Prove to the Business That You Are Not a Cost Centre

 

 

HR

 

 

 

 

 

The attitude towards HR among the upper echelons of Middle Eastern financial institutions is so antiquated it wouldn’t look out of place in an episode of the Flintstones.

Recently I sat in on a senior management meeting at a large regional financial institution. When the HR director suggested that his division should be given a seat on the board, the CFO’s reaction was (and I’m paraphrasing here): “You don’t generate any profit, so you don’t deserve a seat at this organisation’s top table.”

This wasn’t the limit of his barrage against the HR director. The division has been an “unnecessary evil” over the years, he said, and an “unfathomable bottomless pit of this group’s resources”.

The very suggestion from the bank’s HR director that his division had a role to play as a business partner (and therefore justifiably has a role to play on the board) was clearly too much for the CFO. At one point it looked like a vein was about to pop in his forehead.

It’s hard to imagine that such people who hold positions of power still populate the boardrooms of modern-day banks and insurance companies, but they do – and in considerable numbers from my experience. Some are a little less vocal than others, perhaps conscious that they will be perceived as dinosaurs. I suspect that the particular HR Director will be getting in touch with the nearest headhunter this month in the hope of moving to a more enlightened company.

Or, does the seemingly out-of-date CFO have a point here?

Certainly, HR doesn’t produce any revenue, so it’s not a profit centre, but is it really a black hole for hard-earned corporate revenue? I happen to know that in this particular case, the CFO’s points were unfounded, but I’m not sure that he doesn’t have a point more generally.

People’s perception of you within the business can make or break a division, and unless the HR team can demonstrate their worth, they should get what they deserve. In this case, as well as a paltry annual investment, they received a very public chiding in the boardroom.

Most HR managers I meet in Middle Eastern banks are competent, committed and well-meaning, but I wouldn’t describe them as particularly business savvy. The could be, however, if they concentrated on just three things.

Metrics – The measurement of your productivity. It’s a complex subject, and one I would not do much justice to in this short article, but essentially what are the costs of things like absenteeism, downtime, slow output and what is the value of each employee?

Turnover – This particular organisation has suffered more than most over the last 6 years; the uncertainty produced by various mergers and acquisitions has taken its toll. At no point, however, has the HR department shown the negative financial effects of empty positions, attrition and cost of the amount of time it takes to fill a role.

Attitudes- You may think this is a rather more qualitative that quantitative measurement, and that many CFO’s may not be overly concerned about the outcome of HR’s happy sheet staff evaluation. You’re largely correct, but if these results are extrapolated effectively to show the impact on the bottom line in terms of productivity and staff turnover, you can pique their interest.

So before you start to believe that your HR department has any rights to a boardroom seat, ask yourself first, in the eyes of those who read the balance sheet, are we seen as anything other than an expense?

Bill Spindloe is
Regional Director, PetroSkills Middle East
https://www.petroskills.com/

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