HR Impact on Company Profitability
Company Profitability HR Impact

In our previous posts, we strongly urged companies to completely re-structure their HR departments such that they are better aligned with their business strategy. In addition, we observed that companies who restructured their HR units, yielded measurable profits. HR departments are now professional service units within their organizations. In this new avatar, they are effectively demonstrating how competent they are and how BIG a role they can play in delivering profitable business results. To our surprise, a similar topic is trending right now on LinkedIn and HR professionals are enthusiastically participating in it and discussing HR impact on company profitability. We have picked out some interesting bytes from there.

All Hawk Eyes Are on HR

Gary SheardDr. Gary Sheard | Chairman – Sheard European Management Consultants Ltd. | Leeds, United Kingdom

“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 Stan Cox | Principal – Talent Management & Competency Consulting | Greater Minneapolis-St. Paul Area

“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.”

Alberto BeuchotDr. Alberto Beuchot, ACC | Center for Executive Coaching | León Area, Mexico

“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 Roy Stapleton | Founder/CEO – talentTAG.com | Sydney Area, Australia

“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!”

Author’s take

These industry opinions re-establish the fact that a strong HR team helps you achieve your bottom line results quicker. In one of my subsequent blogs, I will discuss how a comprehensive HRMS can help your organization achieve further profitability.