HR Impact on Company Profitability

Dr. Gary Sheard

“I have always thought that it is a great advantage to be able to speak the language – when visiting a foreign country. I wonder how many senior HR professionals can read a Profit & Loss Account, a Balance Sheet, and a Cash-flow? This is not a sarcastic question. It is a real one and I think of vital importance to the Senior HR cause…”

Stan Cox

“The fact is that there are many things HR can do to improve profitability. In my experience the key to HR significantly improving profitability begins with HR professionals serving as business professionals and strategists first and only then as HR experts on problems or issues addressed. When real value is added to the business, only then can significant profit be generated.

In my first HR job, I joined with senior leaders, engineers, HR, and UMWA union stewards to build a gainsharing plan with significant monthly bonus potential. In talking to miners we learned Union Stewards sold the plan as a work speed up process. We in HR visited every crew on every shift in every mine outlining incentive possibilities and work speedup safeguards. All mines voted for the plan and within a year it improved production by 25% or more in every mine. We provided and launched a smaller scale plan for attendance. The bottom line is that HR was essential to the success of these plans and management knew it.”

Dr. Alberto Beuchot, ACC

“HR should, and must, become a business partner to the plant manager and/ or CEO. Controllers have done this, and have displaced HR professionals from the table. It is urgent for them to get power to decide back, in a sea of engineers and finance experts. We at the Center for Executive Coaching have developed a plan for that, with great success. For one thing, the name HR should change: humans are not resources. Culture and Talent Managers is much better.”

Roy Stapleton

“The biggest challenge for HR has always been quantifying their contribution in the only language that anyone really cares about – money! Sure, there is plenty of lip service paid to ‘softer’ wins but all shareholders, CFO and CEOs are measuring is numbers. If HR wants to deliver profitability they need to be asking the right questions rather than being ready with stock answers. Let’s take ‘Engagement’ as a great example. What value does an engaged employee deliver to your organization vs a disengaged employee? If you’re in HR and you are about to give me an answer without any data that equates to dollars, then you aren’t thinking enough. In most cases, for most organizations the answer will be – we don’t know! And for a CEO that is the start of a great conversation that could lead to a well-funded project that seeks to discover and innovate to find the answer to the question and learn how to profit from the knowledge. After all, if just that single question is answered then quite possibly next year’s EBITDA will probably be taken care of – HR just delivered profit!”