Increase Revenue And Drive Profit Through Human Resources

Increase Revenue And Drive Profit Through Human Resources

Increase Revenue And Drive Profit Through Human Resources

This article is not about cost, and not about trying to generate fear. It is about how to increase revenue in lieu of all the data. Winning market share and driving profitability through Human Resources (employees).

As a business owner myself for a little over 13 years, I have learned some very crucial lessons in “how” to be a better person at servicing businesses. It is likely I have still many more lessons ahead.

The longer I’m in business the more I realize that I get caught up in pedaling harder rather than working smarter. I mean let’s face it, what business owner doesn’t want to succeed in what they do? But are we running the same race as our predecessors?

As a service business, we are 100% about people. Having been through some very wild transitions I would be crazy to think that we won’t see more complex transitions in the future. The aging population, generational changes, worker skill gaps, and technology challenges are causing us to be better at not only keeping our businesses relevant but also staying ahead of the competition. In this case not China or Mexico, but rather the other local businesses in our area that we compete with.

This is where I believe the challenge comes. I’m sure that business owners before us had to rethink traditional roles and shortages of people and alignment of skill sets to meet the consumer’s needs. And here we are once again, being challenged. Only this time technology instead of people are playing a much bigger role in our economy.

It’s not an option to run organizations at the status quo for long without falling behind, losing market share, decreasing margins, and eventually hanging the proverbial “going out of business” sign.

One area I have been especially interested in has been in the area of Human Resources. I see time and again that business leaders in the small to midsized businesses especially are focusing their Human Resources (employees & HR Professionals) efforts on compliance for the sake of compliance. I myself thought the value in HR was about administration and compliance at one time. And though many businesses may have identified HR as a strategic business partner and hold HR in the highest of regards, there are still many business owners and HR folks that simply believe that the role they play in “HR” is about tasks we must do when we hire employees whether we like it or not.

Unfortunately, business owners and executives in this mode may be missing huge opportunities for profitability by categorizing the HR profession as paper pushers or compliance police, something our bookkeepers, accountants, admin assistants, insurance brokers or more concerning our executives, owners, salespeople or customer service reps can do, aside from their regular jobs.

For many business owners, HR is looked at as a cost to the business instead of a profit-building partner. Yes, I said profit building. HR (people in your business) impacts every part of the business's P&L. We can prove it…

The practice I see many business owners implement time and time again is letting the “so called experts” (many by title only, Controller, CFO, Accountant, and Administrative HR) operate as their HR department, not realizing the impact, both positive and negative they can have in these areas on their profits. Check for yourself. One of the best ways to see if you have a Strategic HR person on board is to ask two simple questions.

  1. What have you done to increase your knowledge on your own that directly relates to increased revenue or increased productivity in the business?
  2. Can you show me?
    See what you get for answers. You may be surprised.

Small businesses owners are the heart of America. The SBA concludes:
“They make up over 99.7 percent of U.S. employer firms, 64 percent of net new private-sector jobs, 49.2 percent of private-sector employment, 42.9 percent of private-sector payroll, 46 percent of private-sector output, 43 percent of high-tech employment, 98 percent of firms exporting goods, and 33 percent of exporting value.”

Source: U.S. Census Bureau, SUSB, CPS; International Trade Administration; Bureau of Labor Statistics, BED; Advocacy funded research, Small Business GDP: Update 20022010

The heartbeat comes with an astounding cost of doing business. These are the things that a business “has to do” to be in business. They are not optional. If you are in business today the expenditure is there. Guess who pays the bigger price?

The hard facts are below. Some industries pay a little less, some significantly more, but all pay. As identified in the table below from the SBA.

Human Resources – Table 1 summarizes the incidence of costs by firm size based on aggregate data for all sectors of the U.S. economy.

Green Bay WI AHEAD Human Resources Increase Revenue And Drive Profit Table

9 Milton Friedman put the estimated burden of government mandates and regulations at roughly10 percent of U.S. national income in 2003. See Milton Friedman, “What Every American Wants,” Wall Street Journal, January 15, 2003, p. A10.

In my next blog, I’ll discuss the problems in human resources with solutions.
I would love to hear your comments about your human resources, so please leave them below.