Monday, March 18, 2013 by Ed Bradstreet
There is a new strategy when valuing management. Traditionally, companies have ranked management with an A, B and C grading and the philosophy that the more “A” management, the better the company’s potential. It is impractical that companies can afford “A” players in all management positions. The challenge is to attract and retain ”A” talent in key management positions. The difficulty is that not all management position are valued equally and the same positions in two different business models will have dramatically different significance to the success of the organization.
First, there are many business models, however, the two most prominent are the customized solutions that are targeted to a specific audience and the other is the standardized product or service that is sold to the mass markets. If one was to rank management positions by “A” (strategic), “B” (support), or “C” (surplus) in these two business models, would sales or supply chain management be graded equally? Obviously not.
In the customized solutions model, successful sales management needs to identify the unique customer need, understand the solutions development expertise of their business, and strategically (A) orchestrate the customization and delivery of the solution. In the standardized model the sales manager is more of a support (B) relationship or account manager who responds to the needs of the customer through on-time deliveries, service, and pricing. Although both roles are important, there is a higher probability that the sales management role would be ranked higher in the customized solution model.
On the other hand, the supply chain manager in the customized solution model tends to support (B) the delivery of the solution. In this case, timing and delivery is important but not as critical as in the standardized product. When servicing mass markets, the supply chain manager must be very strategic (A) and ensure on-time delivery of often large and complex finished goods to customers. The differentiator for the customized solution model is unique design, solution development and quality of product or implementation while in the standardized business model it is availability, service, and price.
The important message is to first place a value on all management roles within your business model. For those positions that have a strategic impact on the success of the company should be ranked “A” because the role can either increase revenues opportunities or reduce operating costs and expenses. “A” management roles are critical to the performance of the company and usually have autonomous decision-making authority. Calibrate compensate for strategic roles at a different level than support positions because the value to the corporation is greater.
“B” positions support value-adding “A” roles and minimize any downsize risk. These are important roles that follow specific processes and practices to ensure predictable results. “C” positions have little economic impact on the company, however, may be a necessity for the company to function. In most companies, “B” and “C” positions are the most common role in the organization. Aligning “A” quality talent in “A” designated roles is the key.