The NEW HR – Cost Center versus Profit Center Human Resources (HR) departments are often viewed as either a profit center or a cost center within an organiz
The NEW HR – Cost Center versus Profit Center
Human Resources (HR) departments are often viewed as either a profit center or a cost center within an organization. This distinction can significantly impact how HR strategies are developed and implemented.
How would you define HR as a profit center and HR as a cost center? What are the key characteristics and differences between these two viewpoints? Provide an example for each.
Keep in mind, all departments are responsible for controlling or reducing unnecessary costs. This means, controlling and reducing costs does not make HR a profit center.
Reading Resources to use and add into discussion board
As HR responsibilities related to HR analytics take on increased importance, it’s critical to stay updated with any trends in technology. Human Resource Information Systems will be a valuable tool to use in the competitive advantage tool kit.
Cadigan, S., Card, D., & Will, K. (2019). 2019 industry trends in HR technology and service delivery. ISG.
HR as a Company’s Competitive Advantage
THE NEW HCAM (HR) METRICS SYSTEM
HCAM Talent Management
MGT411 Human Resource Management
Unit 2 Interactive Lecture
Adapting to the 21st Century “HR will learn from and adapt the practices of other disciplines and this will be essential to HR’s progress going forward…It will be necessary to reach out through the whole organization and co- create with functions that may formerly have been rivals.” (Boudreau & Ziskin, 2011). If companies are to thrive and not just survive in the 21st century, leadership needs to continue the march with a different workforce and HR/HCAM must lead the way. The transition from “Personnel” to “HR” does not stop there – successful HR practices are upheld by leadership that embraces the now thriving ‘knowledge economy’ driven human capital asset management, the value of which can be seen in the following graphics:
Accomplishing this task of becoming the ‘new’ HR requires addressing the following strategic planning items: 1. Where is HR now? 2. Where does HR hope to go? 3. How is HR going to get there? 4. How much money will it take? 5. Develop and implement a continuous evaluation
process? 6. Celebrate failure as the way to success by
embracing personal accountability? 7. “Fix” any issues – try again. 8. Go back to step 1. 9. Turn traditional managers/leaders into Ligurs!
HR as a Company’s Competitive Advantage
HR as a Company’s Competitive Advantage
THE NEW HCAM (HR) METRICS SYSTEM
HCAM Talent Management
Successful leaders and managers need to incorporate some of the attributes, skills and competencies typically associated with traditional manager and leadership personality traits.
“No institution can possibly survive if it needs geniuses or supermen to manage it. It must be organized in such a way as to be able to get along under a leadership composed of average human beings.“
(Drucker, 1946, p. 26).
Traditionally, managers tend to be risk averse while leaders, driven by innovation and change – cannot imagine not taking risks at every junction. The “new” leadership model needed for this seemingly dramatic transformation needs to take on the characteristics of the Ligur: more productive, powerful, useful and respected.
HR as a Company’s Competitive Advantage
HR as a Company’s Competitive Advantage
THE NEW HCAM (HR) METRICS SYSTEM
HCAM Talent Management
HR as a Company’s Competitive Advantage
HR as a Company’s Competitive Advantage
THE NEW HCAM (HR) METRICS SYSTEM
HCAM Talent Management
Manager Traits: Leader Traits:
Goal Focused
Tough minded
Hard working
Analytical
Business school trained
Works out problem within the system
Family members work for same org.
Typically middle class
Likes hierarchical structures
Rational
Risk averse: “Avoids” mistakes & surprises
Pleases others
Views work as an enabling process, involving a combination of ideas, skills, timing and people.
Views work as something that must be done or tolerated.
See business system as nurturing and protected
Motivated by promotion/power
Needs status symbols
Relinquishes decision making to others
Often conflict avoiders.
Passionate, Personally persuasive. Non-conforming Visionary, Imaginative Intuitive, mystical understanding of what needs to be done. Risk Taker: Learns from mistakes Views work as developing fresh approaches to old problems, or finding new options for old issues. Views work challenging & exciting. Focuses on what needs to be done, leaving decisions to people involved. Pleases self, customers and sponsors Dislikes Business systems – learns to manipulate it. Likes flat org. structures Has business acumen. Likes to bypass system to solve problems if can’t solve within the system. Middle to upper class socioeconomic group. Highly educated Motivated by need for freedom, goal oriented. Persuasive and influential Sense of urgency to goal attainment: bias for action Does own market research Doesn’t need status symbols – could care less.
Traditional Managers v. Leaders Traits
HR as a Company’s Competitive Advantage
HR as a Company’s Competitive Advantage
THE NEW HCAM (HR) METRICS SYSTEM
HCAM Talent Management
Moving from Traditional Management
Moving toward HYBRID
Manager / Leader
“Here’s what we’re going to do!” Passive attitude
“How can I serve you?”
Hierarchy; Rigid Flexible; Critical innovative thinking
Automatic annual raises Pay for performance
Decide on goals based on necessity instead of desire; Focused on current information
Group sets, monitors metrics Group sets, monitors, changes goals
Tend to be reactive Risk- averse Collaborative
Welcome change Risk Takers Seeks win-win
HCAM Talent Management HCAM Talent Management is interconnected to every facet of business operations. A company’s competitive edge is driven by the processes connected to the recruitment and retention of a superior talent pool and achieved through the development, implementation and monitoring of a fully integrated talent management system. A fully integrated talent management system consists of manpower planning, succession planning, and a performance management process that includes recruitment, retention, career- pathing, and compensation/rewards and benefit programs.
HR professionals will need the following competencies and skills to be successful:
1. Commitment to lifelong learning for all employees.
2. Confidence in own abilities.
3. Consensus builder: mediator and negotiator
4. Confidentiality at the highest level.
5. Financial and business savvy.
6. Commitment to superior communication skills: oral and written.
7. Ability to work under pressure:
a. Stress coping skills.
b. Ability to confront and be confronted without animosity.
c. Willingness to make difficult unpopular decisions.
d. Knowing when and how to “cool” off a difficult situation.
8. Critical Thinking.
a. Innovative and creative.
b. Exceptional problem solving skills.
9. Unbiased, non-judgmental appraisal of people.
HR as a Company’s Competitive Advantage
THE NEW HCAM (HR) METRICS SYSTEM
HCAM Talent Management
THE NEW HCAM (HR) METRICS SYSTEM
The evaluative process to determine if procedures, policies and processes are successful requires data. HR metrics is a fluid science and an art. David Urich, an HR guru developed the HR Score Card System that is foundational to most HR data analysis. Any planning process related to HR metrics requires a basic belief that HCAM (HR) is the center of all strategic business planning leading to the overall success of integrating strategic planning and organizational goal alignment.
The following is a relatively new HR metric analysis theory utilizing the concepts of NODs (Numbers only data) and CIAs (Competitive Impact Areas). The concept of NODs (numbers that have not been consider strategically and therefore put you to sleep) and CIAs (key challenges that require NOD information be considered as a strategic issue) were developed by Susan Pellerin in 1999 to explain the importance of transitioning HR metrics to the world of business. These concepts explain how HR Metrics needs to be applied for the proper alignment of HCAM to business drivers. Time to think of HR/HCAM as “Profit Centers” as opposed to “Cost Centers”. Although managers must be concerned about saving money, i.e. reducing turn over, reducing benefit premiums, they must also begin to consider how the NODs impact the overall business objectives and convert the NODs to CIAs enabling the conversion of data to an increase in productivity and profitability. As soon as you begin to relate the concept to your own working experience, you will begin to change the way you react to the NODs.
A typical benchmark in HR is Turn Over Rate (TOR). Retail operations typically have a very high TOR – often over 80%. Certainly one can imagine the added “cost” to the recruitment budget if this type of TOR continues. Some firms believe that they have conquered the TOR situation when the NODs indicate that the TOR has declined – let’s say to 60%. The problem happens when one does not strategically consider the competency of the employees that are left – if they are mediocre your productivity will decrease and you will be lulled into thinking that it is a staffing issue. Indeed it is a staffing issue but not in numbers (NODs) but in competencies.
References:
Drucker, P. F. (1946). Concept of the Corporation. New York: The John Day Company.Boudreau, J. W., & Ziskin, I. (2011).
The future of HR and effective organizations. Organizational Dynamics, 40(4), 255-266.
“Life is not about waiting for the storms to pass…
it’s about learning how to dance in the rain!”
Anonymous.
HR as a Company’s Competitive Advantage
THE NEW HCAM (HR) METRICS SYSTEM
HCAM Talent Management
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