Migrating Human Resources from Cost Center to Profit Center
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Human Resources has traditionally been a cost center, where value creation has been less than cost. To some degree this is because there has been a lack of metrics, focus on value creation, and simply challenging historical notions. A talent gap risks lost possibilities and opportunities to create new value. It prevents companies from growing into new and promising markets or sectors and from gaining a competitive edge. And while solving the global talent gap is the work of nations, companies will increasingly look to HR. When talented people have more choice, high-impact HR leaders can recruit and keep them with strategic investments in key areas: • Growth: Better learning, development and expansion pathways. • Impact: Closer connections to the meaning and value each individual creates. • Relationships: Stronger, more collaborative, more creative processes and team structures. These HR investments are direct business performance drivers, with returns to both top-line and bottom-line growth: Top-Line Drivers: • Productivity: How much each employee contributes. • Quality: How well each employee contributes. • Customer Satisfaction: How much market value each employee’s contribution creates. Bottom-Line Drivers: • Efficiency: How quickly and cost-effectively each employee contributes. • Retention: How long each employee continues to contribute to the company and not to a competitor. • Advocacy: How positively employees speak and write about their company. Attracting, developing, nurturing and supporting talented people in their success and growing revenue while controlling costs are not bureaucratic functions. In the new normal of chronic talent shortages, they offer a competitive edge. Talent is the business, and in this profit center, HR leads the way. Return on Investment (ROI) Metric (Value Created - Cost / Cost).
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Migrating Human Resources from Cost Center to Profit Center
- 1. All Rights Reserved. Copyright Disclaimer Under Section 107 of the Copyright Act of 1976. Allowance is Made for “Fair Use” for Purposes Such as Criticism, Comment, News Reporting, Teaching, Scholarship, and Research. Fair use is Permitted by Copyright Statute that Might Otherwise be Infringing. Education, and Personal Use Tips Included. No Copyright Infringement Intended. Cited Work(s) Are the Property of the Author(s) / Copyright Holders. This Information Does Not Constitute Financial, Tax, Insurance, nor Legal Advice. Consult with a Licensed Professional Before Undertaking Any Important Business Decision(s). Richard Swartzbaugh End-to-End Talent Management
- 2. 2 Executive Summary Human Resources has traditionally been a cost center, where value creation has been less than cost. To some degree this is because there has been a lack of metrics, focus on value creation, and simply challenging historical notions. A talent gap risks lost possibilities and opportunities to create new value. It prevents companies from growing into new and promising markets or sectors and from gaining a competitive edge. And while solving the global talent gap is the work of nations, companies will increasingly look to HR. When talented people have more choice, high-impact HR leaders can recruit and keep them with strategic investments in key areas: • Growth: Better learning, development and expansion pathways. • Impact: Closer connections to the meaning and value each individual creates. • Relationships: Stronger, more collaborative, more creative processes and team structures. These HR investments are direct business performance drivers, with returns to both top-line and bottom-line growth: Top-Line Drivers: • Productivity: How much each employee contributes. • Quality: How well each employee contributes. • Customer Satisfaction: How much market value each employee’s contribution creates. Bottom-Line Drivers: • Efficiency: How quickly and cost-effectively each employee contributes. • Retention: How long each employee continues to contribute to the company and not to a competitor. • Advocacy: How positively employees speak and write about their company. Attracting, developing, nurturing and supporting talented people in their success and growing revenue while controlling costs are not bureaucratic functions. In the new normal of chronic talent shortages, they offer a competitive edge. Talent is the business, and in this profit center, HR leads the way. Return on Investment (ROI) Metric (Value Created - Cost / Cost). Forbes, © March 7, 2019 “Is Human Resources Your Next Profit Center?” Migrating Human Resources from Cost Center to Profit Center
- 3. 3 Executive Summary Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 1 Evaluate Performance of Current Broker for H&W, WC, PLGL, fire, casualty, BI, EPL $150,000 $750,000 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195 3 Implement Cost Reduction Incentive Challenge to Workforce $50,000 $1,000,000 4 Implement Workers Compensation Cost Control Program $50,000 $750,000 5 Amend Health & Welfare Plan Design $100,000 $750,000 6 Deploy Employee Engagement, 3rd Party Intervention Avoidance Program OR Labor Management Partnership (LMP), with employment “at-will” / class action waiver (with opt out) / PAGA limitations $50,000 $750,000 7 Deploy Talent Management Program Solutions (TMS) $250,000 $2,500,000 8 Undertake Leadership Conference (Strategic Planning, Enterprise Risk Mgmt, Mergers & Acquisitions, Performance Excellence, Sales, Clinical, Talent) $50,000 $500,000 All Grand Total(s) $800,000 $20,186,195 Migrating Human Resources from Cost Center to Profit Center Return on Investment (ROI) Metric (Value Created - Cost / Cost) * See Item #2 for formulas, assumptions, and sample illustration(s) Yielding 671% ROI
- 4. 4 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 1 Evaluate Performance of Current Broker for H&W, WC, PLGL, fire, casualty, BI, EPL $150,000 $750,000 CFO, HR Mercer, AON, Lockton, Risk Retention Group (RRG) Migrating Human Resources from Cost Center to Profit Center
- 5. 5 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center
- 6. 6 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center
- 7. 7 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center
- 8. 8 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center
- 9. 9 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center
- 10. 10 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center
- 11. 11 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center
- 12. 12 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center
- 13. 13 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center
- 14. 14 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center
- 15. 15 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center
- 16. 16 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center
- 17. 17 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center
- 18. 18 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center
- 19. 19 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center
- 20. 20 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center VP HR http://www.nationaltraining.com/ https://etp.ca.gov/
- 21. 21 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 2 Work to Migrate HR from Cost Center to Profit Center $100,000 $13,186,195.00 Migrating Human Resources from Cost Center to Profit Center CFO, VP HR https://www.irs.gov/site-index- search?search=WOTC&field_pup_historical_1=1&field_pup_historical =1 https://www.irs.gov/businesses/small-businesses-self- employed/work-opportunity-tax-credit
- 22. 22 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 3 Implement Cost Reduction Incentive Challenge to Workforce $50,000 $1,000,000 VP HR Create an incentive based competition for the workforce on cost control / efficiency and ICP of 10% of savings back to WF in the form of lump sum bonuses. Migrating Human Resources from Cost Center to Profit Center
- 23. 23 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 4 Implement Workers Compensation Cost Control Program $50,000 $750,000 CFO, COO, VP HR The AMAXX based workers comp cost control program Deploy EDEX Approved & deploy WC ICP. Add to ED / Administrator / DON ICP. Implement ED / Administrator / DON accountability. Enhance hiring practices. http://www.dir.ca.gov/dwc/edex.html https://hw359.infusionsoft.com/app/storeFront/showProductDetai l?productId=76 Migrating Human Resources from Cost Center to Profit Center
- 24. 24 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 5 Amend Health & Welfare Plan Design $100,000 $750,000 VP HR, Broker Migrating Human Resources from Cost Center to Profit Center
- 25. 25 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 6 Deploy Employee Engagement, 3rd Party Intervention Avoidance Program OR Labor Management Partnership (LMP), with employment “at-will” / class action waiver (with opt out) $50,000 $750,000 VP HR Migrating Human Resources from Cost Center to Profit Center
- 26. 26 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 7 Deploy Talent Management Program Solutions (TMS) $250,000 $2,500,000 C-Suite, VP-HR Migrating Human Resources from Cost Center to Profit Center
- 27. 27 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 7 Deploy Talent Management Program Solutions (TMS) $250,000 $2,500,000 C-Suite, VP-HR Migrating Human Resources from Cost Center to Profit Center
- 28. 28 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 8 Undertake Leadership Conference (Strategic Planning, Enterprise Risk Mgmt, Mergers & Acquisitions, Performance Excellence, Sales, Clinical, Talent) $50,000 $500,000 Migrating Human Resources from Cost Center to Profit Center
- 29. 29 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 8 Undertake Leadership Conference (Strategic Planning, Enterprise Risk Mgmt, Mergers & Acquisitions, Performance Excellence, Sales, Clinical, Talent) $50,000 $500,000 http://www.nist.gov/baldrige/publications/hc_criteria.cfm http://www.ahcancal.org/quality_improvement/quality_award/Pages/default. aspx Migrating Human Resources from Cost Center to Profit Center
- 30. 30 Execution Framework Item # Description & Summary of Options Conservative Estimated Savings / Value Creation Aggressive Estimated Savings / Value Creation 8 Undertake Leadership Conference (Strategic Planning, Enterprise Risk Mgmt, Mergers & Acquisitions, Performance Excellence, Sales, Clinical, Talent) $50,000 $500,000 http://www.ahcancal.org/Pages/Default.aspx http://www.ahcancal.org/quality_improvement/Pages/default.aspx Migrating Human Resources from Cost Center to Profit Center