Discussion board

The NEW HR – Cost Center versus Profit Center

Human Resources (HR) departments are often viewed as either a profit center or a cost center within an organization. This distinction can significantly impact how HR strategies are developed and implemented.

How would you define HR as a profit center and HR as a cost center? What are the key characteristics and differences between these two viewpoints? Provide an example for each.

 Keep in mind, all departments are responsible for controlling or reducing unnecessary costs. This means, controlling and reducing costs does not make HR a profit center.

Reading Resources to use and add into discussion board 

As HR responsibilities related to HR analytics take on increased importance, it’s critical to stay updated with any trends in technology. Human Resource Information Systems will be a valuable tool to use in the competitive advantage tool kit. 

Cadigan, S., Card, D., & Will, K. (2019). 2019 industry trends in HR technology and service delivery. ISG.

HR as a Company’s
Competitive
Advantage

THE NEW HCAM
(HR) METRICS
SYSTEM

HCAM Talent
Management

MGT411
Human Resource Management

Unit 2 Interactive Lecture

Adapting to the 21st Century
“HR will learn from and adapt the practices of
other disciplines and this will be essential to HR’s
progress going forward…It will be necessary to
reach out through the whole organization and co-
create with functions that may formerly have been
rivals.” (Boudreau & Ziskin, 2011). If companies are
to thrive and not just survive in the 21st century,
leadership needs to continue the march with a
different workforce and HR/HCAM must lead the
way. The transition from “Personnel” to “HR” does not
stop there – successful HR practices are upheld by
leadership that embraces the now thriving ‘knowledge
economy’ driven human capital asset management,
the value of which can be seen in the following
graphics:

Accomplishing this task of becoming the ‘new’ HR
requires addressing the following strategic planning
items:
1. Where is HR now?
2. Where does HR hope to go?
3. How is HR going to get there?
4. How much money will it take?
5. Develop and implement a continuous evaluation

process?
6. Celebrate failure as the way to success by

embracing personal accountability?
7. “Fix” any issues – try again.
8. Go back to step 1.
9. Turn traditional managers/leaders into Ligurs!

HR as a Company’s Competitive Advantage

HR as a Company’s
Competitive
Advantage

THE NEW HCAM
(HR) METRICS
SYSTEM

HCAM Talent
Management

Successful leaders and managers need to incorporate
some of the attributes, skills and competencies
typically associated with traditional manager and
leadership personality traits.

“No institution can possibly survive if it needs geniuses
or supermen to manage it. It must be organized in such
a way as to be able to get along under a leadership
composed of average human beings.“

(Drucker, 1946, p. 26).

Traditionally, managers tend to be risk averse while
leaders, driven by innovation and change – cannot
imagine not taking risks at every junction. The “new”
leadership model needed for this seemingly dramatic
transformation needs to take on the characteristics
of the Ligur: more productive, powerful, useful and
respected.

HR as a Company’s Competitive Advantage

HR as a Company’s
Competitive
Advantage

THE NEW HCAM
(HR) METRICS
SYSTEM

HCAM Talent
Management

HR as a Company’s Competitive Advantage

HR as a Company’s
Competitive
Advantage

THE NEW HCAM
(HR) METRICS
SYSTEM

HCAM Talent
Management

Manager Traits: Leader Traits:

Goal Focused

Tough minded

Hard working

Analytical

Business school trained

Works out problem within the system

Family members work for same org.

Typically middle class

Likes hierarchical structures

Rational

Risk averse: “Avoids” mistakes & surprises

Pleases others

Views work as an enabling process, involving a
combination of ideas, skills, timing and people.

Views work as something that must be done or
tolerated.

See business system as nurturing and protected

Motivated by promotion/power

Needs status symbols

Relinquishes decision making to others

Often conflict avoiders.

Passionate, Personally persuasive.
Non-conforming
Visionary, Imaginative
Intuitive, mystical understanding of what needs to
be done.
Risk Taker: Learns from mistakes
Views work as developing fresh approaches to old
problems, or finding new options for old issues.
Views work challenging & exciting.
Focuses on what needs to be done, leaving
decisions to people involved.
Pleases self, customers and sponsors
Dislikes Business systems – learns to manipulate it.
Likes flat org. structures
Has business acumen.
Likes to bypass system to solve problems if can’t
solve within the system.
Middle to upper class socioeconomic group.
Highly educated
Motivated by need for freedom, goal oriented.
Persuasive and influential
Sense of urgency to goal attainment: bias for
action
Does own market research
Doesn’t need status symbols – could care less.

Traditional Managers v. Leaders Traits

HR as a Company’s Competitive Advantage

HR as a Company’s
Competitive
Advantage

THE NEW HCAM
(HR) METRICS
SYSTEM

HCAM Talent
Management

Moving from Traditional
Management

Moving toward HYBRID

Manager / Leader

“Here’s what we’re going to
do!” Passive attitude

“How can I serve you?”

Hierarchy; Rigid Flexible; Critical innovative
thinking

Automatic annual raises Pay for performance

Decide on goals based
on necessity instead of
desire; Focused on current
information

Group sets, monitors
metrics Group sets,
monitors, changes goals

Tend to be reactive Risk-
averse Collaborative

Welcome change Risk
Takers Seeks win-win

HCAM Talent Management
HCAM Talent Management is interconnected to
every facet of business operations. A company’s
competitive edge is driven by the processes connected
to the recruitment and retention of a superior
talent pool and achieved through the development,
implementation and monitoring of a fully integrated
talent management system. A fully integrated talent
management system consists of manpower planning,
succession planning, and a performance management
process that includes recruitment, retention, career-
pathing, and compensation/rewards and benefit
programs.

HR professionals will need the following competencies
and skills to be successful:

1. Commitment to lifelong learning for all employees.

2. Confidence in own abilities.

3. Consensus builder: mediator and negotiator

4. Confidentiality at the highest level.

5. Financial and business savvy.

6. Commitment to superior communication skills:
oral and written.

7. Ability to work under pressure:

a. Stress coping skills.

b. Ability to confront and be confronted without
animosity.

c. Willingness to make difficult unpopular decisions.

d. Knowing when and how to “cool” off a difficult
situation.

8. Critical Thinking.

a. Innovative and creative.

b. Exceptional problem solving skills.

9. Unbiased, non-judgmental appraisal of people.

HR as a Company’s
Competitive
Advantage

THE NEW HCAM
(HR) METRICS
SYSTEM

HCAM Talent
Management

THE NEW HCAM (HR) METRICS SYSTEM

The evaluative process to determine if procedures,
policies and processes are successful requires data.
HR metrics is a fluid science and an art. David Urich,
an HR guru developed the HR Score Card System that
is foundational to most HR data analysis. Any planning
process related to HR metrics requires a basic belief
that HCAM (HR) is the center of all strategic business
planning leading to the overall success of integrating
strategic planning and organizational goal alignment.

The following is a relatively new HR metric analysis
theory utilizing the concepts of NODs (Numbers
only data) and CIAs (Competitive Impact Areas).
The concept of NODs (numbers that have not been
consider strategically and therefore put you to
sleep) and CIAs (key challenges that require NOD
information be considered as a strategic issue) were
developed by Susan Pellerin in 1999 to explain the
importance of transitioning HR metrics to the world
of business. These concepts explain how HR Metrics
needs to be applied for the proper alignment of HCAM
to business drivers. Time to think of HR/HCAM
as “Profit Centers” as opposed to “Cost Centers”.
Although managers must be concerned about saving
money, i.e. reducing turn over, reducing benefit
premiums, they must also begin to consider how the
NODs impact the overall business objectives and
convert the NODs to CIAs enabling the conversion of
data to an increase in productivity and profitability. As
soon as you begin to relate the concept to your own
working experience, you will begin to change the way
you react to the NODs.

A typical benchmark in HR is Turn Over Rate (TOR).
Retail operations typically have a very high TOR
– often over 80%. Certainly one can imagine the
added “cost” to the recruitment budget if this type
of TOR continues. Some firms believe that they have
conquered the TOR situation when the NODs indicate
that the TOR has declined – let’s say to 60%. The
problem happens when one does not strategically
consider the competency of the employees that are
left – if they are mediocre your productivity will
decrease and you will be lulled into thinking that it is
a staffing issue. Indeed it is a staffing issue but not in
numbers (NODs) but in competencies.

References:

Drucker, P. F. (1946). Concept of the Corporation. New York:
The John Day Company.Boudreau, J. W., & Ziskin, I. (2011).

The future of HR and effective organizations. Organizational
Dynamics, 40(4), 255-266.

“Life is not about waiting for
the storms to pass…

it’s about learning how to
dance in the rain!”

Anonymous.

HR as a Company’s
Competitive
Advantage

THE NEW HCAM
(HR) METRICS
SYSTEM

HCAM Talent
Management

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