Make HR a Profit Center

HR departments are like Rodney Dangerfield. They get no respect. At least not from senior management, says Jacob Shriar, former content director for Officevibe. Upper management thinks of HR as a cost center instead of its real role: a profit center.

But did you know that the average human resources department gets only 4 percent of a company’s budget dollars. Why?

Silicon Valley HR consultant Dr. John Sullivan agrees. According to him, companies make a “trade-off between quality and cost.” But when money is spent in the right place, profits increase. Human resources is that place.

Sullivan says that cost containment measures fail “to address or solve critical business problems facing the organizations that could be remedied by investing in HR.” He compares cost containment to continually replacing water-damaged ceiling tiles instead of fixing the actual problem – the roof.

When we make investments for our retirement, we take the long view. Organizations that buy into the idea that HR is the heart – the backbone — of any business are more profitable. Investment in HR is really an investment in employees. The result? Increased employee retention and workers’ long-term value.

Employee happiness, engagement, retention – and most importantly, productivity are no accident. HR professionals craft programs that make employees want to stay. High turnover is a huge problem. HR managers know the importance of satisfied workers. HR gives employees the right toolkits they need to thrive.

Assessing Employee Happiness

HR managers are the canary in the corporate coal mine. “Management by walking around” is a leadership technique that engages employees and catches issues before they blow up. Everyone wants to be heard. HR professionals who take an interest in employee happiness affect the bottom line directly – engaged employees stay longer and are more productive.

Shriar suggests that the HR department needs to run like a small, internal start-up. Any new business needs capital to grow and survive. Think of your company and its employees as your client. Although HR is a “behind the scenes” function, it doesn’t mean it isn’t important. Find out more from Shriar at

According to Sullivan, “cost containment efforts hit HR hard although it’s only a small fraction of the total budget. The “human resource function impact such a miniscule portion of the overall annual budget, that the savings produces are insignificant to say the least.”

Prove Your Worth

Sullivan encourages metrics to prove HR’s worth to employees and its potentially positive impact on the company’s profits. To convince “the powers that be,” numbers are essential.

He suggests measuring success in the following ways:

  • Split Sample: Use a control group to measure against non-participating employees.
  • Before and After: Analyze performance before you begin a new program and after implementation.
  • Correlation: Show the relationship between a rise in productivity as an effect of implementation.
  • Results: If you didn’t have time to measure the “before” baseline, you can still showcase positive results for the company.


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Tamera Shaw is a freelance writer for Insured Solutions based in Louisville, Kentucky. She writes fiction and enjoys amateur photography. She happily shares her life with husband Ron, daughter Cate and sage cat, Sophie, who grudgingly shares her home with the newest member of our family – Nieko, our new kitten.


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