An HR operating model is a crucial aspect that resonates with many organizational leaders, as they continually seek ways to enhance operational efficiency and collaboration. This article delves into the essence of HR operating models, exploring different ways to structure the HR function and presenting various types of HR operating models, along with recommended practices for their development.
What Constitutes an HR Operating Model?
An HR operating model essentially defines the organizational structure of the HR team, outlining how it functions to deliver value to internal customers and stakeholders. Effective HR operating models facilitate the efficient delivery of HR services and the fulfillment of its value proposition.
Types of HR Operating Models
Numerous types of HR operating models exist, each catering to specific organizational contexts, business strategies, and budget considerations. Some common models include the business partner model, functional model, hub and spoke, federated model, and front-back delivery model. The choice among these models depends on the organization’s size, strategy, and structure.
1. Business Partner Model
The most prevalent model, the business partner model, operates with a centralized shared services and solutions approach. Advisory or business partner functions are embedded within lines of business. Reporting lines are typically dual, with HR reporting into both business units and a centralized corporate HR function. This model emphasizes crafting HR strategy across all lines of business, employing technology from a centralized perspective to ensure consistency, scalability, and avoidance of duplication.
2. Functional Model
Commonly adopted by smaller organizations, the functional model mirrors the business partner model but organizes similar functions and expertise into departments. These departments report to a centralized HR leader, with technology and strategy driven centrally. Decision-making is largely top-down.
3. Front-Back Delivery Model
Operating from a shared back-office function, the front-back model allows the front office to leverage support according to specific lines of business requirements. Shared principles guide the overall strategy, but each line of business crafts a more localized strategy. Technology is shared, but lines of business may have additional technologies based on their specific needs.
4. Hub and Spoke Model
In the hub and spoke model, a centralized function drives consistency, strategy, and shared technology/services. Different spokes, representing localized solutions, are responsible for criteria such as geography or business unit verticals.
5. Federated Model
The federated model consists of independent HR lines of business aligned with either a region or business unit. HR strategy is set within each federation based on established principles. While technology is generally shared for cost efficiencies, federations can procure their own solutions if deemed appropriate.