How Do You Prioritize Departments by Importance?

July 24, 2013

 

Q.  How do you rank by importance each department in a retail organization (e.g., human resources, accounting, marketing, purchasing, etc.)?

 

A. Our initial thought is to respond to this question with a question. Which is more important, your brain or your heart? Obviously, both are necessary for life.

 

You can’t do without your brain, but you can’t do without your heart either. If you are forced to choose one or the other, it is simply a choice about how you will die.

 

There are many companies where one functional area or the other is viewed to be the most important. For example, at Proctor & Gamble, marketing has been king for many years. In hospitals, doctors often view themselves as the most important contributors. In the same way, college professors frequently believe that the functions they perform are the only things that are of much importance at the school.

 

We believe that such views are short-sighted and wrong. Don’t misunderstand, we are not minimizing the importance of marketing at P&G, doctors at hospitals or professors at colleges. All of these roles are critical, and the respective organizations cannot succeed without them. However, our experience shows that in a well structured organization, all departments will make an invaluable contribution to the success of the enterprise. Remember, this is only true if the full potential of each functional area is utilized.

 

Consider human resources. If the role of this department is reduced to processing payroll and signing people up for benefits, this may not be considered very important. However, an appropriately staffed human resources department has much more to offer. With the right, highly skilled professionals, it can participate in and add value to the hiring process. The human resources department can also help establish incentive systems to motivate employees. Depending on the company, it may be appropriate for human resources to design an effective performance management system and/or a progressive discipline program.

 

If the role of human resources is diminished, it may not be viewed as valuable. However, if the full potential of the functional area is exploited, it becomes invaluable.

 

We can hear some people saying, “but what about the bean counters?” Sure, the financial folks pay the bills, send out invoices, receive checks and produce financial statements. Some may think of this as rote work that just doesn’t add much value. This department just isn’t very important.

 

However, if the full potential of the department is used, it could be developing pro forma financial analyses that allow the company to avoid a cash flow crunch. It could be producing daily, weekly and monthly reports that allow management to know what is going on in the bowels of the organization without personally being there. With this information, management can steer clear of potential pitfalls.

 

If a company ships widgets and the shipments start to go out late, it will eventually show up in the financial statements. The problem will show up as a sales decline. Unfortunately, by then it’s too late. The damage is done. The customers are gone. However, if finance had produced a daily or weekly report for management that showed the percentage of late shipments, the problem could have been corrected before the damage occurred.

 

We’re not minimizing the importance of any department. However, we strongly believe that if the full potential of every department is utilized, each one can make an invaluable contribution.

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