How HR has evolved from a Cost Centre to a Profit Centre

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How HR has evolved from a Cost Centre to a Profit Centre

Admin on May. 9, 2016

The HR department was seen mainly as an overhead that did not directly generate revenue in the past. Back then, HR professionals had to justify their budget needs to C-Suite executives. However, things have changed dramatically since then. Today, HR’s budget is a given. Management has come to realize the importance of human capital management and its overall value in driving business profitability. HR is now no longer considered to be a cost centre. Infact, its role has evolved into one of a profit centre, where it now makes strategic decisions that drive company’s growth and profit.

Here are three key factors that have driven this change:

  1. Realising that it’s all about the people:

A company needs people, no matter what the business is. Human capital is the driving profitability force behind any business. Without passionate employees working for the right job, a company is practically nonexistent. HR plays an important role in keeping employees positively engaged.

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Practices such as helping new employees to adapt, celebrating high achievers, and training low performers are some of the ways HR has helped improve the effectiveness of the company. By doing all of this and more, HR creates an opportunity for the company to seek out new business opportunities and grow its revenue.

 

 

 

  1. Knowing that a well-developed employee is a profitable employee:

A business is only as strong as its employees. Hence, employee development is crucial in driving company growth and profitability. There are various positive outcomes to the different types of employee training out there. For example, training programmes in service can lead to better customer service for a com pany in the hospitality industry.

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Another type, leadership and management workshops, can help employees to grow and move up within an organizatio

n, resulting in time and money saved from looking externally. Training in the ever-evolving IT technology equips employees with the knowledge and capability to stay on top of the industry, leading to better productivity and increased revenue.

A company that doesn’t believe in training and growing its employees runs the risk of losing out in the long run. Not only does training increase morale and productivity, it also positions the organization well in the industry, which leads to profitability and attracts higher quality people in return. HR plays a vital role as direct managers of a company’s human capital by keeping employees positively engaged through strategic learning programmes. A company with access to the very best talent enjoys the benefits of the direct impact on business profits and growth. This profit generation comes from the innovative management of human capital.

  1. Acknowledging HR’s transformation and influence in a company’s bottom line:

HR transformation is coming. Organizations are heading towards a lean workforce. Essentially, this is a situation with a smaller core workforce supported by a larger remote (or virtual) workforce. Technology has created new ways for employees to work and contribute to the business’ bottom line.

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As technology guides us towards a re-imagined workforce, HR will be a key player in successfully managing this transformation to ensure a company’s continued growth and profitability. With a technology-receptive and social-ready mindset, HR helps generate value by lowering business costs while hiring the right talent who can generate profit for the organization. Instead of being seen as a cost of doing business, HR now holds a vital seat at the management table, one that directly influences the profitability of any business.

Should you have any HR Transformation queries/requirements, please feel free to Get in Touch.

Rolling Arrays is Asia’s premier award winning HR transformation company, headquartered in Singapore with offices in 6 countries. Since its inception in 2009, Rolling Arrays has successfully delivered more than 100 HR transformation projects for more than 50 blue-chip clients across Asia. A consultative approach to HR Processes, HR Functions and HR Software is Rolling Arrays core expertise and the primary catalyst for its’ success.

www.rollingarrays.com

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