HR Operating Model

What an HR operating model is

An HR operating model (نموذج تشغيل الموارد البشرية) is the way the human resources function itself is organised: who performs each kind of HR work, through which units that work is carried out, and how a manager or an employee reaches the function when they need something from it.

The definition has three parts, and each answers a separate question. First, people: which person or which unit performs a given kind of work. Second, units: through which units the work passes before it is complete. Third, access: the route by which a manager or an employee arrives at the HR function in the first place.

The word “itself” in the definition matters. An HR operating model is about the HR function, not about the organisation that the function serves. What it settles is how the work of human resources is arranged, not how the rest of the organisation is arranged.

The question an HR operating model answers

HR work is not of one kind. Within it there are three kinds of work, and each kind calls for a different answer:

• Repeated work. It has one answer, and that answer is the same for every department. The same request, made in any department, is handled in the same way.
• Specialist design work. It is built once and then applied to everyone. The effort lies in building it, and the application across the organisation follows from what has been built.
• Work close to one particular department. It concerns the needs of that department, and a general answer does not fit it.

An HR operating model is the decision that distributes these three kinds of work among places. It is a decision about where each kind of work goes, not a list of job titles. A list of titles names the people in the function, but it does not say which kind of work each of them has been given.

The three places in an HR operating model

One distribution of HR work answers three questions, and each question is given a place:

• Where is the repeated work carried out? In a shared services center. It is the place where the work that has one answer for every department is brought together and carried out.
• Who designs the rules and the tools of a specialist field? A centre of excellence. It holds the design work, the work that is built once and applied to everyone.
• Who translates the needs of one particular department and carries the function’s work to it? An HR business partner. The role covers the work that sits close to one department, where a general answer does not fit.

Each of these three places has conditions and limits, and those conditions and limits belong to the definition of each place. What belongs to the HR operating model is the boundary between them: which piece of work goes to which place, and who answers for it when two of the places overlap.

The boundary is where the definition of the HR operating model does its work. Describing a shared services center, a centre of excellence and an HR business partner one by one says what each place is. Drawing the line between them says where a given request goes, and which of the three is accountable when that request falls within the reach of two of them at the same time.

What determines the right form of an HR operating model

The distribution into three places is one form of an HR operating model, not the only form. Four factors bear on which form suits an organisation:

• The size of the organisation. The distribution into three places assumes a size that can sustain three separate places. In a small organisation the work of all three places can rest with one person. That is an HR operating model as well; it is not the absence of one. The three kinds of work still exist in a small organisation, and the decision about them has been made by giving all three to the same person.
• The number of sites and activities. When branches are far apart, the value of centralising the work rises. At the same time, the cost of being distant from the departments rises as well. Distance between branches therefore pushes in two directions at once: towards bringing the work together in one place, and towards keeping it near the departments it serves.
• The maturity of policies. Until a rule has been settled, distributing its execution among units achieves nothing. Settling the rule comes before deciding who carries it out. Written rules and procedures, and the extent to which an organisation runs its work by them, are the subject of formalization.
• What the organisation decides. An expansion, a merger or a move into a new sector can change what is asked of the HR function in the first place. When what is asked of the function changes, the question of how its work is distributed is open again.

The sign that an HR operating model exists only on paper

The honest test of an HR operating model is not the chart that draws it but the path of a single request. Follow one routine request, such as a change to the data held in an employee file, the opening of a vacancy or a performance case, and count two things: how many hands the request passed through, and how many times it had to be explained again.

When a single request has two owners, or has no owner, the distribution has not actually taken place, however clearly the structure has been announced. A structure can be drawn in an organisational chart, or set out in an organisation manual, and the request can still find no place that answers for it.

How an HR operating model differs from HR strategy

HR strategy answers the question: what capabilities does the organisation need, and where will it obtain them? An HR operating model answers the question that follows from it: through what structure will that be carried out?

In short, HR strategy sets the destination, and the HR operating model sets who leads and by which route. The strategy says what the organisation is trying to have, and the operating model says how the HR function is arranged to deliver it.

The order between the two matters. An HR operating model chosen before the strategy has been settled ends up being decided on cost alone, because nothing else is available to weigh one form against another. Without a settled answer on which capabilities the organisation needs, there is no other measure against which a shared services center, a centre of excellence or an HR business partner can be judged, and the comparison between forms is left with cost as its only basis.

This is an explanation of the concept, not legal advice.