Thursday, July 28, 2005


You dont need to take a Management Accounting class to understand the terms "Profit Center" and "Cost Center". Your organization could be broken down into business units that either are revenue generators or revenue sinks. For example Sales is always a profit center since they solely focus on their quotas to generate revenue ( as a side effect commisions) whereas HR is always a cost center because they dont generate any revebue but cost the organization some revenue to do whatever it is that they do.(While it is interesting to compare the mentalities of people working in either center, I shall refrain from that digression - for example cost center folks are usually content, laid back , easy going versus hectic, hungry, aggressive profit folks)

In a recent internal company meeting one of the directors nailed me as a "non revenue generator",( that translates into not being one of his folks, who are consultants billed at an hourly rate). I was doing Sales Consulting in my previous life and I do understand the luxuries of being one of them. At the end of the day given the pressure to meet targets, some things would be sacrificed. While this sacrifice is Okay to some and are very happy as to what comes with that territory, I couldnt actually come to terms to a job partially done. Something essential to the work-well-done-feeling is taken away, thanks to the negotiations on the deal.Sorry. I cannot be one of them and Hence my move to this new job where I could do what I want to, to my heart's concern.I have become an accidental engineer because I could not become a scientist or a mathematician :(

Half a dozen retorts came to mind but I resisted ( My favorite one was that we are a profit center with a profit target of zero and we are consistent with that.Beat That!). Luckily to my rescue one of his own team called him their "pimp" (there's a certain element of truth to that :) and we'll lay matters to rest here.

Thinking about this on my way back, I could picture my economics instructor at high school explaining me an isomorphic (read: similar) concept of certain profit and cost curves and their intersection. This was in those days when whiteboards and sketches werent common and good old chalk piece with a blackboard was the standard display medium in schools. While the economics teacher rambled on, I could see the chalk particles from the writing slowly come off.
Have you ever seen that the fall of chalk particles observes a certain parabolic trajectory? ( Incidentally she was talking about the breakeven point of some sort). The particles at the vertex of the parabola take the most air-time. Similarly there seems to be some other "____ center" which could be defined as neither profit nor cost but nevertheless gives us the best of both worlds. Till I figure out that part, I'll have to carry this cross.


Priyanka said...

hmm..we seem to be in a very tho'tful mood these days? i suppose at different points in our lives we tend to evaluate our actions in profit vs. loss..but eventually, it all comes to a balance doesn't it?
ah, whatever. i'm a bit ill, so can't think straight ;)

A. Diddy said...

hmm...i gather you seem a trifle irked with HR?

Paddy said...

[Pri] Am not so sure about the zero sum game but yeah! you are right.Seen from a high enough dimension all of this seems to cancel out.

[Adi] No.Not Really. I am irked with the so called "Professional Services" group.

Anonymous said...

How are ya.. Subhash