It is quite rare to see human resource and profit being used in the same context. The primary function of HR professionals is managing people in the organisation. They are typically responsible for activities like recruitment, training and development, managing pay, and performance appraisal. All these functions involve significant investment and are not revenue generating. Hence, a human resource department is generally considered as a cost centre of an organisation. However, a competitive market scenario today demands a shift in how HR professionals are viewed. A variety of measures can help in converting human resources into a profit centre.
How can you make HR a Profit Centre?
A profit centre of an organisation is held accountable for both revenues and costs, therefore profits. They are typically responsible for carrying out revenue generating activities and reducing costs. While a human resource department is a traditional cost centre, progressive leaders understand the relevance of making HR a profit centre. A human resource department does not carry out revenue generating activities. However, various strategies can be implemented enabling cost reductions which in turn can contribute to profits. These strategies include:
Implementing pre-employment screening
Strategies that help cut down on hiring costs can make HR a profit centre for your organisation. Companies invest a lot of money and time in recruitment. A bad hire can be immensely expensive. It results in the loss of investment and productivity, which ultimately incurs additional costs for re-hiring, and training and development. A comprehensive employee screening procedure will help you hire right and minimise recruitment-related costs. While this approach seems resource and time intensive, the investment will result in long-term returns.
Utilizing internal talent for efficient human capital management
Another way to make HR a profit centre is to utilize the internal talent. Implement an employee referral system to identify and attract talent. Your employees can be a highly effective source to hire candidates, plus this strategy helps in reducing hiring costs. Secondly, you can also harness your employee’s multiple talents in different ways. Every employee has hidden talents that can be beneficial to your company. By deploying their talent, you can reduce your organisation’s dependency on third party. This helps in reducing costs and maximising profits.
Employee retention strategies to save costs
Implementing pre and post hire employee assessment programs can foster employee retention. Training and development, orientation, employee feedback, and pre-employment screening are ways in which you do not lose out on talent. While these processes may demand significant investment, they also offer benefits in terms of reducing costs on re-hiring and related activities.
While these are a few ways, list of strategies that can make HR professionals a profit centre are endless. Eliminating factors that hinder people’s efficiency and organizations productivity can help maximise profits in the long run. Reinforcing a culture to work smarter and managing human capital strategically will transform human resources from cost to a profit centre.