For decades, traditional business models have divided their businesses departments into two categories:
PROFIT centers, and COST centers.
This model, popularized in the 1980’s, designated each department as a place where money was MADE, or where money was SPENT. Profit centers (or revenue centers) were typically areas such as sales, where the direct link to the profit they generated greatly outweighed the costs inherent to the department. COST centers, like accounting and customer service, were necessary to the function of the business, but generated little in revenue.
HR would often be designated as a COST center in most organizations. When applicants were plentiful, and open positions could be easily filled, the HR department was viewed as an administrative necessity — something you just had to have. …But can your organization still afford to see it that way?
The workforce has changed drastically over the years, and in the next 18 months, the worker shortage is cresting at somewhere between 6.5 and 8.5 million workers short. The days of countless applicants and easily-filled job openings are over. The employees and applicants we once took as a given are now in scarcer supply than they have been in the past 20 years, and their numbers continue to drop.
This means that recruiting, engaging, and developing your employees can no longer be optional or reactive; it is a key driver of profitability.
Let’s do some quick math: If an open position is costing your organization $20,000/year, and you are currently operating 5 people short (due to turnover, new employees not fitting, or lack of qualified applicants), that is $100,000/year off the bottom line. Those employees we counted on to apply — and retain — are now leaving visible holes in your P/L.
Still think your HR department is a COST center?
It’s time to equip your HR with new tools, ideas, and support that will ensure that they can continue to supply you a P/L you will be proud to present at the next Board of Directors meeting.
If you’re ready to transform your HR Department into a PROFIT center, let’s talk…
