Since the 1990s, organizational environments in China have taken an unprecedented, unrelenting and largely unpredictable change, competitive advantage has increasingly depended on core employees, conventional and rigid employment modes have been confronted with a serious challenge. In contrast to pervious work in employment relationship, this paper explores how to achieve and maintain sustainable competitive advantage through differential management of employees in a business climate characterized by increasingly fierce competition and diverse human resources. On the assumption that human capital is idiosyncratic and according to a two dimensional matrix of strategic value and firm-specificity of human capital, the paper establishes a binary matrix model and develops a classification of four types of workers： firm-specific core employees, generic key employees, generic ancillary employees, and idiosyncratic allied employees. Each is viewed as playing a different strategic role in organization and should be developed and supported by different employment modes： commitment management based on skill, productivity management based on job, compliance management based on short-term contact, and collaboration management based on alliance, in order to facilitate employment relationship management in congruence with other HR practices and enterprise strategy for winning sustainable competitive advantage.
