Optimization of resource utilization plays a significant role in the continuous improvement initiatives of an organization providing services. Lean thinking and systematic approaches, such as multicriteria analysis (MCA), are necessary to optimize the utilization (or allocation) of human resources (HR) in a public service organization, especially to assure that functional performance satisfies organizational and public needs and objectives. This manuscript demonstrates the use of functional priority assessment (FPA) and functional failure risk (FFR) assessment to support and optimize human resource allocation (HRA) management in a public sector organization. Action research has been carried out in one Norwegian police district, to investigate the appropriateness of FPA and FFR assessment for HRA. First, functional priorities have been assessed, based on their impact relative to nine central organizational criteria. Further, based on a tailor-made risk matrix composed of six criteria, consequence of failure (CoF) and probability of failure (PoF) have been qualitatively assessed, resulting in a quantitative representation of FFR levels. The suggested Lean and MCA-based methodology provides significant support to strategic management and Lean practitioners who are involved in implementing or locating improvement initiatives in service organizations, especially in optimizing resource utilization.