Question

HR- Human resource

8:11 Discussion Assign ment 2 10 points maximum score Ron is back in your office this week for a regular update on the projects you have been working on His comment this week is "You know, I've been going through cost centre classifications all week with our accounting team in terms of profit, cost and investment centres. Do you know what they had the audacity to classify HR as?" Can you tell Ron the appropriate answer and explain how you would measure the performance of the type of centre in which HR has been placed? (8 marks) Provide constructive feedback to at least two other students' postings. (2 marks) Note that you CANNOT view others' submission until you have posted yours first Start Thread

Answer 1

The primary types of responsibility centers along with their main responsibilities are as follows:

• Cost center: Also known as expense center, it is that part of the organization where managers are considered responsible and accountable for the cost incurred in that part. So, the primary responsibility of a manager in cost center is limited to costs and not revenues.
  • Example: Legal department, R&D center, HR department
• Revenue center: This part of the organization is focused on generating revenues for the company. The manager in a revenue center, does not have any control on cost or investment but he focuses on the revenue generated in that center.
  • Example: marketing department, sales department
• Profit center: The manager of this center or segment of the company is focused on generating both cost and revenue. So, he has influence on the profits generated by the segment.
  • Example: marketing department, sales department
• Investment center: The manager of this segment of the company is interested in both profits as well as investments generated. He is responsible and accountable for the revenues generated as well as for the expenses incurred in the segment.
  • Example: IT department

HR was used to be considered as a support function of the company. They were involved in timekeeping and payroll, primarily. Hence the past perception of HR department was to be a cost center. However, with time, HR has gained the respect and has won itself a substantial position in the C suite and Board of the company. The department has been capitalizing on analytics for manpower planning and resource utilization and helps in keeping the expenses and cost of the company minimal. Hence, it can be concluded that HR department in 21^st century has evolved to be a profit center, rather than being a cost center.