The Most Important Business Function

I was once asked by a student what is the most important business function. I was thinking finance back then. It was my primary role, approving the releasing of cash, issuing checks for the company. I could have a standard quality product, earn properly, but the business cannot operate without funds. “It must be finance.” Then my wife answered marketing. She argued marketing. “Without my efforts in marketing, the company won’t have sales. What good will the company have if it is setup but not earning?”

To resolve this issue, I observed for a while from different perspectives in the company, and soon found out a general truth. Every function in business is important because there is what we call “interdependence” — in which each function plays an important role to all the others. With some thought this can clearly be seen:

1. Human Resource Management. The main purpose of human resources is to be able to provide the necessary people for the job at the right time. In terms of finance, human resource must coordinate the number of people employed, the salaries offered in each position, rewards and incentives, and training they will be offering in order for the finance to set a budget.

In terms of marketing, if the company promises professional services, it is the responsibility of human resource to employ people who can deliver such standards. In terms of operations, human resource must be able to forecast increase/decrease in demand, and decide whether the demand requires an increase in manpower, additional working hours, or outsourcing, in order to help the operations. The decision is critical because in our country, it is easier to hire than to fire employees.

2. Financial Management. Finance is being able to manage the company funds effectively, spending it in places where it is needed, and on things that would bring in more profit. The responsibility of the finance toward human resource lies in being able to determine costs incurred for hiring, training, and maintaining people. When human resource says that he will hire more employees, and finance sees that there is just no way for the company to keep up with the additional overhead cost, finance should say no.

In terms of production, both finance and operations must arrive at an understanding on what level of cost is required in order to produce products that match the company standards. This means that they must figure out how much is needed to acquire quality raw materials, cost to process the materials, and finally, produce, store, and distribute the finish product. In terms of marketing, both must come to an understanding which advertising platforms, promos, mode of delivery would be cost-efficient – generating more or same returns for reasonable costs.

3. Operations Management. One of the most underrated but is as important as all others is the operations department where the products are produced or services are rendered. It is the one making whatever will be sold by the company. In terms of marketing, the marketing must be able to relay to the operations what the market needs from the company. You cannot promise something that the operations cannot make. In turn, operations must be able to deliver the product with such quality as targeted by the company.

In terms of human resource, the operations should know the skills and number of people needed to produce a good product/service. Overtimes and other schedule adjustments according to the operations must also be relayed to human resource. In terms of finance, both must be able to stay within the budget in the operations. Operations must be ready with different alternative suppliers, in case budget will fall short. Operations must also relay to finance if the company will decide to outsource certain processes in their production.

4. Marketing Management. Marketing is getting the products/services known and owned by the target market. Marketing also involves product planning as the team also conducts market studies — from the trends, competition, and the complete psychographics of the available market, in order to create a product that will be sellable.

In terms of human resource, marketing must have proficient marketers who know how to conduct studies, analyze, plan, and implement. In terms of finance, marketing plays a critical role in bringing in funds to the company. No matter how effective or big the campaign marketing wants to build, it must always stay within the budget. Finance must make sure that the budget for other departments would not be compromised.

In terms of production and operations, marketing is in charge relaying the results of its studies in order to create the suitable and affordable product. Marketing sells while operations team makes the products or services that will be sold. Marketing must understand the boundaries of its operations so as not to sell beyond capacity. Operations must understand the quality that it must reach in order to fulfill the selling propositions that the marketing is offering to the firms’ consumers.

Despite all arguments, many would still insist that their favorite function is the most important. It really boils down to how you define importance. If you mean that which adds the most value, then the most important function will depend on the industry and other factors. However, if what you mean by important is indispensability, which means that you cannot do without, then all are equally important like wheels and brakes to a car, the company could not run without the presence of both. In most cases, it is better to choose the second definition if you wish to improve teamwork and morale within your company.
*Originally published by the Manila Bulletin, C-4, Sunday, June 26, 2016. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.