), who have never known anything different. For their part, organizations are facing their most diverse workforce yet—not only in terms of age, gender and ethnicity but in terms of life pursuits, cultural norms and key values as well. The same forces are having a similar impact on the makeup of senior management teams.

To be sure, standardization has played a critical role in employment in the recent past, enabling companies to achieve some important goals—consistency, efficiency and fairness, among them. In the last decade especially, as large companies implemented ambitious enterprise systems and globalized at the same time, most organizations standardized their people practices to achieve a global view of their employees and operate consistently as a unified organization.

But in an era of growing diversity, more complex knowledge work in which jobs are increasingly difficult to standardize, a shortage of qualified workers and talent-driven competitive advantages, today's generic people practices will be quickly rendered obsolete—and increasingly detrimental to the bottom line.

Maximum performance
Instead, market leaders like Best Buy, Procter & Gamble, Google, The Container Store and W. L. Gore & Associates are getting maximum performance from their employees by taking an individualized approach to talent management, treating each employee as a "workforce of one."

Because everyone has different abilities, work styles and preferences, as well as different motivations for working, these companies know that no single way of treating all employees is ever likely to be the best way. As the economy begins to recover, they are achieving improved workforce performance and productivity, higher levels of engagement and lower turnover while recruiting top performers who produce outstanding results (see sidebar, "Three workforce-of-one pioneers").

Most important, by using one or more of four workforce-of-one customization approaches, these organizations are achieving customization in a highly structured, coordinated and scalable way, thereby retaining control of the management of their organizations. Moreover, the hard work organizations have done standardizing people practices remains valid and relevant; it serves as the foundation enabling companies to take the next evolutionary step toward customization.

Controllable and manageable
After a comprehensive study of more than 100 organizations, we have identified four distinct ways that an organization can customize in a structured, rules-based manner (see chart, below). These four workforce-of-one approaches to customization are built on standards that allow flexibility rather than encourage sameness, which is precisely what makes the approaches controllable and manageable.

1. Segment the workforce. Just as marketers have been deftly dissecting consumer populations for decades—they have us pegged as suburban moms, clothes-conscious teens, techno-geeks and the like—companies can segment a workforce into discrete groups that share similar characteristics.

Employees may be grouped by any relevant criteria, such as value to the company, role or workforce, and age or generation. Advances in business intelligence and analytics have spurred a revolution in how companies are segmenting their workforces; companies are now creatively grouping their employees on such varying dimensions as learning styles, values, personality, wellness profiles, mobility, behavioral patterns, and even networking and communication styles.

Accenture, for example, segments employees in part according to their overall well-being (such as how many vacation days they have taken and how much time they have spent on a project) to identify those who might be at risk of leaving or high levels of stress. One high-tech company in our study relied on extensive anthropological-style research to determine the unique behaviors of eight different types of teams based on factors including degree of inter-dependence and mobility; it then designed corresponding workplaces for each one.

Even the extended workforce can be segmented. Many companies today are finding highly talented workers all over the globe by tapping Web-based talent profiles of pre-screened people available for work, using test scores, experience, ratings and referrals from other users—think of Amazon.com and Facebook—to help them make a strong match for a particular need.

Because executives specify standard practices at a detailed level for each given segment, control is maintained.

2. Offer modular choices. Just as Dell customizes computers by offering customers a menu of mix-and-match options, companies can offer a predetermined list of organizationally defined options that enable employees to customize their work experience.

At Capital One and Microsoft, for example, employees choose from a variety of mix-and-match work environment options based on their individual needs and changing work tasks.

Other organizations have unbundled standard job descriptions and broken them down into smaller tasks that can then be reconfigured in numerous ways by the individual, based on interest and skill. And at Skyline Construction, a San Francisco–based builder, eligible employees can pick their own salaries (within a certain range), choosing between lower salaries and a shot at a larger bonus, and higher salaries and the possibility of a smaller bonus.

By limiting employees' options to a list of organizationally defined and sanctioned standard alternatives, offering choices becomes manageable, affordable and controllable.

3. Define broad and simple rules. Alternatively, an organization can create standard organizational rules so broad and simple that they can be interpreted in many different ways by workers or managers.

Just as contestants on the reality TV show The Amazing Race can take different routes to the same destination, so, too, can companies simply define the end, letting individuals and their managers customize the means based on the employee’s unique strengths, preferences and needs. The organization maintains control because the rules always have clear boundaries; as long as employees stay within them, they can act in a way that suits them best. Boundaries may be constrained by strategy, values, time, money, results or organizational scope, among others.

Consider how broad and simple rules can be used to customize jobs. At W. L. Gore, the Delaware-based maker of Gor-Tex and other fluoropolymer products, boundaries are constrained by organizational scope; employees determine their roles and tasks on each project, working within the loose limits of general functional or broad work areas only.

Time may also be used as a constraining boundary. At Google, for example, engineers need spend only 80 percent of their time on core duties; the remaining 20 percent may be customized by working on projects that have the greatest potential to create value for their organizations.

Best Buy, on the other hand, customizes jobs by using the broad and simple rule of obtaining results. Take Moira Hardek, a member of Best Buy's Geek Squad. After discovering that customers responded positively to her personal style, Hardek developed a passion for getting more females interested in technology careers, including jobs on the Geek Squad. Because Best Buy broadly defined Hardek's job as delivering superior customer service, she was able to match her job to her strengths by creating a technology summer camp with unique hands-on experiences designed to demystify technology for a younger generation—specifically young women.

Data analysis done jointly by Best Buy and Gallup reveals that helping people play to their strengths effectively doubles the rate of increase of employee engagement. This makes a dramatic difference in Best Buy's financials, since each 0.10 increase in engagement (on a five-point scale) is worth an estimated $100,000 in incremental profit per store, per year.

4. Foster employee-defined personalization. In the same way that today's consumers can define and create their own content using the video-sharing site YouTube or the volunteer-written reference site Wikipedia, employees can now define and create their own people practices without any centrally defined limits, choices or policies designed to serve particular employee segments.

Individuals can create customized learning experiences, for example, by participating in wikis, blogs, YouTube- or Facebook-like applications, or virtual, simulated job experiences. They can also set their own schedules, as they do at Tesco and JetBlue Airways, by brokering schedule changes with fellow employees through shift-trading markets.

Compensation can be employee-defined too. In the US Navy, sailors—not HR—set compensation levels in hard-to-fill jobs through an online job auction website. This market-based system differs from a modular-choice approach to talent (like the Skyline Construction example cited above). Rather than having a few predefined schedule or compensation options determined by HR to choose from, this system gives people a practically unlimited ability to define their own schedules or salaries based on what the internal employee market can bear.

Even competencies, job descriptions and career paths can be defined not from on high but rather in a bottom-up fashion by employees themselves. By scanning résumés, email and other electronic communications, human capital analytics software can organically tell the organization what skills, experience and knowledge each employee has to create common, dynamic and ever-evolving worker-generated profiles.

Companies can use analytic technology, like that developed by talent management software company Taleo, to analyze promotion and transfer histories to identify common customized career paths taken by their employees. They can then use social networking technology to help those employees identify and network with people who have taken paths similar to the ones they want to take. This process will help provide some degree of structure and guidance for employees who work in complex organizations but have no clear career paths.

It's true that the employee-defined personalization approach grants the organization the least amount of control. But the organization still decides which employee-defined personalization practices it will support and how through incentives, technology and cultural change—enabling it to maintain some degree of control, consistency and alignment with business needs.

Crafting a strategy
Just as employees are different—with unique needs, values and aspirations—so, too, are companies, which vary in their unique strategies, histories, types of employees, values and cultures. Each company may thus decide to pursue customization in its own unique way. Although most organizations use at least a few practices from each customization approach, they tend to favor one or more approaches over others based on their unique business conditions.

Here are some factors you might want to consider when crafting your own unique customization strategy.

• Degree of customization versus degree of control. Whereas segmentation and modular choice allow for more control—because the specifics of the people practices are defined by HR—broad and simple rules and employee-defined personalization allow for less control, since the specifics of the people practices are defined more by employees with enabling guidelines and structure provided by HR. But less control means more customization—employees can create a greater variety of people practices that fit them using broad and simple rules and employee-defined personalization than with the other two approaches.

• Amount of change. Broad and simple rules and employee-defined personalization can be adapted more easily to change. For example, instead of waiting months for the company to centrally define new learning courses based on new needs, peer-to-peer learning through wikis, blogs and other means can help employees quickly adapt to changed conditions.

• Fairness. The modular choice approach to customization is perceived as being the fairest, since it clearly provides the same set of detailed options to everyone. Since segmentation creates different practices for different groups, some employees might view this approach as less egalitarian. Broad and simple rules and employee-defined personalization approaches fall somewhere in the middle—everyone is given the same opportunity to interpret or define their own people practices, but because HR doesn’t centrally define the details, these practices can vary significantly from one person to another.

• Amount and type of resources required. More HR resources may be called on when favoring segmentation or modular choice approaches, which require HR executives to define, implement and administer not just one set of detailed talent practices for the organization but multiple ones. However, fewer resources may be required when favoring more employee-driven approaches, since these don't require a company to track and administer multiple detailed variations. Rather, the burden—or privilege—of defining the specifics of a people practice shifts to employees.
  
  Organizations using these approaches may shift their resource allocation to change and education, for example, or they may provide fewer HR resources altogether. If your organization operates in a low-margin business and can’t afford to support things like a vast data warehouse and the analytics capability that are commonly used with the segmentation and modular choice approaches, you’ll want to weigh this factor when choosing a customization approach.

Although some employers are introducing choice and variation in such areas as employee benefits and job assignments in an effort to recognize the differing needs of individuals, most companies have not yet begun to tap into the depth of this opportunity.

Managing your company's talent as a workforce of one involves creatively customizing your people practices and applying this principle to your entire workforce in a strategic, thoughtful, proactive way. Customization will transform your workforce—and the human resources team—into a strategic powerhouse and position your organization to win.

This article is based on Workforce of One: Revolutionizing Talent Management Through Customization (Harvard Business Press, 2010), by Susan M. Cantrell and David Smith.

Sidebar
Three workforce-of-one pioneers
In the course of extensive research involving more than 100 companies, Accenture identified a number of organizations we consider "workforce-of-one" trailblazers, either because they are pioneering novel and innovative ways to customize and individualize the work experience, or because they are extensively adopting customization practices in a strategic and holistic fashion across a wide variety of practices. Three of them are profiled below.

Capital One: A pioneer in using analytics to support segmentation and modular choice

• Uses data analysis to segment intended hires based on criteria that distinguish top-performing employees
• Uses employee database (SAT scores, college GPAs, number of children, etc.) to match staffers to assignments and tailor communications and programs to employees
• Segments universities as sources of top-performing employees
• Creates innovative modular choice options related to work settings
• Was one of the first companies to offer employees iPods as an alternative format for learning
• Recognized by Fortune as a top company for developing leaders and a top company to work for

PepsiCo: A pioneer in using employee-defined personalization

• Committed to customization, one of the company’s six long-term strategic imperatives for talent sustainability
• Extensively uses employee-defined personalization practices in more than a dozen ways
• Offers modular choices with respect to total rewards
• Recognized by The Hay Group and Chief Executive magazine as a leader in diversity and leadership development
• Recognized by publications such as Working Mother, The New York Times and Asian Entrepreneur as an employer of choice
• Named by BusinessWeek as a 2009 Best Performer

Microsoft: A pioneer in all four customization approaches

• Segments its workforce in 11 different ways
• Offers modular choices regarding work setting, time, compensation, benefits and career paths
• Applies broad and simple rules across six dimensions, including hiring practices
• Uses 10 different employee-defined personalization practices
• Uses technology to support many employee-defined personalization practices (informal feedback system, peer-to-peer learning programs, etc.)
• Customization has improved employee engagement and stemmed key defections
• Consistently makes Fortune's "Best Places to Work" list; remains one of the world's most profitable companies

For further reading
For more about the makeup of management teams, read "Vive la différence!," Outlook June 2010
For more about analytics, read "How to turn data into a strategic asset," Outlook June 2010

About the authors
David Smith is the managing director of the Accenture Talent & Organization Performance service line. Mr. Smith specializes in designing and developing talent and organization performance strategies and solutions. He is a guest lecturer at Wharton Business School and Babson College and a frequent speaker at industry conferences and events. In addition, Mr. Smith has authored and coauthored several articles and papers, and has contributed his viewpoints on talent management to various business media and industry publications. Mr. Smith is based in Hartford, Connecticut.

Susan M. Cantrell is a fellow at the Accenture Institute for High Performance in Boston, Massachusetts, and CEO of The Cantrell Group, a research and consulting firm that focuses on topics related to improving human performance. Ms. Cantrell is a widely published author. Together with Accenture’s Talent & Organization Performance service line, she also developed an award-winning framework for measuring and managing human capital.

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