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How can HR be Profit Center ?
Human Resources » Organization Development

Chrm Message From: raghu Total Posts: 51 Join Date: 17/08/2006
Rank: Manager Post Date: 23/12/2008 02:31:16 Points: 255 Location: United States

How HR can be a Profit center ? Your views pl.



Chrm Message From: tesmian Total Posts: 63 Join Date: 17/08/2006  
Rank: Manager Post Date: 23/12/2008 02:35:21 Points: 315 Location: United States
Hi Raghu,

Good recruitments
Low attrition rate
efficient and effective employee benefit programs
Enabling work culture

If HR is successful in all of these, can you imagine what it costs to the organization?

Chrm Message From: siddharth Total Posts: 33 Join Date: 17/08/2006  
Rank: Executive Post Date: 23/12/2008 02:41:06 Points: 165 Location: United States

I do agree with you tesmian. Question is once we achieve all this, how can we convince the management that it is purely our contribution and how many percent contribution from each element mentioned?

Moreover, Training departments can definitely become profit centres. They could train external candidates on tools that the company is working with. There are a number of services companies that are making business plans around this idea.

The recruitment department can also work towards being a profit centre. Companies which do staffing for onsite opportunities would see that every 10 people placed translates into an annual revenue of more than $ 1 million. Similarly, companies with high utilization rates (>85%) would hire employees for particular projects, where the money is already on the table. This again translates to direct revenue (topline and bottomline) for each hire.



Chrm Message From: senthil.m Total Posts: 43 Join Date: 17/08/2006  
Rank: Executive Post Date: 23/12/2008 02:55:34 Points: 215 Location: United States

It is not simple. First start collecting the data. For example, varying estimates put the figure of loss due to exit of an employee and recruiting a replacement from 6 mths to 1 year of salary depending on the complexity and scarcity of skills. This does not include the loss of wisdom. Now if you are able to reduce attrition percentage, you can calculate the savings. Selling the credibility to management comes later.


Chrm Message From: anujjain Total Posts: 46 Join Date: 17/08/2006  
Rank: Executive Post Date: 23/12/2008 03:26:01 Points: 230 Location: United States

If we created a accident free environment in the industry then we are reducing the cost of the company and also profit center to our concern. For example if an employee meet accident, the company have to pay two types of costs. One is Direct cost (First aid, Transport to Hospital, Treatment, and other expenses) another one is Indirect cost (cost incurred at stoppage of work due to accident, benefit to be given to that employee / his family etc.,. We are reducing the accident through training, precaution, awareness meeting etc.

by this way also HR is profit center Anuj

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