By: Paul Davis on March 22nd, 2018
The Top 5 Ways Role Clarity Can Financially Benefit an Organization
Communication | Total Rewards | Business Management & Strategy | Career Tips
Creating and maintaining an environment that engenders role clarity has a number of positive impacts that directly impact the success of organizations. This article discusses five of the main positive outcomes for businesses if they effectively generate and manage role clarity.
What is Role Clarity?
The simplest way of describing role clarity ties back to the basic question of whether an organization can clearly describe the duties and responsibilities associated with a role and the accompanying baseline requirements that an individual needs to have in order to effectively perform the role.
Five Positive Outcomes for Businesses with Role Clarity:
- Management of Expectations (Manager & Employee)
- Market Pricing and Internal Equity
- Performance Management
- Continuity of Operations
How Does Having Role Clarity Financially Benefit an Organization?
Management of Expectations (Manager & Employee)
The success of any organization, regardless of how structured or unstructured the reporting relationships are, requires that managers and their staff are operating from the same set of expectations. Having roles with clearly documented responsibilities and duties impacts all levels of the organization, from the senior-most executives down to entry-level staff. The way in which role clarity often manifests itself to this end is that it creates an environment in which the strategic objectives of the organization can effectively flow down through the ranks of the company and be reflected in a clear memorialization of who is responsible for what.
Providing role clarity in the context of management of expectations is a major bonus to both managers and their staff because it allows for managers to effectively manage duties across roles, and it creates an environment where accountability is clear. If an organization is trying to accomplish certain objectives that are tied to their financial performance, it goes almost without saying that effective management of expectations towards those objectives will positively impact the financials of the business.
One of the ways in which organizations can find themselves in compliance-related hot water is via job descriptions not reflecting role clarity. This is due to a few very important reasons:
- If an employee (or a job-seeking candidate) with a disability is trying to work through the accommodation process, it is critical for the organization to have an accurate reflection of the role and its associated requirements. Without this information, if access to the job and/or reasonable accommodations are denied, it places the organization is a generally untenable situation that it could have easily avoided if it had job descriptions that reflected role clarity. While any company can get sued for a variety of reasons, setting yourself up to lose lawsuits is just bad business and can severely impact an organization's immediate bottom line and long-term reputation.
- If an employee is fired for cause due to unsatisfactory performance, part of the accompanying documentation that should be present includes a clear statement of the expectations for the role. If the ex-employee comes back and says that they were fired for reasons other than poor performance (such as being discriminated against for being in a protected class), it will be beneficial for the organization to defend itself by demonstrating that it clearly laid out the expectations for the role to be performed and that the employee did not meet those expectations.
Market Pricing and Internal Equity
Not having documented role clarity is a poster child of a ‘garbage in yielding garbage out’ scenario when it comes to analyzing employee compensation. It’s a best practice to market price important positions at an organization, and I’ve yet to run into an HR professional who knows how to accurately market price a position that does not have role clarity. This goes beyond just not having role clarity reflected in a formal job description, and really drives to the point of knowing what a role actually is.
Pricing (and as a result, paying) roles incorrectly has a clear and direct line to negatively impacting an organization’s bottom line. You don’t want to overpay for any jobs, or conversely underpay for jobs and lose high performers to the competition who are willing to pay market rates for the work. Imagine the impact on your business for overpaying a single position by $10,000 per year over a number of years. Multiply this out across your organization based on how many positions you have, and the potential cost overruns that you can run into via not managing role clarity are staggering.
The ability to manage performance ties back to a lot of the themes already expressed in this article. If you can’t describe what a role is responsible for in a clear and accurate manner, then how do you communicate those expectations to the incumbent(s) in the role? If you can’t clearly explain expectations, you won’t be able to manage accountability and performance.
In addition, when organizations describe their jobs in such a way that provides quality role clarity, it also provides an opportunity to engage in career pathing conversations with staff.
- If an organization has their roles described well: a manager has the opportunity to communicate with their staff, based on the staff’s aspirations and the needs of the business, regarding what other roles exist in the organization, and importantly, how to attain and be qualified for those roles.
- If these other roles in the company don’t have role clarity: it becomes near impossible to be able to mentor and coach staff to the point where you would be able to groom them for the jobs. This then creates a situation in which current staff are more likely to leave in order to further their career and the company is forced to recruit externally to fill those roles. Both of these manifestations of not having quality role clarity negatively impact the bottom line of a company.
Continuity of Operations
Employees go on vacation and leave their current jobs for a variety of reasons, many of them can be out of the control of their employers. To not plan for this inevitable development is to have your head in the sand regarding a future you know will eventually come to pass. To be caught flat-footed when an employee leaves a job, and then not know what the job was really responsible for is inexcusable in just about every situation.
Not having role clarity in these situations makes it take longer for a company to find an adequate replacement, increases the likelihood that certain tasks will fall through the cracks, and decreases the chance that the eventual replacement for the role will even be a good fit for the job. All of these scenarios of not having proper role clarity hurt a company’s financial well-being and can be avoided with a bit of advance planning and work.
A lack of role clarity is oftentimes more visible in organizations than when there is role clarity. That is because when role clarity is present, in many ways the organization and its staff are functioning as they should. When role clarity is not present, there is inconsistent and arbitrary management of accountability of staff, which leads to misalignment of resources towards company goals and low morale.
If employees can be given a clear set of expectations, it helps make manager’s lives easier, helps mitigate the firm's compliance-related liability, provides a clear sense of purpose for employees, allows the company a basis from which to evaluate the compensation of roles, and helps ensure continuity of operations.