Homepage-Hero-Image

The Hidden Profit Centre in Your Business

Think HR has no bearing on profitability? Think again…
Having long been denounced as nothing more than a cost centre and a necessary part of doing business, the people management aspects of an organization (specifically HR) have been overlooked as an integral component of the profit structure of an organization. The link, however, is a lot stronger than many businesses have traditionally thought.
In a recent study on management practices in Fortune 1000 companies, the Center for Effective Organizations at the University of Southern California found that employee involvement measures (that traditionally sit well beneath the HR umbrella) show a solid ROI and link to the bottom line.
For small to medium-sized businesses who don’t even have an HR department, the impact of this study is even larger, as decisions made at owner-run businesses see an immediate trickle-down effect due to the smaller work structures, and can see a positive impact in the bottom linke much sooner than a larger organization. The key is in increasing the employee commitment to the organization.
Any one of the following measures can be implemented by a company to see a lasting improvement in financial returns (not to mention the cost-savings garnered from reduced turnover):

  • Employees generally feel that if an investment is made in them, they will return that investment in-kind. Establish a feeling of “repricosity” through:
    • Information-sharing
    • Skills training
    • Encouragement of ownership thinking
    • Fostering “buy-in” for organizational change measures
    • De-centralizing decision-making
  • Using technology for process improvement, not just cost-cutting benefits. If employees are brought into the process on the ground level, working backwards and can have input into process design, hey are more willing to manage change, and feel a greater benefit of new technology as a tool for them—not just because it’s cheaper for the organization
  • Building a culture which values job-security – which means attaching value to the person over the employee number.

Each of these measures is fiscally achievable in one way or another, even for very small businesses and engage in the employee’s higher level needs, which leads to increased productivity, better customer interactions, a willingness to tackle challenges and stick with the company–all which have a positive impact on profit.
Small tweaks can often have the greatest impact on profitabilty, particularly if they are seemingly unrelated to the bottom-line. Remember that everything in your organization starts and ends with culture, so before you tweak your marketing, sales prices, or slash costs to boost productivity, have a critical look at how investments to your people-practices can pay you back in spades.

Share this post

Share on facebook
Share on google
Share on twitter
Share on linkedin
Share on pinterest
Share on print
Share on email

More to explore

newton's cradle illustrating concept of goals

If You’ve Ever Had Goals You Didn’t Complete, This Post is for You

Have you ever had a great idea you just know could truly change your business? Have you set goals for it, but to this day, that idea hasn’t been realized? When we make goals, we tend to approach them with a ton of enthusiasm in the beginning, only to discover the longer it takes to

7 Things to Look for in a Business Coach [UPDATED]

The right business coach can help you jump off the hamster wheel and make sure all that energy you’re expending is actually leading you somewhere. The wrong one is simply a waste of time and resources. Here’s how to find the business coach that’s right for you. If you’re thinking of engaging a business coach

the key to business success

Business Success Isn’t About Working Harder. (It’s About This)

When it comes to business success it can be easy to become lost in the weeds. Your head can be so far down in the trenches it can be hard to assess what the real priorities are. The result – you just work harder, believing that doing so should surely bring you better outcomes. One