Why Cost Centers Should be Extinct

In this day and age, can any company afford to have a department or division that doesn’t contribute to the top- or bottom-line? The concept of a cost center makes no sense. “Let’s develop a department where we incur costs and have no ties whatsoever to improve the overall financial performance of the organization. We will have no financial measures that help the overall company improve.”

So here’s where you say, “But not all departments can be tied directly to the financial performance of the overall organization!” Wanna bet?

IT departments may have developed some great new technology tools to manage information in the company. Couldn’t that be commercialized and sold?

Call center representatives, who talk to customers ALL DAY LONG, could be trained on all of your company’s offerings and help identify new customer needs that can be filled with those products and services.

Repair people and technicians can be trained to provide better solutions to customers when they are in the field. Procurement departments can negotiate better relationships with key suppliers. Finance departments can find more cost effective ways to report on financial information.

And any department can contribute new ideas to help with customer acquisition and retention, or revenue growth, or increasing profitability.

I think you get the point. Creating cost centers is an out-dated idea that needs to become extinct. Are you one of the people giving it CPR to keep it alive?


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