Why treating all roles equally is the most unfair thing an organization can do.
Fifty years ago, the primary responsibility of the "personnel" function was to ensure that employees were treated equally. The United States was in the throes of the Industrial Revolution and the vast majority of workers were tasked with moving materials from one place to another, working on farms, and operating machinery. Safety, a chief and legitimate concern from the early 1900s, was addressed by the rising popularity of unions, which provided workers with basic workplace protection. Personnel teams were formed to administer the terms of labor contracts, administer to bargaining unit employees, and ensure adherence to workplace rules.
Employees in the 1960s were typically male, high school educated, working 9-to-5 jobs, and with work bound by time and space. The more hours they worked at a particular job, the more they could accomplish and earn—working an assembly line, plowing a field, or driving a truck. To ensure compliance with state and federal regulations, rules were created to ensure that the vast majority of workers were complying. Differences in work rules, responsibilities, and benefits were dictated by level—the primary one being exempt versus nonexempt.
Fast forward to 2016, and it's quickly obvious how dramatic the world has changed. Changes include women in the workforce; the increase in employees with college and advanced degrees; the advent of the Internet; astonishing advances in technology, science, and medicine; and improved standards of living.
Fifty years ago, businesses were valued based on their hard assets—capital equipment such as buildings, trucks, and machinery. Intangible assets that are so common today, such as data, patents, and brands, either didn't exist or were inconsequential to the value of a business. The impact on business has been almost all-encompassing. While many workers continue to be tasked with manual work such as preparing food, servicing customers, and moving materials, an increasing number of U.S. employees are knowledge workers, creating what has become the most valuable asset in the world: intellectual capital.
In fact, a recent analysis of companies in the Dow Jones revealed that 86 percent of the average company's value is a direct result of intellectual capital, all of which is powered solely by people. Today, brands such as Coca-Cola, proprietary advertising algorithms such as those used by Facebook, and patents created by companies like IBM and Intel are what power the value of companies. All of these incredibly valuable intangible assets have a single source: the brain power of certain people in certain roles. Importantly and obviously, not all people in all roles.
In companies today, as in the past, different roles contribute to the business in different ways. What's essential to understand about our economy today—and the jobs within it—is the fact that, while all jobs are important to a business (or else they wouldn't merit the head count), not all jobs are critical to a company's business value. And while all people are important in an organization, only some are essential to building and maintaining business value.
Invest more in critical roles
Take Tunkta, a fictitious social video-gaming business with 500 employees. Tunkta has more than 800 mobile gaming apps, but is best known for its incredibly popular TimeWaste app. TimeWaste is an addictive game with a huge following among children and adults. It drives a great deal of revenue for the company by selling, among other things, virtual "timesticks" to players. These timesticks enable players to stay in the game and rack up more points, which can then be traded for more timesticks, special offers from advertisers, and other virtual prizes. Tunkta's 500 employees include app developers, software engineers, marketers, project managers, security specialists, senior leaders, data analysts, finance staff, and HR personnel.
Like all companies, Tunkta has limited resources to dedicate to talent services such as hiring, training, retention, and performance management. In light of this obvious fact, the company's senior leaders decided early on that if they didn't hire and keep the best app developers, all bets were off and there was no hope for the future of the company. Therefore, they decided to over-invest in the hiring and retention of app developers by dedicating a team of app developer-focused sourcers and recruiters; building a one-on-one onboarding and cultural immersion experience for app developer new hires; creating a performance management process that was different, more relevant, and motivating for developers; and so on.
The senior team was completely transparent with all employees to explain why the company was investing more heavily in the hiring and retention of app developers than other roles. They explained that the company's existence literally depended on a team of the best and brightest in app development. All other jobs were dependent on this team killing it—developing new popular games and constantly improving existing ones. One talented app developer, after all, could author another TimeWaste app, which could bring even greater fortune and success (and business value) to Tunkta. Therefore, the company was committed to over-investing in these key roles, rather than taking their limited talent dollars and spreading them thinly and evenly (and, they believed, ineffectively) across the organization.
Next, they focused their talent data analytics effort on their success at hiring and retaining the best app developers. They tracked source effectiveness; interview-to-hire ratio; the candidate and new-hire experience; hiring managers' involvement and success in the sourcing and selection process; how long app developers stayed; and how successful they were on the job.
It's all about business value
This example not only shows the logic for and approach to identifying and investing in critical roles—and explaining and justifying it across the organization—but, more importantly, it illustrates how truly flawed the typical talent approach is.
After all, most organizations drive different talent practices and processes across levels. For example:
- recruiters handling open requisitions on a first-come-first-served basis, with executive recruiters or agencies dedicated to the hiring of vice presidents and above
- performance management processes differing by nonexempt versus exempt and executive roles
- all new hires receiving the same orientation program
- succession planning taking place for vice presidents and above
- special training and mentoring for the top (50, 100, 500) leaders
- attendance policies and edicts that affect everyone (for example, banishing all employees from working at home or vice versa).
Our research indicates that identifying critical roles and then managing them differently than all other roles is the key to increasing enterprise value in our knowledge economy. Practically speaking, this looks like:
- teams of recruiters (with varying levels of experience, resources, and supervision) dedicated to requisitions that are organized according to business criticality and talent availability—not level
- high-potential employees selected and developed from only one business-critical area (for example, research and development in a biotech company)—rather than a few from across the business
- succession planning practices focused and deep (say, for all levels of buyers at a retailer)—rather than across all vice presidents and above
- special attendance, work hours, and virtual work policies for creative workers for whom work product isn't related to the number of hours they work or where they sit.
As a society, our history of managing people in a way that emphasizes parity and perceived fairness over all else is deeply engrained within our work cultures and the psyches of business professionals. This approach, however, doesn't just pose a risk to the success of talent professionals; it endangers the success of the very organizations for which we work.
Sooner or later, the connection between business value, intellectual capital, and critical roles—and the need to manage talent accordingly—will become painfully obvious. Until then, talent development leaders should engage their executive teams in discussions about the future value drivers of their business, the critical success factors, and the roles that are critical to achieving the most important business goals.
Read more from CTDO magazine: Essential talent development content for C-suite leaders.
