Strategic Workforce Differentiation is a management framework that differentiates HR practices that may mix employment modes that influence individual outcomes, adding the risk of reducing the work quality of vulnerable workers and increasing the complexity of HR management for specific employee groups. Strategic Workforce Differentiation identifies, reinforces, and develops strategic capabilities, allows better performance management, and combines different employment modes. This research focuses on the individual reaction to Strategic Workforce Differentiation and the influence of national culture on the individual reaction. A literature review from an organizational perspective focuses on improved usage of resources, and increased financial performance. Satisfaction with monetary rewards (pay satisfaction), nonmonetary rewards (psychological contract fulfillment), and the perceived organizational culture of strategically differentiated employee groups across different national cultures are measured using surveys and structured interviews. The results show different individual reactions to HR practices across different strategic employee groups: satisfaction with nonmonetary rewards refutes the existing literature because the most strategically important employee group does not show highest satisfaction. The results further suggest national culture has an influence on satisfaction with monetary and nonmonetary rewards. However, satisfaction across strategic employee groups under national culture shows no statistically significant differences; therefore, it is concluded Strategic Workforce Differentiation balances out the differences between national cultures, which should be respected when designing HR practices, and organizations can maximize satisfaction with nonmonetary rewards and improve satisfaction with strategic workforce differentiation development.
Keywords: Strategic Workforce Differentiation, strategic human resource management, total rewards, national culture