The Organizational Structure of Human Resources

Companies structure human resources to best meet business needs.

Human resources (HR) no longer mirrors its "personnel department" roots. How it appears on an organization chart varies by type of company. How it functions reflects the growing emphasis on what "HR Magazine" calls the "strategic business" role of human resources.

Company Types

David Ulrich, Ph.D, an authority on human resources organization, views HR "as a business within a business," adding that HR organizations should be structured like their companies. A single business would rely on a centralized HR department, with HR generalists at any off-site manufacturing facilities. A decentralized approach to HR best serves the holding company where each of its independent businesses has a dedicated HR department. The HR organizational structure in diversified, and multinational corporations use the "business partner model"---a hybrid format that provides economies of scale from centralization and flexibility to react to market conditions.

Business Partner

The business partner HR structure includes the "back of the office," a service center charged with administrative functions such as payroll and benefits. Centers of excellence handle employee relations, training, recruiting and staffing responsibilities. Both assist the "front of the office" business partners. A business partner's job resembles that of an account manager. Business partners participate in strategy development for an assigned business and share responsibility for its overall performance.

Solution Centers

A newer form of HR organizational structure, the solution center model, transforms HR into a consultancy for the company. This structure uses small centers of excellence based on business complexity rather than company size. Teams of functional experts called field staff distinguish it from the business partner model. These teams, known as solution centers, can report to a business, a geographic division or an HR function on the organization chart (e.g., training, recruitment, compensation). Solution centers offer more flexibility to react to opportunities and challenges than the business partner model.

References

• Findarticles: Bnet Business Services Industry; Changing shapes - trends in human resource reorganizations; "HR Magazine;" Carla Joinson, March 1999
• University of Michigan: The twenty-first-century HR organization; Dave Ulrich; Human Resource Management 47(4); 829-850
• Entrepreneur: Business Journals; Human Resource Planning; (Re)designing the HR organization.(human resources); Amy Kates, June 2006

Resources

• Scribd: Changing Nature of Human Resource Management; David Ulrich
• Personel Today: David Ultich Model Defense; Louise Peacock, April 2008