HR is Cost or Investment ?
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hey friends i need certain clarification , every time we are putting this term HR , What is this HR exactly. Is it the Human Resource of the organization or it is the HR Function or department of a company. I always take it as the HR Department.
ReplyDeleteHR as a function has to be a investment for a growing organization. But in case the organization is not growing and is very small than the HR is a cost, and this cost is difficult to justify.
Otherwise HR in no case be a cost , it has to be investment , if one feels it to be a cost , they need to change the way of looking at the HR or may not be having good experience with their HR.I believe the following function done by HR will make it a investment.
> Timely Recruitment
> Recruitment of right candidate
> Taking right candidate at right cost
> Proper training to employees
> Care for proper employee satisfaction
> Efforts to make employee turnover lower.
there may be many other factors.
Hi
ReplyDeleteI wanted to know how this question has come into mind, is anybody came accross such situation.
I dont think anybody came across the situation , but it was Arvind who decided to have such question on the blog and expected every body to comments on the same.
ReplyDeleteI believe the comments shall be given by every body but the one who has put the querry shall also express his views.
Major companies only consider Operation department on the asset side of their balance sheet. But they should understand the fact that without HR it is very difficult to run the smooth process of the organization. At the initial stage HR is definitely a cost to the company but at the end of the day it is an absolute investment which results in to profit center for the organization .
ReplyDeleteI had been to a HR related site it was mentioned "It is true that worldwide, knowledge has become the key determinant for economic and business success, but Indian companies focus on ‘Return on Investment’ (RoI), with very few concrete steps being taken to track ‘Return on Knowledge’".
It is a fact that in our country maximum number of companies consider HR as a cost rather than considering the personnel department as investment or profit centre. That is why good number of companies in India don't have HR department. Service industry is the sector which found the actual importance of HR . HR is the back bone for them , They start from the recruitment itself.
HUL, Infosys , Reliance & Bhel are the some companies in India which have implemented HRA in India and working on it. Among this Infosys is the company which shows HR as an asset in their Balance Sheet.
EVA – Economic value addition is a method which is used by some companies’ which enables to assess the exact or true value of their employee who serve the company.
Here what I understood that Arvind is talking HR as a department and not as a resource.
ReplyDeleteIt is not necessary that all the company should have HR department but it does not even mean that they are not hiring right resources. It depend upon the size of the company, their working style and their internal management policies. Because to have HR department for a company which is not depending much on human resources or which does not have resource turnover, definitely it is going to be an additional cost. Rather I can say that they can cater their need thru some other HR outsource firms.
But for companies like BPO, IT Industries or which are large and medium size manufacturing companies definitely they can not run successfully without having a successful HR department. If we talk about service industries they market purely on the basis of their Resources which are main tool of getting their projects. And it is HR department who cater need of Human Resource. I mean to say even it is not valued in monetary term in financial statement of a company but it is an important assets without which they can not even enter into market only. And companies like Infosys, TCS, Wipro etc, I think they consider it (HR Department ) as an very important assets. Because they get time based projects and we all know that what is resource turnover in this industry. Even then they get their projects done in time with quality which they have promised. The simple reason is their HR department and their HR policies which keep them unaffected by this turnover.