The Jobs You Can’t Do Without

By Todd Henneman

Dec. 13, 2005

Pause a moment and name the jobs that your company depends upon to meet its goals for the next year. Would the list include the CEO? The CFO? Perhaps an engineer responsible for a high-potential product? A sales representative who covers a key territory?

    Edwards Lifesciences Corp. performs this exercise every year. The cardiovascular device maker understands the critical nature of certain jobs, and regularly identifies positions that are absolutely integral to meeting its business strategy. CEO Michael Mussallem says success in the cardiovascular product industry depends as much–if not more–on knowing which jobs are essential to the company as it does on pioneering innovative technology.

    That’s why he is personally involved in selecting who gets the jobs. And he has determined that talent reviews trump board agendas.

    “Out of all the activities I’m involved in, I think that this is one where I provide the most value,” Mussallem says. “Our people are essential to the success of our company, and Edwards’ Talent Development Process addresses the most critical positions that have the biggest impact on that success.”

    At Edwards–which has regional headquarters in Irvine, California; Switzerland; and Japan–about 75 of its 5,000 employees hold critical positions. They range from members of the senior management team to managers on mission-critical programs.

    The company is a global leader in products and technologies to treat advanced cardiovascular disease, the global leader in acute hemodynamic monitoring, and boasts of being the No. 1 heart valve company in the world.

    John Sullivan, consultant and management professor at San Francisco State University, says that by identifying the most essential jobs in an organization, companies are able to put their best resources into the areas where they will have the maximum effect. “Companies have been prioritizing customers for centuries, placing emphasis on high-value customers with repeat-spending habits,” he notes. “Much like a single high-value customer can make or break a business, so too can a limited number of positions.”

    As an organization pinpoints the jobs that directly produce revenue, touch customers or possess the skills needed to develop or deliver the features that differentiate it from competitors, the company’s focus moves from the top of the organization to much lower in the organization, he says.

    “When asked to prioritize jobs that are mission-critical to the organization for the first time, many human resource professionals come back with the top few rungs of the organization chart,” says Sullivan, former chief talent officer of Agilent Technologies. “When forced to really think about what positions in the organization have the ability to immediately impact a firm’s time to market or quality of goods or service being offered, the list of critical positions looks a lot different.”

    As an example, Sullivan cites FirstMerit Bank, which operates in Ohio and Pennsylvania. The bank’s manager of recruiting determined that 74 percent of revenue came from only 12 percent of the jobs. “He realized that a vacancy in a commercial lending position would cost the bank thousands of dollars in unrealized revenue each day,” Sullivan says. “As a result, openings for such positions were given priority focus.”

    Many companies, including MGM Grand Hotel & Casino and Valero Energy Corp., North America’s largest oil refiner, also find that prioritizing jobs is essential, Sullivan says. Valero spent two years mapping talent in refineries, identifying key positions and developing labor supply chains that coordinate training, recruitment and retention to fill vital gaps.

Program’s origin
    The roots of Edwards’ critical-jobs system go back to the days when the organization was a division of Baxter International, a maker of medical products based in Deerfield, Illinois. Before Vernon Loucks stepped down in 1999 after 18 years as CEO of the firm, he wanted to leave the company and its divisions well-prepared for the future. His desire led executives to identify the top imperatives in the coming years for each division and region.

A position is labeled critical based not on who holds it, but on its importance in achieving business goals.
“It has nothing to do with the person, and everything to do with the
business imperative.”
–Robert Reindl,
Edwards Lifesciences Corp.

    To help, Loucks brought in management consulting firm McKinsey & Co. At the time, Robert Reindl, now corporate vice president of human resources at Edwards, was vice president of human resources for Baxter’s cardiovascular group. He worked with McKinsey to recognize the jobs where the company needed strong performance to achieve its business imperatives. Once discussions began in 1998 about spinning off Edwards, his ability to identify critical jobs and to allocate top performers took on even greater importance.

    “We weren’t going to have the Baxter corporate leadership to lean on anymore,” Reindl says. “We were going to be by ourselves, our own independent company on the New York Stock Exchange.”

    Today, analysts characterize Edwards Lifesciences, which sells medical technologies in more than 100 countries, with 2004 sales of $931 million, as a steady performer and leader among the 19 firms racing to be the first to introduce a noninvasive heart valve. Tim Nelson, research analyst with Piper Jaffray Co., characterizes the most recent quarter for Edwards as in line with expectations and says the company consistently delivers profit growth of 13 percent to 15 percent.

    In November, Piper Jaffray graded the company “outperform” on its expected performance on the S&P 500 over the next 12 months. In comparison, the brokerage graded competitors St. Jude Medical, Boston Scientific Corp. and Medtronic Inc. all as “market perform,” expected to perform in line with the S&P 500 over the next 12 months.

    Over the years, the “talent management system” has become interwoven with corporate strategy. Executives are tight-lipped about which jobs have been identified as critical, except for the most obvious, such as franchise leaders, who oversee the four main businesses in which Edwards operates (heart valve therapy, critical care, cardiac surgery systems and vascular therapies), and key positions responsible for noninvasive-valve strategy.

    But even with its well-publicized noninvasive valve, inserted using a catheter sent through the veins rather than opening a patient’s chest, the company declines to cite specific job titles as examples.

    “We don’t publish a list of our critical jobs because it is totally connected with our strategy,” Reindl says. “If you saw a list of all of our critical jobs and you knew the medical device industry, you’d be able to pick off what our strategic imperatives are for the future.”

“I am a firm believer that organizations should not only prioritize jobs, but actively communicate with employees how the jobs are prioritized, why they are prioritized, and what the current ranking looks like.”
-John Sullivan,
author of
Rethinking Strategic HR

    At least two successors at the firm are now identified for each critical job. A position is labeled critical based not on who holds it, but on its importance in achieving business goals. “It has nothing to do with the person,” Reindl says, “and everything to do with the business imperative.”

    For veteran professionals in human resources, the critical-jobs program may sound a bit like the old-fashioned process of job evaluation. After all, job evaluation focuses on positions, not people, ranking jobs in order of their relative worth. But executives at Edwards Lifesciences say their talent management program is nothing like the job-worth hierarchy produced by evaluations. They cite the fluidity of critical jobs, which can change annually based on the business imperative. They also point to the chief executive’s hands-on involvement in succession planning for all critical jobs, not just the positions of people who directly report to him.

How it works
    At Edwards, a job becomes critical each year after the company reviews and chooses its strategic imperatives. The assessment is part of a multistage process that culminates in talent reviews by the CEO. Mussallem conducts 15 such reviews, each one taking four to five hours. He and Reindl meet with the president of each region as well as the officer in charge of each function and their human resources partners.

    They talk about the mission of their organization, key imperatives, the organizational chart and whether it will change, critical jobs that currently are listed on the chart, and the succession plan for each critical job.

    That’s also when Mussallem and Reindl look at “mitigation strategies,” steps taken if someone in a critical job is performing subpar, for example, or plans for addressing problems retaining high-potential employees. Because critical jobs intertwine with business imperatives that are updated annually, a job could be considered critical one year but not the next. Some IT jobs, for example, would have been considered vital immediately before 2000 because of concerns about the Y2K date rollover, but not afterward, Reindl notes.

    “If I told you that you were in a critical job, I also would tell you that potentially this is not going to be a critical job forever,” he says. “That doesn’t mean we might not move you to another critical job. That doesn’t mean you may not be an important person if you’re not a critical person.”

    Once deemed critical, each job is given clear objectives that are vetted by the CEO. The company also estimates a market value for the job and increases the total compensation of the job holder. It pays a premium to people in critical jobs because the external market value doesn’t reflect how important the position is to the company.

    “We want to make sure they aren’t paid below market, for sure,” Reindl says. “So they are paid either at or above market.”

    Succession planning plays an important role too. “Usually, you want to have some of your highest-potential people coming into your critical jobs,” Reindl says. “If we identify the people who will be successors to critical jobs, we will say, ‘What should be their next job or two jobs that would expedite them to get to a critical job?’ They’re prioritized in terms of leadership-development training.”

    Research suggests that such strategic approaches to succession planning help companies’ financial performance. Consulting firm Bain & Co. studied 23 high-growth companies in 2002 and found that businesses whose leaders embrace a “rigorous system” for developing and allocating the organization’s leadership capital significantly outperform companies that don’t. Less than 15 percent of the companies examined by Bain develop high-potential employees by advancing the right people through the right jobs.

    But Bain found that the organizations that adhered to a system for developing and allocating leadership capital had shareholder returns, on average, of more than 10 percent a year above their cost of capital over a 10-year period.

    The most common question that Sullivan, author of Rethinking Strategic HR, hears from human resources professionals is how to avoid demoralizing employees who learn they aren’t in critical jobs. “The short and simple answer is that prioritizing mission-critical or key jobs positively impacts everyone and hurts no one,” Sullivan says.

    Focusing on these jobs optimizes a company’s prospects at success, which in turn helps drive job security, rewards and career advancement opportunities for all, he says. “I am a firm believer that organizations should not only prioritize jobs, but actively communicate with employees how the jobs are prioritized, why they are prioritized, and what the current ranking looks like,” Sullivan says.

    Edwards has become more transparent about its critical-jobs strategy since its introduction seven years ago. In its infancy, the program had to be kept quiet because it was driven by information that wasn’t public: the pending spinoff from Baxter. Now the company is much more open about it, a change, officials say, that adds credibility with employees.

    Above all, the program works because the CEO views it as important as financials and customer and investor relationships. “By having strong talent in critical positions,” Mussallem says, “our technologies have the greatest potential to have a real impact on patients.”

Workforce Management, December 12, 2005, p. 1, 16-22Subscribe Now!

Todd Henneman is a writer based in Los Angeles.

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