well I think we can put it in other way. Instead of making it profit centered we can save the money in different areas. like for example,
hope that if we look into, we can save considerable amount of money
regards
mashamsi
From Pakistan, Karachi
3- post the jobs & recruit inside the company to avoid outside recruiting costs
Use retired workers on a project or part time basis.
Perhaps reorganizing the department can eliminate the need of a new person.
establish performance based pay system
Use goal based performance appraisal system. In this way you can weed
hope that if we look into, we can save considerable amount of money
regards
mashamsi
From Pakistan, Karachi
Dear mashamsi,
Cost saving is not related to Profit Centre. Profit Centre is an Unit which can generate Profit by itself. The whole debate is about where HR can generate Profit and not where HR can save cost, which we all do all the time.
Regards,
SC
From India, Thane
Cost saving is not related to Profit Centre. Profit Centre is an Unit which can generate Profit by itself. The whole debate is about where HR can generate Profit and not where HR can save cost, which we all do all the time.
Regards,
SC
From India, Thane
Hello all !!! The issue of HR being a profit centre excites me. Is it not too early, I feel. Traditionally HR used to be a Cost Centre, alike other support functions. Now other functions have taken the road of being a profit centre like MM, Maintenance etc. But, HR dealing with imponderables continues to be viewed as a cost centre. In the days to come, with outsourcing, globalisation and competition set to increase day by day , many a management would be tempted to go for options that can enhance bottom line. What Puja says can be prophetic - if you do not add to the profits then you have no reason to exist :roll: In this mad rush to pocket more and more of moolah, can HR be left behind. :evil: In deed the trend is already seen. Many of the small scale organisations here have off loaded their entire HR function, although it is essentially man maintenance. Now a days most organisations have started off- loading recruitment activities. It saves the organisation of many hassles besides being cost saving. Thus the trend towards partial off loading of the function is catching up almost all over. But where do we see HR as a function is contributing? Is it limited to the age old view of being a basket of techniques/skills or is it being a strategic partner. If we look at being a strategist in the organisation then we cannot look at the function as mere expenditure point. We cannot just add the personal expenses in an organisation viz a viz the share of the HR in the bottom line. As what Mr. Rajat says, to look after the HR needs of other organisations is too naive. Getting into another organisation partly for a defined project would be withering your competencies and spreading it too thin. Even offering consultancies are not likely to be very productive. See the experiment of many leading organisations did trying to merchandise their HRD programmes to other organisations. Ultimately wisdom dawned that such approaches are not likely to benefit in the long run. There is a feeling of disquiet amongst the employees that many of the welfare facilities voluntarily undertaken by the companies are being cutailed. For instance many organisations have highly subsidised their canteens. Now to garner money and make it self sustaining the cantten can be converted to be a self financed one. Will it not result in employee morale going for a six.Well the point I am trying to make is that although there is a general leaning to make HR function and activities more cost oriented, treating it to be a profit centre is going to result in more problems than the solution it offers. Yet, when the way in business is being done is getting rewritten almost every day with newer and better techinques and skills coming out evey now and then, which definitely impacts in a positive way the bottom line, can HR be left behind. Definitely not. While the harware aspects (machinery/technology) can be changed overnight but the softer aspects (people/systems) cannot be changed so rapidly. It needs to be consciously formulated, strategically designed and thoughtfully excuted, otherwise such changes can mar an organisation for ever. I agree with Vicki that being cost conscious and working towards value addition is very different from being a profit centre. We need to be more sensitive to humans, :wink: Ms. Puja.
This is what I thought about the issue.
This is what I thought about the issue.
Dear Freinds,
I think, i also contribute on this topic. When we were on informal meet of bangalore citehr members, i came to know this topic by Ramya. So i decided to contribute something.
How HR is profit base??????
1) Recruitment: Who arrange???? Ans- HR, why always need of recruitment for a similar position. bze we don't recruit needy person. We recruit HI-Fi person whose communication skill is high.....is it correct???? We frame policy that we will hire only MSW or MBA HR for HR post and they are hi-fi so we are facing problem of more turn over. In place of Hi-fi, if we recruit B.Com/M.com, i think we will save something fro company bze they will not leave the job so easily and their PAY PACKAGE is also less than hi-fi. If we will do practice like this, demand of hi-fi will be less and supply of hi-fi will be more. Now all hi-fi will accept our terms and conditions and they will perform well for longer period. If we do practice , wat i think, we will save company a lot which is profit base HR.
I ll come with anothe point in due course bze i m going somewhere so time is not permiting to sit and write.......sorry.....i be back with another point......
Regards
Sidheshwar
From India, Bangalore
I think, i also contribute on this topic. When we were on informal meet of bangalore citehr members, i came to know this topic by Ramya. So i decided to contribute something.
How HR is profit base??????
1) Recruitment: Who arrange???? Ans- HR, why always need of recruitment for a similar position. bze we don't recruit needy person. We recruit HI-Fi person whose communication skill is high.....is it correct???? We frame policy that we will hire only MSW or MBA HR for HR post and they are hi-fi so we are facing problem of more turn over. In place of Hi-fi, if we recruit B.Com/M.com, i think we will save something fro company bze they will not leave the job so easily and their PAY PACKAGE is also less than hi-fi. If we will do practice like this, demand of hi-fi will be less and supply of hi-fi will be more. Now all hi-fi will accept our terms and conditions and they will perform well for longer period. If we do practice , wat i think, we will save company a lot which is profit base HR.
I ll come with anothe point in due course bze i m going somewhere so time is not permiting to sit and write.......sorry.....i be back with another point......
Regards
Sidheshwar
From India, Bangalore
Dear Sidhu This is not fair. Are you looking for Quality or Cost... You will find a answer to your post. Regards Jeyaseelan.A
From India, New Delhi
From India, New Delhi
Hi Jaya,
I m looking for both. Quality and cost. How to handle the more turn over rate. This is the only solution in present scenario. This is pratical approach. I did this when I was in Coca -cola bhopal and i succeded like any thing...................this is my approach to work and balance the demand and supply..........
I ll give another input. I hav plenty of work so i m unable to contribute. despite i m little bit contributing...............
Regards
Sidhehshwar
From India, Bangalore
I m looking for both. Quality and cost. How to handle the more turn over rate. This is the only solution in present scenario. This is pratical approach. I did this when I was in Coca -cola bhopal and i succeded like any thing...................this is my approach to work and balance the demand and supply..........
I ll give another input. I hav plenty of work so i m unable to contribute. despite i m little bit contributing...............
Regards
Sidhehshwar
From India, Bangalore
I’d like to make some more observations on this discussion about HR generating a profit.
1. ROI is not the same as profit. In HR, ROI is calculated for specific programs. It is not a reflection of profit. ROI does not typically take account of shared costs, such as rent, capital equipment, electricity, etc. These shared costs are taken account of in calculating profit.
2. Calculating profit requires sales (profit = sales ¬– cost of goods sold). Unless the HR department is selling its services, profit cannot be calculated.
3. And if the HR Department were to sell its services as a profit center, why single out HR? For any company seriously considering turning the HR Department into a profit center, it will need to do the same for the Purchasing Department, Quality Department, Warehouse, Engineering Department, and so on. (There is nothing *special* about these other departments, over and above the HR Department.)
4. Setting up the various departments as independent profit centers goes against everything we know about the systems nature of organizations. Organizations achieve their mission and objectives through each function working collaboratively towards a common goal. This requires high levels of co-operation. Setting departments up as profit centers will put departments in competition with each other (more so than they are now). Each will be competing to reach their own individual profit targets, often at the expense of the organization’s overall mission.
Vicki Heath
Human Resources Software and Resources
http://www.businessperform.com
From Australia, Melbourne
1. ROI is not the same as profit. In HR, ROI is calculated for specific programs. It is not a reflection of profit. ROI does not typically take account of shared costs, such as rent, capital equipment, electricity, etc. These shared costs are taken account of in calculating profit.
2. Calculating profit requires sales (profit = sales ¬– cost of goods sold). Unless the HR department is selling its services, profit cannot be calculated.
3. And if the HR Department were to sell its services as a profit center, why single out HR? For any company seriously considering turning the HR Department into a profit center, it will need to do the same for the Purchasing Department, Quality Department, Warehouse, Engineering Department, and so on. (There is nothing *special* about these other departments, over and above the HR Department.)
4. Setting up the various departments as independent profit centers goes against everything we know about the systems nature of organizations. Organizations achieve their mission and objectives through each function working collaboratively towards a common goal. This requires high levels of co-operation. Setting departments up as profit centers will put departments in competition with each other (more so than they are now). Each will be competing to reach their own individual profit targets, often at the expense of the organization’s overall mission.
Vicki Heath
Human Resources Software and Resources
http://www.businessperform.com
From Australia, Melbourne
Dear Freinds,
I strongly say that HR also should be profit oriented.
I am siting a simple example.
How to run the family???
Suppose we are three brothers.
1) Elder brother- He is back bone for family. earner.
2) 2nd- Doing job far away from home
3) 3rd- Seating ideal at home
4) 4th- Getting education.
Now question, to run such big family, only elder's duty to earn??????
Ans: No
2nd also should contribute as per his earning capacity.
3rd: If he is seating ideal (Like HR Dept). His duty to take home responsibilty to reduce the overburden of elder brother. If 3rd will start doing, certainly he ll be contributing something to run the family despite seating ideal.
4th: He is also suppose to share with all, if he is getting education. He should demand more and more money for his expenses and enjoy. In the same way, if we travel somewhere for company work, we should not waste company money. means if we are doing like this cerainly we are contributing( Not saving) something to the company.
Hence, as HR we can save every where and we ll show that we are profit oriented not cost oriented.
I ll elaborate this with each and every function of HR. How I have given example of RECRUITMENT.
Dear freinds, we should think about profit of company otherwise there is no question of HR Dept.
Regards
Sidhehshwar
From India, Bangalore
I strongly say that HR also should be profit oriented.
I am siting a simple example.
How to run the family???
Suppose we are three brothers.
1) Elder brother- He is back bone for family. earner.
2) 2nd- Doing job far away from home
3) 3rd- Seating ideal at home
4) 4th- Getting education.
Now question, to run such big family, only elder's duty to earn??????
Ans: No
2nd also should contribute as per his earning capacity.
3rd: If he is seating ideal (Like HR Dept). His duty to take home responsibilty to reduce the overburden of elder brother. If 3rd will start doing, certainly he ll be contributing something to run the family despite seating ideal.
4th: He is also suppose to share with all, if he is getting education. He should demand more and more money for his expenses and enjoy. In the same way, if we travel somewhere for company work, we should not waste company money. means if we are doing like this cerainly we are contributing( Not saving) something to the company.
Hence, as HR we can save every where and we ll show that we are profit oriented not cost oriented.
I ll elaborate this with each and every function of HR. How I have given example of RECRUITMENT.
Dear freinds, we should think about profit of company otherwise there is no question of HR Dept.
Regards
Sidhehshwar
From India, Bangalore
Hi All,
It is interesting to see soo many views on the topic..
well first of all let me clarrify one thing.. I did not mean to say. that we as HR have to be harsh on humans to make profit... but then what I am saying is HR has to contribut to the bottom line of the business...
Its like this... if all the dept do their share to contribute the business is bound to succeed...
Like Vicky said.. their is nothing special abt HR dept (why should HR be pointed out over the other dept like Manufacturing, production, etc.),
As HR, isn't it the main challenge to keep the employee morale high yet contribute to the business... Let me take this e.g. (without naming the co)... The HR dept had a num of training programmes and concerts every other weekend..... justifying it by saying tht keps employee morale high...... but no survey was doen to find out if employees are actually happy with this kind of initiative of HR dept...
They just cribbed that due to concerts every other weekend they got less time with their family.... So whose responsibility is it to act of such a feedback...
what i am saying is a lot of times HR hides behid the veneer of T&D R&S, etc... without understanding or trying to find the impact of every activity on the ogr... if the initiatives dont give the result they are meant to give, HR fails in its duty... thereby adding to the cost...
like in the above case.. cost of concerts, trainig, and a case of cost involved in reduced / no improvement in emp morale...
whereas on the other hand if initiatives taken were such that they improved the morale, or the employees benefitted from the training.. it would add to the profit of the co, in the long run... tht is the kind of figures HR should be able to predict (well almost), if it was to add value to the business...
I dont think its a easy task.. but I think its one we need to take up seriuosly..
Rgds
Puja
From India, Guwahati
It is interesting to see soo many views on the topic..
well first of all let me clarrify one thing.. I did not mean to say. that we as HR have to be harsh on humans to make profit... but then what I am saying is HR has to contribut to the bottom line of the business...
Its like this... if all the dept do their share to contribute the business is bound to succeed...
Like Vicky said.. their is nothing special abt HR dept (why should HR be pointed out over the other dept like Manufacturing, production, etc.),
As HR, isn't it the main challenge to keep the employee morale high yet contribute to the business... Let me take this e.g. (without naming the co)... The HR dept had a num of training programmes and concerts every other weekend..... justifying it by saying tht keps employee morale high...... but no survey was doen to find out if employees are actually happy with this kind of initiative of HR dept...
They just cribbed that due to concerts every other weekend they got less time with their family.... So whose responsibility is it to act of such a feedback...
what i am saying is a lot of times HR hides behid the veneer of T&D R&S, etc... without understanding or trying to find the impact of every activity on the ogr... if the initiatives dont give the result they are meant to give, HR fails in its duty... thereby adding to the cost...
like in the above case.. cost of concerts, trainig, and a case of cost involved in reduced / no improvement in emp morale...
whereas on the other hand if initiatives taken were such that they improved the morale, or the employees benefitted from the training.. it would add to the profit of the co, in the long run... tht is the kind of figures HR should be able to predict (well almost), if it was to add value to the business...
I dont think its a easy task.. but I think its one we need to take up seriuosly..
Rgds
Puja
From India, Guwahati
Hi:
This is a very interesting topic. I completely agree that HR should have a profit motive.
But, here we need to keep one thing in mind, I think it is not prudent on our part to restrict the word "profit" to mere currency figures.
In the context of the fast changing dynamics of the present world with all its complexes, HR plays a vital role. Because a strength of a company lies solely on its human capital and it is HR, which plays a vital role here.
Take the example of Google, they have a brand of their in, their work culture is excellent, the best I knew of and it is the HR which plays a vital role in coming out with innovative ideas.
So, I feel, HR is always making profits to the organization by taking care of its human capital.
From India, Secunderabad
This is a very interesting topic. I completely agree that HR should have a profit motive.
But, here we need to keep one thing in mind, I think it is not prudent on our part to restrict the word "profit" to mere currency figures.
In the context of the fast changing dynamics of the present world with all its complexes, HR plays a vital role. Because a strength of a company lies solely on its human capital and it is HR, which plays a vital role here.
Take the example of Google, they have a brand of their in, their work culture is excellent, the best I knew of and it is the HR which plays a vital role in coming out with innovative ideas.
So, I feel, HR is always making profits to the organization by taking care of its human capital.
From India, Secunderabad
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