Can a HR Professional Increase Profit?

by Greg Phillips

HR Professionals can dramatically affect the profit of an organisation. Here is one example.

A couple of topics that are often discussed in various forums are the talent shortage (and what recruiters refer to as a ‘candidate-short market’) and staff retention. If you are in a HR, Training or Leadership role, this won’t be news to you. The two topics are somewhat interrelated in that, in a candidate-short market, it is even more critical to retain talent. Again, not news.

If you conduct good quality exit interviews, you will regularly find that one of the more common reasons people leave an organisation is due to being unhappy in the work environment, and this is often related to their colleagues. You will regularly receive comments such as “I don’t understand my work colleagues”,  My work colleagues don’t understand me”, “I don’t understand (or like) the organisational culture”. So, how does this affect profit and what do you do about this?

There are a variety of psychometric and behavioural profiling instruments available to assist in the recruitment and professional development of people. These tools can be used to create much better (true) understanding. Whether you use these types of instruments or not, there are valuable lessons to learn from some of the regular outcomes which are achieved when these tools are used well. One of the most valuable outcomes when we profile a team is that people gain an understanding that we are all different. You might say, well everyone probably already realises that we are all different. True, however the reality is that most people don’t stop and think about what that means. People need a framework so they can understand this fully – When I understand something I can master it.

You need to really work through it and have people realise that they need to understand that, because their behavioural style is different to others, all sorts of things can be misunderstood e.g.:

  • Communication – both giving and receiving
  • Intentions
  • Interpersonal styles
  • People’s abilities

Let me share a brief story, which underlines this.

I did some work with a national retail chain and some outstanding performance improvements were made, which resulted in a dramatic profit increase, simply by improving understanding between the personnel. In one example, many of the staff in a particular store were working against each other. Numerous staff relationships were quite dysfunctional, including the relationship between the sales departments and the administration office.

The number of ways people can make life difficult for others, even when they don’t work in the same department, are countless. For example, when retail staff would go to the office to get change for the register, the Office Manager would deliberately make them wait unnecessarily, apparently just because she didn’t like them. Of course, often the customer was also kept waiting and there are the obvious productivity issues, not to mention the effect on morale.

In short, all that was required to fix the problem was to educate the staff using the DISC framework and have them understand their differences; to realise that none of them were good or bad; that there was great power in their differences; that everybody contributed to the store and the customer experience. The new level of understanding that was created, propelled the store forward to an amazing profit level. In the previous financial year this store had contributed $116,000 net profit to the group. In the “year of new understanding”, the store contributed $1,080,000 net profit. That’s not a typing error. That’s right, more than 9 times profit improvement!

I’m sure you can also imagine the effect on retention given the much-improved working conditions and morale. I imagine that everyone these days knows that a good working environment has an enormous impact on staff retention. Many organisations however lose sight of the fact that good working conditions doesn’t just mean the physical environment or that there is coffee in the kitchen. It’s about relationships, and good relationships come from understanding.

There are many areas where understanding is important and where there are common misunderstandings:

  • People’s potential
  • Working relationships – between individuals, departments, locations, administration……
  • People’s roles
  • How people can best contribute to the organisation
  • What is expected of me?
  • What can I reasonably expect of others?
  • What can I reasonably expect of the organisation?
    Etc. etc. etc.

In summary, HR professionals play a critical role in understanding the needs and behaviours of employees, facilitating effective communication, and creating a positive work environment. By addressing issues related to talent shortage, retention, and interpersonal dynamics, HR can significantly contribute to an organisation’s profitability and success.