SlideShare uma empresa Scribd logo
1 de 26
HR DEPARTMENT :
COST OR
PROFIT CENTER
HUMAN RESOURCE MANAGEMENT
• It is a function in the organizations designed to maximize employee performance
in service of an employer's strategic objectives.
• Hr is primarily concerned with the management of people within organizations,
focusing on policies and on systems.
• It involves all management decisions & practices that directly affect or influence
the people or human resources who work for the organization.
 The division of a company that is focused on activities relating to employees.
these activities normally include recruiting and hiring of new employees,
orientation and training of current employees, employee benefits, and retention
 HR is the most valued department in an organization since they are the guardian
of people’s interest and people are the company’s important assets.
 Human resource management is essential for overall productivity and efficiency
of the strong work force in any flourishing organization.
• A cost center is part of an organization that does not produce direct profit and
adds to the cost of running a company.
• A profit center is a unit of a company that generates revenue in excess of its
expenses.
Talent
• The human resources function is often considered a cost centre, because technically it
does not directly generate revenue .
• A prominent target for cost reductions.
• By monetising various aspects of the hr function within the company, and showing how
those functions impact and add to the bottom line financial outcome of an organization ,
hr can easily turn from being a cost centre to a profit centre.
• 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.
• In fact, its role has evolved into one of a profit center, where it now makes strategic
decisions that drive company’s growth and profit.
How HR has evolved from a Cost Centre to a Profit Centre
Talent
HOW HR DRIVES PROFIT
• HR certainly improves the effectiveness of the organization, which allows the
company to find new business or open new markets
• In order to boost corporate profitability, hr has two ways of looking at building
profit:
1) cutting costs
 utilizing technology to provide employee self-service.
 self-service technology enables employees — and their managers — to do such
things as pursue e-learning, get answers to stock and compensation questions,
and manage performance without the help of hr professionals or expensive hr
handbooks.
2) Helping to generate revenue
eg:-
Valassis, a marketing services company based in Livonia, Michigan. this 1,400-
person company helps other companies market their products and services, most
notably through coupon inserts in sunday newspapers around the country. Valassis
posted 10 percent net growth last year and continues to grow despite the tough
climate for advertisers.
Hr activities must work together to create an overall culture that is conducive to
profit-making.
Profitable companies have the following hr initiatives in common:
 They communicate extensively
 Employees are involved in setting goals
 Employees understand how their jobs affect the bottom line and how the
bottom line affects their paychecks
Empirical evidence that is readily available to quantify the value of HR based
initiatives :-
• Companies that invest in talent management initiatives yield 27% greater
shareholder return
• Increases employee engagement by 5 per cent can add 2.4 per cent to a business
operating margin
• Shareholder returns are 3 times at companies with superior human capital
practices than at companies with weak human capital practices.
WAYS OF HR TO CHANGE FROM COST CENTER
TO PROFIT CENTER
USE THE TOOLS ALREADY AVAILABLE
• Department can tap on existing employees to streamline human
capital management and organizational development.
 When recruiting for new talent ,utilize an employee referral system to help
identify and attract top talent.
 Harness employee hidden talents.
• Conduct an employee skills and interest survey.
Opportunity to learn new skills to hone abilities that was underdeveloped
RETENTION THROUGH RETRAINING
• Employee training and professional development have a cost associated with it
,but it also gives back.
• Employee satisfaction and engagement leads to customer satisfaction.
• Employee loyalty depends upon perceived job security and future employability.
• Inhouse training
INVENT REVENUE
• Cost centre is able to offset some of their expenses by creatively generating unexpected
revenue.
• Charging back other departments for services.
Eg:- training course, succession planning for different department, conflict resolution,
compensation analysis and employee surveys.
• Inhouse Hr-better option than outsourcing
• Sell Hr services externally-training
If you can cover all your costs with offsetting revenue , it is not a cost centre
anymore.
Recruiting right people at right time.
Proper training and development sessions can helps in enhancing their
employability and visibility in the company.
There should be a proper communication between the superior and the
subordinates.
Motivation can lead to better work efficiency.
HOW TO MEASURE WHETHER IT IS PROFIT
OR A COST CENTER?
1. Split sample contrast — use a split sample or a control group. Instead of
applying a new HR program to the entire team or division, apply it to only half to
demonstrate the relative impact of the program.
2. Before and after contrast – measure employee performance just prior to
program implementation and again after implementation, show the contrast in
performance.
3. Demonstrate a correlation — show a direct correlation between the increased
usage of a tool by managers and employees and an increase in productivity,
revenue or profit. Also demonstrate that when usage goes down, so does
productivity.
4. Results after implementation — show that employee performance is high
immediately after the program is implemented (in this case you do not have
“before” performance data (as in #2) for precise comparisons)
GRAND HYATT
Grand Hyatt hotels are large luxury hotels in major cities and holiday
destinations.
Mission & vision
To provide authentic hospitality.
To make difference in the lives of those they “touch” everyday.
To do this in an environment that respects all people and all ideas.
To do it in an efficient way that leads to superior results.
 According to their company policies and from the economic point of view HR
is considered as cost center.
 A cost center is created when overhead cost are directly allocated to
departments, outlets or individual products.
 Hr does not generate any revenue nor does it have any source to generate one.
 Hr takes care of resources [people] but the returns from this department cannot
be calculated in monetary terms.
HEWITT
• Is one of the world's leading HR consulting and outsourcing companies.
Mission & vision
To enhance associate engagement
To strengthen our business
Discover ways to reduce their HR costs
Process millions of HR customer interactions, freeing them to focus on their core
business
From the company’s point of view HR is indirectly a profit center.
Hr can generate profit by reducing the cost involved in hiring, absenteeism,
attrition and by raising the productivity level of people through proper training
programmes in order to improve the skills.
Every department, be it production, marketing, finance etc.. Incurs cost while
performing their functions. Likewise HR also incurs cost while performing HR
functions.
HR is a bridge between cost center and business segment.
Though one cannot calculate its benefits in monetary terms but the department
has its huge impact.
Hr is also considered as a resource center.
“ If finance is heart of the organization, marketing is considered as brain of the
organization then hr is definitely the soul of the organization.”
THANK
YOU

Mais conteúdo relacionado

Mais procurados

Nature and scope of hrm
Nature and scope of hrmNature and scope of hrm
Nature and scope of hrmArun Sriram
 
Role of hr in knowledge management final ppt
Role of hr in knowledge management final pptRole of hr in knowledge management final ppt
Role of hr in knowledge management final pptTanuj Poddar
 
Balanced scorecard ppt slides
Balanced scorecard ppt slidesBalanced scorecard ppt slides
Balanced scorecard ppt slidesYodhia Antariksa
 
Production Planning and Control
Production Planning and ControlProduction Planning and Control
Production Planning and Controlshrinivas kulkarni
 
Introduction to Strategic HRM
Introduction to Strategic HRMIntroduction to Strategic HRM
Introduction to Strategic HRMRahul Sharma
 
Career Based Performance Management System
Career Based Performance Management SystemCareer Based Performance Management System
Career Based Performance Management SystemAvinash Kumar
 
Line and staff, responsibility of hrm lecture_ 02 class
Line and staff, responsibility of hrm lecture_ 02 classLine and staff, responsibility of hrm lecture_ 02 class
Line and staff, responsibility of hrm lecture_ 02 classabir hossain
 
Operation management
Operation management   Operation management
Operation management Nevedida
 
Role of hr in strategic formulation
Role of hr in strategic formulationRole of hr in strategic formulation
Role of hr in strategic formulationRenu Sebastian
 
Introduction to production and operation management
Introduction to production and operation managementIntroduction to production and operation management
Introduction to production and operation managementPROF.JITENDRA PATEL
 
Production System and Production Facilities
Production System and Production FacilitiesProduction System and Production Facilities
Production System and Production Facilitiessanket394
 
Competitive advantage through Human Resource
Competitive advantage through Human ResourceCompetitive advantage through Human Resource
Competitive advantage through Human ResourceMaged Elsakka
 
Placement and induction in HRM
Placement and induction in HRM Placement and induction in HRM
Placement and induction in HRM Anuj Yadav
 

Mais procurados (20)

Nature and scope of hrm
Nature and scope of hrmNature and scope of hrm
Nature and scope of hrm
 
Operation Management
Operation ManagementOperation Management
Operation Management
 
Role of hr in knowledge management final ppt
Role of hr in knowledge management final pptRole of hr in knowledge management final ppt
Role of hr in knowledge management final ppt
 
Balanced scorecard ppt slides
Balanced scorecard ppt slidesBalanced scorecard ppt slides
Balanced scorecard ppt slides
 
Production Planning and Control
Production Planning and ControlProduction Planning and Control
Production Planning and Control
 
Introduction to Strategic HRM
Introduction to Strategic HRMIntroduction to Strategic HRM
Introduction to Strategic HRM
 
Career Based Performance Management System
Career Based Performance Management SystemCareer Based Performance Management System
Career Based Performance Management System
 
Hr audit
Hr auditHr audit
Hr audit
 
Production management
Production managementProduction management
Production management
 
Plant layout
Plant layoutPlant layout
Plant layout
 
Line and staff, responsibility of hrm lecture_ 02 class
Line and staff, responsibility of hrm lecture_ 02 classLine and staff, responsibility of hrm lecture_ 02 class
Line and staff, responsibility of hrm lecture_ 02 class
 
E-HRM and HRIS
E-HRM and HRISE-HRM and HRIS
E-HRM and HRIS
 
Operation management
Operation management   Operation management
Operation management
 
Role of hr in strategic formulation
Role of hr in strategic formulationRole of hr in strategic formulation
Role of hr in strategic formulation
 
Introduction to production and operation management
Introduction to production and operation managementIntroduction to production and operation management
Introduction to production and operation management
 
Role of compensation in organisation
Role of compensation in organisationRole of compensation in organisation
Role of compensation in organisation
 
Production System and Production Facilities
Production System and Production FacilitiesProduction System and Production Facilities
Production System and Production Facilities
 
hrm functions
hrm functionshrm functions
hrm functions
 
Competitive advantage through Human Resource
Competitive advantage through Human ResourceCompetitive advantage through Human Resource
Competitive advantage through Human Resource
 
Placement and induction in HRM
Placement and induction in HRM Placement and induction in HRM
Placement and induction in HRM
 

Destaque

Sign Company Captive Profit Center
Sign Company Captive Profit CenterSign Company Captive Profit Center
Sign Company Captive Profit CenterLou Polur
 
Payroll as a Profit Center
Payroll as a Profit Center Payroll as a Profit Center
Payroll as a Profit Center ADP, LLC
 
IT as a profit center
IT as a profit centerIT as a profit center
IT as a profit centerAksam Dar
 
Ranbaxy cost accounting (profit centre & cost centre of ranbaxy)
Ranbaxy cost accounting (profit centre & cost centre of ranbaxy)Ranbaxy cost accounting (profit centre & cost centre of ranbaxy)
Ranbaxy cost accounting (profit centre & cost centre of ranbaxy)Shashank Kapoor
 
Profit center-accounting
Profit center-accountingProfit center-accounting
Profit center-accountingBala Ranganath
 

Destaque (6)

Sign Company Captive Profit Center
Sign Company Captive Profit CenterSign Company Captive Profit Center
Sign Company Captive Profit Center
 
Payroll as a Profit Center
Payroll as a Profit Center Payroll as a Profit Center
Payroll as a Profit Center
 
IT as a profit center
IT as a profit centerIT as a profit center
IT as a profit center
 
Ranbaxy cost accounting (profit centre & cost centre of ranbaxy)
Ranbaxy cost accounting (profit centre & cost centre of ranbaxy)Ranbaxy cost accounting (profit centre & cost centre of ranbaxy)
Ranbaxy cost accounting (profit centre & cost centre of ranbaxy)
 
Profit center-accounting
Profit center-accountingProfit center-accounting
Profit center-accounting
 
PROFIT CENTER
PROFIT CENTERPROFIT CENTER
PROFIT CENTER
 

Semelhante a Talent

Semelhante a Talent (20)

Shrm role in creating value
Shrm role in creating valueShrm role in creating value
Shrm role in creating value
 
UTILIZATION of Resources for an organization.pptx
UTILIZATION of Resources for an organization.pptxUTILIZATION of Resources for an organization.pptx
UTILIZATION of Resources for an organization.pptx
 
NFED Paper Presentation(2)
NFED Paper Presentation(2)NFED Paper Presentation(2)
NFED Paper Presentation(2)
 
Control In Personnel Area Sushil Yadav
Control In Personnel Area Sushil YadavControl In Personnel Area Sushil Yadav
Control In Personnel Area Sushil Yadav
 
Talent management
Talent managementTalent management
Talent management
 
Role Of Hr
Role Of HrRole Of Hr
Role Of Hr
 
Role Of New Hr
Role Of New HrRole Of New Hr
Role Of New Hr
 
MCF
MCFMCF
MCF
 
Horner Capstone Presentation
Horner Capstone PresentationHorner Capstone Presentation
Horner Capstone Presentation
 
Designing Cash Incentive Plans
Designing Cash Incentive PlansDesigning Cash Incentive Plans
Designing Cash Incentive Plans
 
HRM in retail
HRM in retailHRM in retail
HRM in retail
 
Human resource accounting
Human resource accountingHuman resource accounting
Human resource accounting
 
How Balance Scorecard Helps in HR Planning
How Balance Scorecard Helps in HR PlanningHow Balance Scorecard Helps in HR Planning
How Balance Scorecard Helps in HR Planning
 
Hr systems
Hr systemsHr systems
Hr systems
 
Human Resources Planning, Recruitment
Human Resources Planning, RecruitmentHuman Resources Planning, Recruitment
Human Resources Planning, Recruitment
 
Human resource research
Human resource researchHuman resource research
Human resource research
 
the 21 century HR organization
the 21 century HR organizationthe 21 century HR organization
the 21 century HR organization
 
HRM .pptx
HRM .pptxHRM .pptx
HRM .pptx
 
Employee retention
Employee retentionEmployee retention
Employee retention
 
HRM CHAPTER 1.pptx
HRM CHAPTER 1.pptxHRM CHAPTER 1.pptx
HRM CHAPTER 1.pptx
 

Mais de Sneha Joy

Social media in recruiting
Social media in recruitingSocial media in recruiting
Social media in recruitingSneha Joy
 
Ibs software
Ibs softwareIbs software
Ibs softwareSneha Joy
 
project in tile industry
project in tile industryproject in tile industry
project in tile industrySneha Joy
 
Supply chain management at fed ex
Supply chain management at fed exSupply chain management at fed ex
Supply chain management at fed exSneha Joy
 
servant leadership
servant leadershipservant leadership
servant leadershipSneha Joy
 
Economic exposure
Economic exposureEconomic exposure
Economic exposureSneha Joy
 
organisational role stress
organisational role stressorganisational role stress
organisational role stressSneha Joy
 
A study on examination of organisation role stress sneha
A study on examination of organisation role stress snehaA study on examination of organisation role stress sneha
A study on examination of organisation role stress snehaSneha Joy
 
Presentation fra
Presentation fraPresentation fra
Presentation fraSneha Joy
 
Dehejia committee
Dehejia committeeDehejia committee
Dehejia committeeSneha Joy
 
Counselling self esteem
Counselling self esteemCounselling self esteem
Counselling self esteemSneha Joy
 
IT impact on organizational design
IT impact on organizational designIT impact on organizational design
IT impact on organizational designSneha Joy
 
Labour welfare
Labour welfare Labour welfare
Labour welfare Sneha Joy
 
Infosys presentation
Infosys presentationInfosys presentation
Infosys presentationSneha Joy
 
Cause related marketing
Cause related marketingCause related marketing
Cause related marketingSneha Joy
 
infosys hr policies
infosys hr policiesinfosys hr policies
infosys hr policiesSneha Joy
 

Mais de Sneha Joy (18)

Social media in recruiting
Social media in recruitingSocial media in recruiting
Social media in recruiting
 
Ibs software
Ibs softwareIbs software
Ibs software
 
project in tile industry
project in tile industryproject in tile industry
project in tile industry
 
Supply chain management at fed ex
Supply chain management at fed exSupply chain management at fed ex
Supply chain management at fed ex
 
servant leadership
servant leadershipservant leadership
servant leadership
 
Economic exposure
Economic exposureEconomic exposure
Economic exposure
 
organisational role stress
organisational role stressorganisational role stress
organisational role stress
 
A study on examination of organisation role stress sneha
A study on examination of organisation role stress snehaA study on examination of organisation role stress sneha
A study on examination of organisation role stress sneha
 
Presentation fra
Presentation fraPresentation fra
Presentation fra
 
Dehejia committee
Dehejia committeeDehejia committee
Dehejia committee
 
Counselling self esteem
Counselling self esteemCounselling self esteem
Counselling self esteem
 
IT impact on organizational design
IT impact on organizational designIT impact on organizational design
IT impact on organizational design
 
Labour welfare
Labour welfare Labour welfare
Labour welfare
 
Infosys presentation
Infosys presentationInfosys presentation
Infosys presentation
 
Consumer
ConsumerConsumer
Consumer
 
Cause related marketing
Cause related marketingCause related marketing
Cause related marketing
 
infosys hr policies
infosys hr policiesinfosys hr policies
infosys hr policies
 
reserves
reservesreserves
reserves
 

Talent

  • 1. HR DEPARTMENT : COST OR PROFIT CENTER
  • 2. HUMAN RESOURCE MANAGEMENT • It is a function in the organizations designed to maximize employee performance in service of an employer's strategic objectives. • Hr is primarily concerned with the management of people within organizations, focusing on policies and on systems. • It involves all management decisions & practices that directly affect or influence the people or human resources who work for the organization.
  • 3.  The division of a company that is focused on activities relating to employees. these activities normally include recruiting and hiring of new employees, orientation and training of current employees, employee benefits, and retention  HR is the most valued department in an organization since they are the guardian of people’s interest and people are the company’s important assets.  Human resource management is essential for overall productivity and efficiency of the strong work force in any flourishing organization.
  • 4. • A cost center is part of an organization that does not produce direct profit and adds to the cost of running a company. • A profit center is a unit of a company that generates revenue in excess of its expenses.
  • 6. • The human resources function is often considered a cost centre, because technically it does not directly generate revenue . • A prominent target for cost reductions. • By monetising various aspects of the hr function within the company, and showing how those functions impact and add to the bottom line financial outcome of an organization , hr can easily turn from being a cost centre to a profit centre. • 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. • In fact, its role has evolved into one of a profit center, where it now makes strategic decisions that drive company’s growth and profit. How HR has evolved from a Cost Centre to a Profit Centre
  • 8. HOW HR DRIVES PROFIT
  • 9. • HR certainly improves the effectiveness of the organization, which allows the company to find new business or open new markets • In order to boost corporate profitability, hr has two ways of looking at building profit: 1) cutting costs  utilizing technology to provide employee self-service.  self-service technology enables employees — and their managers — to do such things as pursue e-learning, get answers to stock and compensation questions, and manage performance without the help of hr professionals or expensive hr handbooks.
  • 10. 2) Helping to generate revenue eg:- Valassis, a marketing services company based in Livonia, Michigan. this 1,400- person company helps other companies market their products and services, most notably through coupon inserts in sunday newspapers around the country. Valassis posted 10 percent net growth last year and continues to grow despite the tough climate for advertisers.
  • 11. Hr activities must work together to create an overall culture that is conducive to profit-making. Profitable companies have the following hr initiatives in common:  They communicate extensively  Employees are involved in setting goals  Employees understand how their jobs affect the bottom line and how the bottom line affects their paychecks
  • 12. Empirical evidence that is readily available to quantify the value of HR based initiatives :- • Companies that invest in talent management initiatives yield 27% greater shareholder return • Increases employee engagement by 5 per cent can add 2.4 per cent to a business operating margin • Shareholder returns are 3 times at companies with superior human capital practices than at companies with weak human capital practices.
  • 13. WAYS OF HR TO CHANGE FROM COST CENTER TO PROFIT CENTER
  • 14. USE THE TOOLS ALREADY AVAILABLE • Department can tap on existing employees to streamline human capital management and organizational development.  When recruiting for new talent ,utilize an employee referral system to help identify and attract top talent.  Harness employee hidden talents. • Conduct an employee skills and interest survey. Opportunity to learn new skills to hone abilities that was underdeveloped
  • 15. RETENTION THROUGH RETRAINING • Employee training and professional development have a cost associated with it ,but it also gives back. • Employee satisfaction and engagement leads to customer satisfaction. • Employee loyalty depends upon perceived job security and future employability. • Inhouse training
  • 16. INVENT REVENUE • Cost centre is able to offset some of their expenses by creatively generating unexpected revenue. • Charging back other departments for services. Eg:- training course, succession planning for different department, conflict resolution, compensation analysis and employee surveys. • Inhouse Hr-better option than outsourcing • Sell Hr services externally-training If you can cover all your costs with offsetting revenue , it is not a cost centre anymore.
  • 17. Recruiting right people at right time. Proper training and development sessions can helps in enhancing their employability and visibility in the company. There should be a proper communication between the superior and the subordinates. Motivation can lead to better work efficiency.
  • 18. HOW TO MEASURE WHETHER IT IS PROFIT OR A COST CENTER?
  • 19. 1. Split sample contrast — use a split sample or a control group. Instead of applying a new HR program to the entire team or division, apply it to only half to demonstrate the relative impact of the program. 2. Before and after contrast – measure employee performance just prior to program implementation and again after implementation, show the contrast in performance.
  • 20. 3. Demonstrate a correlation — show a direct correlation between the increased usage of a tool by managers and employees and an increase in productivity, revenue or profit. Also demonstrate that when usage goes down, so does productivity. 4. Results after implementation — show that employee performance is high immediately after the program is implemented (in this case you do not have “before” performance data (as in #2) for precise comparisons)
  • 21. GRAND HYATT Grand Hyatt hotels are large luxury hotels in major cities and holiday destinations. Mission & vision To provide authentic hospitality. To make difference in the lives of those they “touch” everyday. To do this in an environment that respects all people and all ideas. To do it in an efficient way that leads to superior results.
  • 22.  According to their company policies and from the economic point of view HR is considered as cost center.  A cost center is created when overhead cost are directly allocated to departments, outlets or individual products.  Hr does not generate any revenue nor does it have any source to generate one.  Hr takes care of resources [people] but the returns from this department cannot be calculated in monetary terms.
  • 23. HEWITT • Is one of the world's leading HR consulting and outsourcing companies. Mission & vision To enhance associate engagement To strengthen our business Discover ways to reduce their HR costs Process millions of HR customer interactions, freeing them to focus on their core business
  • 24. From the company’s point of view HR is indirectly a profit center. Hr can generate profit by reducing the cost involved in hiring, absenteeism, attrition and by raising the productivity level of people through proper training programmes in order to improve the skills. Every department, be it production, marketing, finance etc.. Incurs cost while performing their functions. Likewise HR also incurs cost while performing HR functions.
  • 25. HR is a bridge between cost center and business segment. Though one cannot calculate its benefits in monetary terms but the department has its huge impact. Hr is also considered as a resource center. “ If finance is heart of the organization, marketing is considered as brain of the organization then hr is definitely the soul of the organization.”