“Profit Based HR”

Dear All
Here I would like to invite you for an open discussion on “Profit Based HR”
What makes HR as a profit centered function?
Is this ethically a right one?
Why should we make profit? While concentrating on profit we may have chances to forget or deny basic professional ethics and human values. Is that right?
On what ways we can get profit?
Is it indirectly cost cutting?
I also encourage questions from your side. I hope this will deliver fruitful information.
Regards
Jeyaseelan.A
+91-9994629950
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Hello Jeyaseelan. Can I ask: Who is it that is saying that HR needs to be a profit centre? This is new to me.
There is a lot of talk from Urlich and others saying that HR needs to be outcome focused and add value to the organization. I agree with this, however, this is very very different from saying that HR needs to generate a profit for the company.
Vicki Heath
Human Resources Software and Resources
http://www.businessperform.com

Hi Jeyaseelan,
You have raised a good point..
In order to be a profit based one needs to look at the cost centre concept and evaluate the same on internal basis and also HR should be given the opportunity to extend the services to outside companies - today it may not be feasible or allowed by companies on various factors as Vicki mentioned Dave Ulrich model for HR.
This may happen tomorrow.
Regards,
Rajat

Dear Vicki & Rajat
Thank you for your replies.
Vicki,I am not sticking to Profit Based HR.I would like to start a discussion on that.
My questions are:
1.Is it Possible?
2.If so then how?
3.Is that ethically good?
4.What are all the impacts?
5.The ways and means for the profit – As Rajat came out with an excellent idea. (Why don’t we outsource an activity of other company and do it with our HR team, we can very well make profit out of that, let us use that money for the development of HR/HR budgets etc.,) Tell me pros and corns of this idea.
6.Does it evolve a new model/frame?
COME ON MEMEBRS …… ADD VALUES TO THIS DISCUSSION
Regards
Jeyaseelan.A
+91-9994629950
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Hi,

This topic is very interesting indeed. To analyze the topic itself "Profit Based HR".

Well, from the way I see it, bottom line of every business is growth and profit, and every action of the co. is a step to achieve that mission.

What I mean is.. the vision might be simple as "IBM means service" , but will the company survive without profits. Fact is we are not talking about Non-profit Org.... and every CEO is today under the pressure of showing immediate returns...

In this scenario are we not talking about ROI of departments. If HR does not add to the bottom line of the buisness, it will only be seen as a cost-center .. which is what is happening in most org.. that is how HR is viewed.

I think it is up to us HR pofessionals to change this image of HR to one tht adds to the growth of business.

In his book Dave Ulrich has mentioned that HR has to add to the bottom line of the business..

It is not about being ethical... There was a period of personnel Management.. in which the voice of the employees was the loudest (as least in the eyes of law). It was in this era that most of the decisions given by court was in favour of the employee, and the personnel manager was to look after the well being of the employees.

But today in HR era, we have to balance the two, the benefit to employees and co. And aren't we talking abt growth of individuals being related to growth of organization, so how can the two be non-related.

I think HR has to and should calculate ROI on every activity..

Recruitement

Performance Appraisal

Training & developemnt, etc.

It would be unethical to demand benefits from the co for the emp, without ensuring that the emp would bring returns to the co... It would mean we have only done part of our duty.

So yes HR should work with a profit motive, it is there to do business, but that does not mean it becomes unprincipled... the challenge for HR has just begone...

If a department does not add to the growth of the business... it has no business of being in the business.

I would like to hear from the you as to wht you think about it, as a general view that I got was that you did not support the idea of HR being a profit center

thnks & rgds

Puja

Dear All,
It ahs been very interesting reading various insights on HR generating profits for the business...I cannot really mention the name of the organization..but we did have a team target of generating revenue and adding value to the business.. We conducted a training program and and our sales and marketing team helped us get people who would be interested in the program..(mind you they were very senior officials of brands like TATA's/ABN Ambro/NTPC etc)..we did specially well last year and got a few interested people from US/ Greece as well..and generated a profit of 17-19lakhs..which was of course handed over to the management...The task kept us on our toes but was a refreshing experience and learning.
Hope this helps..
Regards,
Sunaina

HI
Its an interesting topic to discuss. The reason y Managers dont concentrate on HR is because of the fact that its not generating money for them.
But i believe that this perception needs to be changed, its the HR dept which is instrumental in increasing the profitability of other departments or should i say it should be instrumental.
We can conduct a small tasks by taking a particular section, understanding their working, providing necessary t&d, or other process revamps to augment the profit from that section. This can be done to emphasize the importance of the different hr functionalities in an organization.
HR directly may not be responsible for profitability, but takes a substantial part in it. There has to be a means to segregate the efforts put by the hr department in to generating the bottoomline.
Rgds

Dear All,

I have earlier posted two similar topics as per the link given below:

<link no longer exists - removed>

<link no longer exists - removed>

I personally feel that unless HR can become a profit centre it will never get integrated in main stream (Like Unilever case). It is for us to determine and ascertain value in monetory terms of our effort. We should remember that the prime objective of business is to create and retain customers thereby maximising profit. Similarly, as long as we can create and maintain customers we will remain. It must be mentioned that as is the case with everything else we will have to adapt and chage as per the customers need and not sit back and expect the other way round.

I was trying to develop a rating system which sadly didnot get much response from CiteHR members.

<link no longer exists - removed>

The main problem also lies in the fact that a majority of us are not concerned about changing the current status as is evident from the responses you get in these kind of posts.

Regards,

SC

I appreciate the contribution of Puja and other fellow members.
I didnt expect this.People are started thinking diferently.
This is quite intersting, i hope the new model of HR is nearer to us.
Regards
Jeyaseelan.A

Well As far as HR as a Profit centre is concerned I would like to say is that HR is not a profit centre but it does plays strategic role in generating profits for the company by taking work out of people
Regards
Srishti