How human resources can be a profit-center
Our CEO tells us to find ways to convert our human resource (HR) department to a profit center. How can we do it given the fact that HR is a traditional cost center handling an organization’s from hiring-to-firing function? Please help us. — Lost Sheep.
Let me begin answering your concern by telling you this story. Three men were carpooling to work, when the subject of success came up. One said: “Success is being asked to go to Malacañang Palace to consult with the president.” The second commented: “No, success is being asked to Malacañang to consult with the president, and if his phone rings, he won’t answer because he is listening to you.”
Finally, the third added: “I beg to disagree. Success is when you’re at Malacañang consulting with the president, and when his phone rings, the president picks it up, listens, then says, ‘It’s for you.’”
In HR, success is telling the Chief Executive Officer ( CEO) what you’re planning to do, and then he listens, and approves it almost without thinking. That’s why I’m a bit worried that it takes the CEO to tell you what to do and not the other way around. Really, you have to do all the thinking for the CEO. That is, if you want to succeed in HR, you’ve to start thinking like a CEO, and not like an ordinary employee waiting for instructions.
In order to become a champion, you have to think like one. But let me get this straight. Your CEO is equally at fault here if you can’t think like a CEO. In his Forbes magazine May 21, 2013 article entitled “How to Make Company Employees Think Like a CEO,” Joel Trammel says the objective of any CEO is to “get every employee to make the same decision the CEO would make given the same situation.”
If an employee is not aligned with the vision, mission, and values of the company, then the blame goes up to the CEO’s level. OK, enough of fingerpointing.
But really, what’s on the mind of every CEO?
Simply, it is how to earn more money for the profitoriented organization. There are many ways to do just that, but in essence, an organization earns money in two ways:
One is to sell more products or services. And two is to cut operational costs. If you can do both, there could be tremendous profit for your company. However in HR, it’s unthinkable to think how a “traditional cost-center” (as you’ve said) can sell its services to earn money for the corporation. But not, if you know how to think outside of the box, no matter how trite it has become to people.
The first thing that comes to my mind is to package and sell your HR functions to your company’s affiliates, suppliers, and sub- contractors. For instance, if you’ve accumulated a database of job applicants and maintained it on a regular basis, then you can sell your services to your business partners. Another thing, you can also do targeted background checks of those in the short list, and create a databank out of it.
Instead of buying classified print ads in Sunday newspapers or retaining a monthly space with online job sites, you can be an in-house expert on job search for your conglomerate. The basic decision that you should make is either — to buy from others or make it your own and sell it too. That is the rationale behind HR shared services, now fast becoming centers of excellence.
Another role that is receiving considerable attention is how HR manages its operational processes to reduce costs and improve work efficiency. There are many dynamic organizations out there that are now trying to meet the mold of Dave Ulrich’s “administrative expert” category, as part of his quad model for HR as an employee champion, change agent, and business partner.
Today, many people managers are looking into the possibility of taking the costs out of the HR systems while improving the quality of its services. This has led HR to use the Japanese approach to identify and eliminate muda ( waste), mura ( imbalance), and muri (stressful condition) in many of its processes.
Let me ask you this question: Why are you still keeping the personnel folders of your resigned, retired, retrenched, dismissed, and deceased employees in your warehouse so much so that it occupies a quarter of your factory? If you still don’t know why, other than the 3-year reglamentary period of the Labor Code, then you’re not thinking.
Gone were the days when the costeffectiveness mindset is monopolized by those in the manufacturing industry. Because everyone is adversely affected by the cost side of a company’s economy, anything that obstructs an easy process, faster system, and cheaper model directly impacts the revenue side.
ELBONOMICS: You never begin costcutting until your last day in office.