Whitepaper Identifying Critical Roles, Easier Said Than Done! A best practice approach to addressing the missing link in talent management “ Colin Beames is a global thought leader in SWP. His content is more advanced By Colin Beames than typically what has existed on this subject.” BA (Hons) Qld, BEng (Hons), MBA, MAPS Corporate Psychologist Mike Haffenden, CEO, Corporate Research Forum, UK 2 Summary The Business Case for Identifying contribute to strategic impact. Critical Roles The business case for identifying Critical Roles A Critical Role Model Best Practice is compelling. By investing disproportionally Approach in the people and resources associated with such roles, this will have maximum leverage We present the Advanced Workforce on enhancing organisational performance, Strategies (AWS) Skills-Based Workforce contribute to the achievement of strategic and Segmentation Model, adapted from the work business objectives, and provide longer-term of Lepak and Snell (1999), as a “best practice” competitive advantage. approach to the identification of Critical Roles. Role differentiation (e.g., “make” versus “buy” This model serves as a basis for identifying roles) constitutes the essence of developing an various role types (Critical Roles, “make” roles, effective workforce strategy, starting with the “buy” roles, roles suitable for outsourcing). It identification of Critical Roles. is based on analyzing roles according to two dimensions of skills: (1) skills value and (2) skills However, definitions of what constitutes Critical uniqueness. Critical Roles are defined as having Roles abound, many of which are piecemeal higher skills value (i.e., impact on business or ad hoc, lacking in rigour, and/or of limited outcomes) and higher skills uniqueness (i.e., utility. Furthermore beyond the rhetoric around cost). Critical Roles, there is very little available by way of a framework, model and methodology for identifying Critical Roles. Thus the identification Case Studies in Critical Roles of Critical Roles in practise is easier said than We present three case studies that illustrate done! the adverse consequences of failing to identify Consequently there is a danger of relying on Critical Roles. These consequences include “gut feel” and opinion with politics filling the poorer performance, higher turnover and gap, resulting in unintelligent people investment unintelligent or misplaced investment decisions decisions and less than optimum organisational in people. outcomes. Conclusion Critical Role Traps, Considerations, The “best practice” approach to the Value Creation and Strategic identification of Critical Roles, including a model Impact and associated methodology, accommodates all of the Critical Role considerations, common We highlight three common traps in identifying traps and limitations outlined in this white paper. Critical Roles and discuss a number of other Such a rigorous approach that has been lacking Critical Role considerations. We also explore in the HR domain, constitutes a vital missing link role value creation and strategic impact as key in talent management and Strategic Workforce concepts in the identification of Critical Roles. Planning. We conclude that the identification of Critical Roles is an exercise in complexity. There is a need to understand the deeper characteristics of roles and how roles create value and 3 Table of Contents 2 Summary 4 Part 1: About Critical Roles 4 The Business Case for Identifying Critical Roles 4 Many Definitions of Critical Roles 5 3 Common Traps and Limitations in Identifying Critical Roles 6 4 Other Critical Role Considerations 7 Critical Roles: A Complex Concept 8 Part 2: A Best Practice Approach to Identifying Critical Roles 8 The AWS Skills-Based Workforce Segmentation Model 9 Four Role Types 10 Intelligent Investment 10 Calculating the Cost of Turnover for Critical Roles 10 External Focus of the AWS Skills-Based Workforce Segmentation Model 12 Part 3: Case Studies in Critical Roles 12 Case Study 1: A Misplaced Emphasis by Relying on Organisation Charts Resulting in Unintelligent Investment 15 Case Study 2: Mistaken (Role) Identity and the High Cost of Turnover 16 Case Study 3: Not Seeing the Wood for the Trees and Performance Issues 17 Conclusions 18 References 19 Appendices 19 A: The Skills Segmentation Questionnaire (SSQ) and Plotting of Roles 20 B: The Workforce Strategy Audit Survey (WSAS) 21 C: Critical Roles and Talent Management 23 About the Author 24 About Advanced Workforce Strategies 4 Part 1: About Critical Roles The Business Case for Identifying “gut feel”, and/or are of limited utility. Critical Roles We contend that two key considerations in identifying Critical Roles are value creation and The quickest route to increasing strategic impact. shareholder wealth is to increase employee performance in critical positions. (Becker, Huselid & Beatty, 2009) Value Creation Value can be manifested in a number of ways, The identification of Critical Roles should e.g., enhanced customer satisfaction, cost be a key focus for organisations in their reduction, improved quality, greater efficiency people investment decisions. By investing or time to market, improved systems and disproportionally in the people and resources processes, improved financial performance associated with such roles, this will have (e.g., ROI, cash flow), product and services maximum leverage on enhancing organisational innovation, etc. So roles need to be assessed performance, contribute to the achievement of according to the various types of value that they strategic and business objectives, and provide create (i.e., against a value creation framework), longer-term competitive advantage. including the impact of this value creation (e.g., whether localized or widespread across the Roles come first before people without organisation). diminishing the importance of the latter. A role exists, as part of the organisational structure, to perform a function that ultimately contributes Strategic Impact: Linking Roles to the to the provision of products and services that Business Strategy the organisation provides. Not all roles are of or create equal value, so it follows that the Determining the strategic impact of roles people in those roles are also not of equal involves linking the business strategy and value in terms of their contribution to business outcomes to the concept of “Role Criticality”. outcomes. For example, if the business strategy is to improve the quality of its products and services, Note. Irrespective of the value of people, they then roles associated with quality assume still need to be treated with respect, honesty greater importance. Alternatively if the business and fairness. model is changing to a web-based model, then roles associated with improved processes and This role differentiation (e.g., “make” versus systems (including design implementation and “buy” roles), including the identification of maintenance of IT systems) assume greater Critical Roles, constitutes the essence of importance. developing an effective workforce strategy. Another strategy consideration is the critical Many Definitions of Critical Roles capability(s) of the organisation and how certain roles may be more closely linked to As is the case with many concepts in the Human the maintenance and strengthening of this Resources domain, there is no universally capability(s). accepted definition of what constitutes a Critical Note. The critical capability(s) or an Role. This is a somewhat “grey” area with some organisation is what differentiates it from its Critical Role definitions and approaches being competitors. It is the reason why customers piecemeal or ad hoc, lacking in rigour, relying on buy its products and services. 5 Part 1: About Critical Roles For example, it may be the case that an a “blunt” approach. It indicates a lack of organisation’s critical capability is its cheaper understanding of the true value of a role in products (i.e., the organisation competes on relation to the business, the lack of a workforce cost and price). Therefore roles associated strategy, and is an exercise in mediocrity! with controlling costs and increasing internal efficiencies become more significant as these roles are more closely linked to the 2. Identifying Critical Roles Based on critical capability of the organisation and the Organisational Structure Considerations preservation of its longer-term competitive advantage. 3 Common Traps and Limitations in Identifying Critical Roles Many organisations are locked into obsolete mindsets and models that have exceeded their “use by” date in the identification of Critical Roles. To that end, we have identified three Some organisations may adopt a hierarchical common traps. model of determining Critical Roles based on organisational charts and job title considerations. Whilst this hierarchical 1. Identifying Critical Roles by Job model may be suitable for defining reporting Evaluation/Salary Levels arrangements and determining limits of authority, it doesn’t explain how roles create value and how they are linked to the business The conventional approach to job strategy and business outcomes. evaluation is static, inflexible and primarily focused on internal equity... There is a Put another way, it is nonsense to think that jobs need to move away from conventional at the same level in an organisation: approaches to determining job importance and job-worth to a model that focuses on • Contribute equally to the achievement of the future value creation, strategic job