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  • Writer's pictureAnant Mishra

HR - The Evolution to a Profit Centre!

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 Suite executives. However, things have changed dramatically since then. Today, HR’s budget is a given measure in the budget planning. Management has come to realize the importance of human capital management and its overall value in driving business profitability.

Effectively, 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 - tactfully calling it an organization development centre.

The multitude of factors that lead to this change was the realisations that came a long way from then.

Realising that it’s all about the workforce:

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.

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.

Realising that a well-groomed employee is a profitable one:

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 company in the hospitality industry.

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

The transactional transformation is enroute. It is coming and is inevitable. 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.

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



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