I just read a post titled, “The Only Number that Matters in Business.” It took me back to a few months ago when I had the opportunity to hear Kevin Wheeler speak on trends in the area of talent management. One of his discussion points was about management focusing their energy on the needs of top revenue producers of the organization. Afterwards, I was chatting with some colleagues about the session and this prompted a convo about the importance of department functions that don’t necessarily generate revenue but support revenue generating areas.
A while ago, I heard a CEO speak to an HR audience about the most important department in the organization. I know – you’re thinking he said HR. Nope. He said sales. Because without it, the HR department wouldn’t exist.
I’d like to explore this with you because it’s important for HR to get their heads around it. And without getting into the whole “chicken and egg” thing (i.e. sales wouldn’t even be there without HR). Is there a most important department? And, if so – who is it?
Businesses need to find customers (i.e. generate revenue). Once they find a customer, it’s in their best interest to keep them because it’s cheaper to keep a customer than find a new one. That’s where support departments come in…customer retention.
But it only seems logical that companies will always want more customers and a greater market share. So while keeping the customer is important…so is the constant process of getting new customers.
It seems to me that organizations have two kinds of employees: those who directly generate revenue and those who indirectly generate revenue by supporting the former. I think we’ll all agree that companies need both. And, they’re both important. But do they both generate profit? And, isn’t that the most important thing in business?
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Tracy Tran says
I do agree that employers need to have to generate revenue either indirectly or directly. They are in one team. Basically, if they made a dollar, it’s one dollar they earned more today. So any revenue is good.
However, since the headline says “The Most Important Department,” I do think the most important department in the company is not HR or Sales. It’s the finance department. Since finance knows the budgets, they set the parameters for divisions.
Finance determines the limit (or not limit) for each department and how each department responds to the resources they’re given. Why do you think most financial people get top executive positions?
Kevin Brozovich says
Sharlyn,
I had this discussion at a former employer. One of our managers stated in a meeting that his department (operations) was the most important. Obviously that didn’t go over well with the rest of the team and he took a fair amount of abuse for stating it. It takes all areas, working together, to make a company sucessful.
I’m guessing that the CEO you spoke to came from sales….because everyone thinks his or her area is the most important. However, for a CEO to announce a “pecking” order of importance is just a sure way to create conflict within his/her organization. Every department must serve a vital function or it shouldn’t exist.
Mark Hornung says
These discussions remind me of one of my favorite quotations, from Albert Einstein: “Not everything that counts can be counted. And not everything that can be counted, counts.” Businesses are obsessed with numbers and metrics, but overlook the intangibles (which some analysts believe comprise the majority of a corporation’s market cap). Most CEOs would say Finance is the most important department for the reasons cited in the comment earlier. Others, Sales for the reasons discussed in the post. But that’s like asking what’s the most important position on a sports team (pick any sport). Sure, the pitcher in baseball is important, but without support he will lose. Ditto the quarterback or goalie or center. Point is, all play a role and all should be valued for those roles and strive to perform them as well as possible. De-valuing one or the other ultimately will reduce performance.
Joe Lavelle says
Hi Sharlyn – Great post!
Can there ever really be “a most important department”? I don’t think so, just like sports teams typically don’t do well to spend all their money on one superstar and having to be thrifty with all the other players. I believe the best companies measure and nurture their overall effectiveness.
Regarding your tweet about Finance being the most important department. Doubtful, going back to the sports analogy, is the scorekeeper EVER the most important person? (just kidding)
hr bartender says
Thanks everyone for weighing in. I really appreciate your comments. It got me thinking…
I understand the idea of team and everyone bringing something to the party…but I’m having trouble shaking the whole money concept. Meaning, if you don’t have money…you’re not going to be in business. Just sayin’. And wouldn’t that give preference to revenue generating departments?
Interested to hear your thoughts.
Michelle says
Think about a start up company. Until a company has a customer – someone who will buy what they are selling – they are not a company. To exist at all, you need sales.
Other close contenders are: R&D, Manufacturing (if a manufacturing company) and Marketing. It is important that other functions understand this. Our job is to support the business so that these critical functions can do their job well and make money.
Mark Hornung says
OK, another analogy. In warfare, infantry is the most essential unit. The Marines have developed the ability to insert a fighting unit virtually anywhere and have them pursue their mission immediately. However, if support doesn’t become available soon thereafter (either via extraction or logistical support, i.e., additional supplies, medical facilities, etc.), that fighting unit will cease to be effective. So, to Michelle’s start-up example, yes, you must begin with an offering (product or service) and sell it. But if you do not provide proper support quickly, the start-up will die (I know–I did the start-up CEO thang). Many start-ups fail, for example, because they do not budget nearly enough for marketing (believing the old saw about “building a better mousetrap…”). To be more precise, the real question is not one of importance but priority (a nuanced, but real, difference). Some things must come before others, but ultimately you need the full suite of business capabilities done well in order to achieve long-term success.
hr bartender says
Thanks to everyone for continuing this discussion. I like the idea of priorities but that takes me back to money. Doesn’t the priority have to be selling, making money and turning a profit?
Blissex says
«Doesn’t the priority have to be selling, making money and turning a profit?»
First, that’s not a priority — it is a goal, a goal that is reached as a *consequence* of setting priorities right.
But what are you selling? Purchase orders or repeat business?
People who think that sales is the most important department as a rule assume that the company is into trading, and the only think that matters is closing, as only each trade matters. Then manufacturing, delivering, supporting, etc. don’t matter that much — all that matters is to get the purchase order, and then the next and then the next. These companies regard themselves as anonymous traders.
Companies that make money by selling customer satisfaction and repeat business know instead that selling is just one step and “closing” is misnamed, and all departments matter to making money.
Similarly companies where what they do or sell is less important than cost control and efficient capital allocation think that what matters most is finance; they regard themselves as lenders and investors.
As to priorities, the priority is addressing whichever bottleneck is most significant; if selling is a bottleneck, then sales becomes a priority, if capital is a bottleneck than finance becomes a priority, if production is a bottleneck than operation is the priority.
This in theory — in practice in many organizations the priority is whatever validates the career and hold onto power of existing top management. If the CEO got his job for his sales background, he will hardly diminish the value of his background by making engineering a priority, whether unconsciously or consciously.
Currently most USA executives think that sales is the bottleneck, and everything else can be sourced from India or China for very cheap; this idea is based on the certainty that those little yellow or brown monkeys will continue to do everything very cheaply for their betters in the USA and will never start selling directly their stuff under their own brand names in the USA, just like those funny slitted eye japanese never did either ;-).
Blissex says
«“Not everything that counts can be counted. And not everything that can be counted, counts.” Businesses are obsessed with numbers and metrics, but overlook the intangibles»
But the distinction here matters a great deal to careers — those in functions that can be demonstrated numerically to be directly related to something quantifiable (“profit centres”) have very different careers from those whose contribution is harder to quantify. Because when promotions and other rewards are decided, numerical evidence matters for the first, but politics for the second.
Ultimately it is all down to politics anyhow, because what matters to business success is good calls of judgement, but what matters in politics is arguments and strength of proof, and any (even dodgy) numerical “proof” is stronger than any (even good) “call of judgement”.
Sure calls of judgement have to be based on quantitative evidence as well or mostly, but evidence tends to be backwards looking and incomplete, and a lot of business is about making the right bets about the future and taking into account non obvious factors.
Moe says
@Tracy Tran,
I am an accountant. I obviously think that the financial department is extremely important. What some people sometimes overlook is that it is really everyone working together that makes a successful business. No one is “more important” because a business could not run smoothly with a department missing. While some departments are more efficient, or do more work, it is the team effort that makes a business work in the end. When I do accounting work on the side for various businesses, I always find that the companies that are more balanced in departments make more of the big bucks then companies that have too much emphasis on sales, HR, etc…
chuks anowa says
Well,i think the most important department in an organisation is the marketing department because without the marketing department going out to get customers and sales,the company will not grow even the finance department will have nothing to count(money) and nothing to budget on…they play the most important role which is going out to get customers for the organisation and by so doing sales increases and finance department have something to count (money)……
Kenya says
The most important department is the department that knows what’s going on with the people that make the Organization go”ZOOM!” Whether its the facilities management (sanitation/janitorial) department or the Marketing/HR department. The people are the heart of the organization and a well run flat organization with few departments, non traditional titles etc. where people are valued and their input is taken into consideration is going to be successful and sustainable.