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How Prioritization Can Maximize HR’s Business Impact, Part 1 of 2
Posted By Dr. John Sullivan On March 26, 2012 @ 5:38 am In Advice and How-Tos | 1 Comment
Prioritization is one of the highest-ROI practices available to HR leaders, but unfortunately most in HR have failed to take advantage of it. It takes very little time or money to prioritize your internal customers, but the results can be dramatic.
Prioritizing can result in a 10% to 20% increase in your business impacts, without any additional budget. In talent management, you can prioritize positions for recruiting, individuals for retention and development, and you can prioritize business units so that you can target and focus your efforts to improve productivity and innovation. The primary reason why prioritization works is because you are able to focus HR resources and speed up your response time on the problem areas and opportunities that can produce the greatest business results.
If you managed an airline, hiring for every position would be important. But if you didn’t prioritize the fast hiring of pilots when a pilot vacancy occurred, your planes will sit idle, and as a result you would lose millions. You also get a larger impact in retention if you prioritize and focus your efforts on critical impact positions. For example, if you managed the NFL champion Giants, you would certainly like to keep everyone on your staff who contributed to your victory, but it would be smart to focus your retention efforts first on your star quarterback, rather than your best Gatorade guy!
Most in HR are supporters of “equal treatment” because of employment lawsuits. And as a result, HR is usually the largest resister to prioritization. But be aware that whether you realize it or not much of what we do in HR is already prioritized. Some individuals get paid significantly more than others, indicating their relative importance or priority to the organization. Some management positions get different benefits and privileges that most employees do not get. When we lay off large numbers of people, we are essentially prioritizing and releasing the low-priority employees. And finally, if we train replacements for some positions but not for others, we are in essence admitting that one job is more important than the other (because it requires an available replacement).
Most other business functions have long ago shifted to a prioritization schema. For example, in customer service, not all customers are treated the same, because some customers simply spend more money. In retail, all products are not treated the same because some provide much higher margins. Supply chain prioritizes shipments, and advertising prioritizes its channels based on the results they produce. Because the other business functions are so far ahead and prioritization, the first step that I recommend to HR leaders who are considering prioritization is to work with these other functions to learn their best practices and the measures that they use to prioritize.
If increasing corporate revenues is a major strategic goal for your firm, you can help to meet that goal by prioritizing the hiring in revenue-generating jobs that obviously can’t produce revenue when they are vacant. And as a result, if you filled these revenue jobs faster, you would significantly increase corporate revenue. If you also hired better quality and better-performing individuals in sales jobs, you could also show an increase in sales revenue. If you also prioritized your retention efforts, a focused retention effort might be able to prevent your sales manager from leaving for another firm.
Prioritizing jobs, individuals, and business units can also increase productivity, innovation, and profits. By providing a faster and higher-quality response to high-impact jobs and individuals, you would get a moderately higher return than when you spread your resources evenly and a much higher return than when you focus your resources on the squeaky wheel.
For example, two different major quick service restaurant chains prioritized store manager jobs after finding out that a 30+% improvement in sales occurred when top-performing managers (but no other position) were placed at an individual store. A national retail chain found that losing a store manager by itself resulted in one million dollars in lost sales at the store over the next year. There was no similar drop in sales when any other position came vacant. With such a major impact, it is not surprising that many retail operations focus their best hiring, retention, and development efforts on store managers.
Prioritization is the process of identifying which areas should get the fastest or the most attention. Lower-priority jobs, employees, or managers under most approaches never receive “bad treatment.” The budget may be a little smaller, the service may be a little slower, and it may come from a more junior HR employee, but the same quality level is maintained throughout. Incidentally, if you’re concerned about creating a ruckus, there is no hard and fast rule that requires that HR reveal to managers and employees that it is prioritizing its services or what priority they are given.
This is by far the most common question from HR practitioners, particularly those who love to argue that all employees should be treated equitably. The short and simple answer is that prioritizing mission-critical or key jobs positively impacts everyone and hurts no one. By focusing on these jobs, the organization optimizes its chances at success which in turn helps drive job security, enhanced rewards (bonuses), career advancement opportunities, and reputation for all. Being on a winning team raises every participant’s value in the marketplace for labor. This is very evident in professional sports where every team member wants the strongest players on the field when the score is tied and only two minutes remain on the clock.
To help employees adjust, organizations need to educate them on the value that comes to them as result of this initiative. I am a firm believer that organizations should not only prioritize jobs, but they should also actively communicate with employees how the jobs are prioritized, why they are prioritized, and what the current ranking looks like. Once they are informed, employees can then see what skills they need to add and where they need to move if they want to be in a high-priority job.
Many assume that prioritization efforts result in identifying executives as the most important employees. And in fact, when HR is asked to prioritize jobs that are mission critical to the organization for the first time, many human resource professionals do come back with the top few rungs of the organization chart. However, when they are forced to really think about what positions in the organization have the ability to immediately impact a firm’s time-to-market or quality of good or service being offered, the list of critical positions changes becomes a lot different. In fact, the focus moves from the top of the organization to positions much lower in the organization that produce revenue, touch the customer, or provide the skill set needed to develop/deliver the primary features that differentiate a good or service line. You see this in major sports, where the emphasis is clearly placed on a few key roles.
Although HR might not like to admit it, there may be a 80/20 rule in effect — 80% of what drives the capability and the success of a firm lies in just 20% of its people. In most organizations and especially in high-tech firms, the key individuals are instead located in the middle of the organizational chart. Starbucks even inverts it organizational chart (putting employees at the top and executives at the bottom) in order to show how important lower-level employees are to their success. Firms like Microsoft have been identifying their top 1,000 most-impactful employees for years and firms like Edwards Lifesciences, Motorola, Valero, and MGM Grand have a history of job prioritization.
For years HR has suffered through reduced budgets. One of the best solutions when you are faced with limited resources and time is to develop some logical process of allocating resources, so that the largest amount of resources goes to the most impactful HR problems. It’s time for HR to stop handling “things in the order that they came in” and treating all problems as equal. Instead, it only makes sense to prioritize and put the most time and dollars into hiring, retaining, and developing employees that have the highest “priority” or weight.
In next week’s Part 2, you will find a list of the actions and the execution steps that you need to take in order to prioritize your employees, jobs, managers, and business units.
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