In part 1 of this article I highlighted the many reasons why prioritizing positions, employees, and business units was necessary, and how it could dramatically increase business results. In the following sections, I will highlight the methodology and steps that HR leaders need to take in order to prioritize HR’s customers and programs.
Steps in the Prioritization Process
If you going to institute a prioritization schema, the initial steps that you need to take in order to begin the process include:
- Benchmarking and learning — do your research and benchmarking in order to determine how your own internal business units can help. Gather information from benchmark HR firms because some have been prioritizing their internal customers and clients for years.
- Set goals – set your prioritization program goals. Set your goals based on whether you are trying to increase revenue, customer service, productivity, or speed with your targeted efforts.
- Anticipate resistance – don’t be naïve; before you start the process, make sure you understand who is likely to resist prioritization and what arguments it will take to overcome this resistance.
- Your prioritization percentage target – you can’t call it prioritization if nearly every employee and job is rated as high priority. Instead you need to set a target percentage for prioritization. For example, if you’re prioritizing jobs, the percentage of jobs that are designated as high priority should be less than 25%. The general range of prioritization is between 10% and 25%. If you start with too large a percentage, you will inevitably have to use a “shotgun” approach, which will overly spread your limited resources.
- Prioritize what? – categorize precisely “who or what” will be prioritized. The possible categories for prioritization include problems, opportunities, jobs, individuals, teams, managers, functions, and business units.
- HR programs to be prioritized – not every HR program or tool has the same success rate or impact on the business, so you should prioritize your programs and tools. In addition, you might also prioritize individual talent management functions that have large business impacts, like recruiting, retention, and leadership development, so that they receive the most HR resources and talent.
Data-driven Methods to Identify High-priority Employees and Jobs
After completing the above steps, most organizations work with the CFO and COO to determine — using data and financial impacts — what the key positions and employees are that should receive a priority. Some of those employee or job identification methods include:
- Use pay as an indicator – look at pay rates and bonus percentages to identify high-priority jobs and individuals.
- Use the budget – generally positions that are given increased headcount across all business units are high-priority positions.
- Use mission-critical jobs – ask senior managers to identify which jobs, when unfilled, cause operations to stop. These are known as mission-critical jobs.
- Use forced-ranking scores – if your organization uses forced-ranking, use it to identify high-priority employees.
- Use key customer-contact jobs – ask the COO or the head of customer relations to identify the jobs with high levels of customer interaction with high-profit or key customers. These positions deserve a high priority because, even though they may be held by hourly employees, taken together they can have a dramatic impact on revenue.
- Exempt from freezes – any positions that are exempt from hiring or salary freezes are generally high-priority positions.
- Use new-hire failure costs –– do the calculations yourself or just ask the GM which jobs have the biggest negative impact when a new hire fails (e.g. safety, sales, revenue producers, critical patient care).
- Use performance differentials – do the calculations yourself or just ask the GM which jobs have the highest performance differential. That means identify those jobs where a top-performing employee produces 50% or more output than an average performer in the same job.
- Use the cost of an error – ask risk management at your firm to tell you which jobs, when the employee makes a major error, costs the firm hundreds of thousands of dollars or more.
Alternative Methods to Identify High-priority Employees and Jobs
In addition to using numbers, there are other alternative methods that you can use to determine what jobs and employees need to be prioritized. Some of those other options include:
- Ask the senior managers – quite often the senior manager of a business unit or department knows instantaneously which positions or individuals are crucial. Independently, ask several managers in the unit to also identify the top key positions. If there is agreement, you can be assured that you have accurately identified the key positions and employees.
- Ask recruiting – typically the recruiting department has already identified the most critical or hard-to-hire jobs. Obviously if a job is hard to fill, it’s an important job to target for recruiting and retention efforts. Ask them to share with you the most-difficult-to-recruit jobs also because hard-to-fill jobs are often also made a priority.
- Ask training and HR planning – in many organizations, the training and development function or the human resource planning function have pre-identified the key jobs that contain the competencies that are required for the continued success of the corporation. Succession planning may also be able to tell you which jobs that they have targeted. Have the GM of each business unit verify that the jobs with those skills are in fact essential.
- Ask consultants – it’s often a good idea to get a second opinion by working with your own or outside executive recruiters to identify the hard to hire and retain positions. External recruiters can also advise you on which individuals are most likely to be recruited away.
Use the Prioritization Experience of Other Firms
If you don’t have time to use either the data-driven or the alternative approaches for identifying key individuals or jobs, there is a shortcut. You can use the experience of others to guide you. The following section contains three lists which individually highlight the type of individual, the key jobs, and the key business units that are frequently prioritized.
A List of the Type of Employees That Are Prioritized at Many Firms
The following is a list that highlights the type of individuals that most organizations prioritize. Obviously your retention, promotion, and development should focus on these high-priority employees. Some of the types of individuals that many firms prioritize include:
- Top performers – individuals whose performance ranks in the top 20% of their function, team, or job family.
- Innovators – in an era where innovation may be prized over productivity, innovators, game-changers, and pioneers are identified and given the highest priority.
- High revenue generators –– because increasing revenue is so important to most organizations, in most cases individuals who produce large amounts of revenue are targeted for retention, development, and productivity efforts.
- Individuals on the succession plan – these individuals are almost by definition high-priority employees. Individuals on the promotion list are also often given a higher priority.
- Individuals in leadership development –– individuals who have been developed into leaders should be given a high priority.
- Can’t afford to lose – individuals who are company icons or those who hold company secrets certainly can’t be lost to the competition.
- Hard-to-replace individuals – individuals who have unique skills, knowledge, or experience who can’t be easily replaced through training or recruitment should be prioritized. Individuals with extensive contacts may also be of high value.
- Diverse employees — because you worked hard to recruit diversity, it only makes sense to prioritize diverse employees to maintain your diversity.
- Individuals “at risk” of leaving – when it comes to retention, focus your activities on high-value individuals who are the most likely to leave.
A List of the Jobs That Are Prioritized at Many Firms
Many firms prioritize particular jobs regardless of the individuals who are in them or no matter what business unit they reside in. Some of jobs that many firms prioritize include:
- Managers and leaders – in many organizations, all manager and leadership positions are designated as high priority.
- Mission-critical jobs – jobs in which a vacancy means that the entire operation must stop (i.e. pilot, safety inspector, etc.) are almost always made a priority.
- All revenue jobs – at many firms, all revenue jobs are given a high priority.
- Revenue-impact jobs – in addition to revenue-generating jobs, you may also need to prioritize what are known as revenue-support revenue-impact jobs. Because if they badly interact with high profit customers or suppliers, it can negatively impact revenues.
- Hard-to-fill positions – in many organizations, positions that are difficult to fill through recruitment are given a high priority.
- High-loss-potential jobs – jobs that include work where and error can cost millions need to be given a high priority (even if insurance covers most of the losses).
- Positions where employees have critical skills – it individuals in any position have key current or “future skills,” those positions are often given a high priority.
- Jobs filled by executive search – a job that in the past have been filled by external executive search is likely to be a high priority job.
- “Hire them all” positions – positions that are deemed so important that recruiting is not required to have an open requisition to hire someone (i.e. evergreen jobs).
- Embarrassing losses – some jobs, when they become suddenly vacant can be an embarrassment to the organization. These jobs might include a CFO at a financial firm, the CTO at a technology firm, or the founder at any firm (i.e. Jerry Yang at Yahoo).
- “Surplus jobs” are given a lower priority – jobs that are soon to be eliminated or outsourced are often given a lower priority. Jobs and employees in business units that are soon to be sold off are also often given lower priority.
A list of Business Units and Functions That Are Prioritized at Many Firms
In addition to individuals and jobs, many firms prioritize important business units and functions. Some of the areas that could receive high-priority include:
- High profit/margin units – ask the CFO or COO to identify the business units that produce the highest margins, profit, or revenue.
- High-growth business units – the most important business units may be those that have the highest growth rates.
- Geographic area – many firms prioritize geographic areas. If your business is growing rapidly in a certain geographic area or if you find that most of your high-impact jobs are in a limited geographic area, it makes sense to prioritize the employees and jobs within that area.
- Critical departments or functions – some departments or functions may be critical, even though these departments are housed in a low-priority business unit. For example, in an organization where quality is essential, the six sigma function may be a critical contributor to business success in every business unit. In those cases, all six-sigma-related jobs throughout the corporation would be prioritized.
Most in HR and talent management initially resist the concept of prioritization because they think it runs counter to their values. However, remember that business organizations routinely prioritize whenever resources are limited or when it results in superior business results. Just like on a sports team, where everyone knows that the star players get priority, HR must learn that managers and employees will eventually see the rationale and the overall benefit to the firm. After the initial brouhaha, HR can expect at the least an increase in workforce productivity, revenue, and surprisingly, higher manager satisfaction with HR.