HR as a Profit Center
Earlier this week I attended a presentation from Tim-Oliver Goldmann, currently HR Director at twenty4help about “The HR Business Partner in a Profit Center Organization” which was positioned as a concept that gets HR accepted as a “Business Partner”. Really interesting model although it has already been discussed quite extensively in the 90s! I find it still generally compelling as it can help HR to really drive their business and get educated live on business metrics. Imagine your internal clients negotiating pricing of your services with you? Imagine the HR department having a higher margin than the core business (that's where the problems start...)? Conditions to successfully implement are an ERP system to capture the processes, write internal invoices, track revenue and finally make up the P&L of HR. In this case the Customer Service Module of SAP was used.
The example presented was focussed on more operational HR tasks in a production oriented small to medium size company of the automotive supplier industry. The benefits clearly were change managing the turn around of the traditional HR function with the help of the profit center framework.
I personally believe that the recognition of HR with the business can also be achieved differently by implementing partners at higher management levels who can anticipate future business needs with the knowledge of business strategy and then align HR resources to perform on the appropriate HR practices to support this business strategy. From my perspective the profit center administration in itself is too much of an overhead for the limited value it can bring. Most HR functions these days go through the same tough budget planning processes as the business.
This also showed that the position “HR Business Partner” is most probably differently defined in every company.
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Posted at
09:17PM Feb 22, 2007
by Volker Seubert in Human Resources |
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Comments[3]
What can be wrong with giving business units of a company the ability to transact with each other?
Envy that one unit may attain a higher margin than the other? Putting all units under the same denominator because "the burden has to be shared by all"?
I do understand where this thinking comes from. But this isn't a negative reaction against the concept of "profit centers" altogether. Rather, it's a reaction against giving exclusive rights to one unit to function as a profit center, while banning the rest the ability to transact and deal internally.
Give all business units the freedom to transact internally and this friction will be gone!
Can you imagine a company where ultimately every employee becomes a profit center? :)
I can! And I believe this is the way forward!
Posted by Vladimir Dzhuvinov on February 22, 2007 at 10:48 PM CET #
Posted by Ram's on April 10, 2007 at 07:50 PM CEST #
The article is both educative and updating for Practitioners. Keep it up,
Regards.
Posted by igwe sebastian on November 20, 2007 at 01:27 PM CET #