For years, I’ve read articles about the human resource (HR) department as a “revenue center.” They go something like, “We built this program and extrapolated some nebulous ROI and look how valuable we are – I swear.”
The issue I have is that saving money is bottom-line and making money (a.k.a. revenue) is top-line. So instead of boring you with more rhetorical strategies regarding the term “revenue” let’s use the term as intended and change the approach.
I believe the future of HR lies in the division’s ability to add actual top-line revenue and here are a few ways it could be accomplished:
Until the internal recruiting division of a company begins to sell candidates to other companies they’ll never truly understand the candidate marketplace or fully eliminate the cost of external agencies. Also, if TA brought in revenue it could manage its own budgets and external relationships as a strategic P&L activity, i.e. it would give them the freedom to control their activities without worrying so much about their spending.
The HR division is constantly arguing about how valuable its service is, and I agree, but what is your department doing to bring in revenue and prove the value of this service? (Remember, value is based on what someone is willing to pay.)
There are companies right in your backyard that would pay you (or at least partner with you) to build a better, more sophisticated HR function — non-competing, complimentary, cooperative businesses. Think “open-source HR” for a fee.
Tip: Start at home. Build a beta test program and use it internally. Share the results with a neighboring company and partner for more results.
Most large companies have chief people officer types. Today, these individuals are some of the most sought after speakers around. There are HR conferences happening all over the world. So, another option to create HR revenue is to “loan” them out for a speaking fee.
Overcoming the objections
I know what many of you are thinking: “There are big potential ethical issues” or “I don’t want my executives giving away our secrets” or “who would buy our leftover candidates?” Well, let’s take a moment to break down each potential roadblock.
There is the possibility that your HR department could exploit some of these sales opportunities to benefit themselves (from selling to another company) instead of doing their own company’s important HR work. Like any other division, the principal-agent issue is always looming. Leadership will be responsible for framing the measurements and compensation to reflect the overall business objectives.
Ideas are barely worth the keyboard they’re typed on. Execution is everything! If your department has been attacking a certain problem and it’s working, share. You’re likely light years ahead of your competition and sharing the idea won’t hurt you.
On the contrary, it will help. First, it helps raise the industry. Second, your company begins to become a “thought leader” and every company wants that. And last, by the time your competitors figure out what you’re currently doing, you’ll be off to the next, better idea.
It is a fallacy to believe that sending an applicant to a different or even competing company would be a future disadvantage to your company. Or, that the other company would reject the candidate simply because it’s coming from you.
You may have a director role available and have an absolutely excellent vice president from a competing company who’s interested. There could be some timing, location, or compensation issue which eliminates the individual from the opportunity. This hardly disqualifies his or her excellence as a candidate. Partnering with a competing or cooperative company to make an introduction for a fee is hardly unethical or detrimental to your company. You can’t keep everyone for yourself and people and organizations develop at different rates so why not help all parties?
I realize that what I’m suggesting is a giant shift from HR today and it would take a different kind of employee to handle the ambiguity of these changes. That said, I believe the HR world has developed and is developing some of the best employees around and if anyone can do it – we can.
There are still some obvious questions that need to be answered:
- What can HR sell that can make the company money?
- To whom can it sell?
- And should it sell anything at all?
I’m genuinely interested in reading your comments (post tem below) about this topic and I look forward to continuing the conversation.