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Organization: Structure of the HR Function - Coggle Diagram
Organization: Structure of the HR Function
Role of HR
Strategic Role of HR
Purpose: Align HR with organizational strategy to drive long-term success.
Key Activities:
Participate in organizational strategy development.
Ensure HR strategy supports business goals (e.g., talent planning for growth).
Advise on human factors in strategic decisions (e.g., global expansion risks).
Skills Needed:
Forward-thinking, data analysis, cross-functional collaboration.
Administrative Role of HR
Core Focus: Compliance, record-keeping, and efficiency.
Strategic Use of Technology:
HRIS (Human Resource Information Systems):
Centralize data (employee records, compliance reports).
Enable self-service portals for employees/managers.
Data Analytics:
Identify trends (e.g., turnover risks) to inform strategy.
Outsourcing Non-Core Tasks:
Examples: Payroll, benefits administration, background checks.
HR’s Role: Vendor negotiation, performance monitoring.
Operational Role of HR
Day-to-Day Activities:
Recruitment, hiring, employee relations, performance consulting.
Strategic Alignment:
Knowledge Management:
Map organizational expertise to support strategic goals.
Targeted Talent Strategies:
Use job analysis to bridge gaps between job descriptions and actual skills.
Incentive Systems:
Reward behaviors aligned with strategy (e.g., customer satisfaction over call speed).
Employee Engagement:
Programs to boost productivity/retention (e.g., leadership training, empowerment models).
Key Takeaways:
Strategic HR: Big-picture focus (future growth, alignment).
Administrative HR: Efficiency + compliance (leveraging tech/outsourcing).
Operational HR: Daily execution with strategic intent (talent, engagement).
HR's Internal Stakeholders
HR as Strategic Cross-Functional Bridge
:warning: Key Content:
Modern organizations require integrated strategies across functions, not siloed approaches
HR uniquely positioned to connect functions through its human capital perspective
Serves as translator between technical and business domains
HR's Strategic Bridging Role:
Facilitates cross-functional understanding through:
Joint planning sessions
Interdepartmental training
Shared success metrics
Acts as organizational consultant by:
Identifying resource gaps before they impact performance
Developing talent pipelines aligned with multi-function needs
Creating shared language/knowledge bases
HR Partnerships with Core Functions
Executive Management (C-Suite)
Critical Support Areas:
Succession Planning:
Identifying/developing next-generation leaders
Creating leadership competency frameworks
Governance:
Board recruitment/training
Executive compensation structuring
Ethics/compliance oversight
Strategic Workforce Planning:
Modeling human capital needs for 3-5 year plans
Scenario planning for mergers/expansions
Finance & Accounting
Key Collaboration Points:
Workforce Analytics:
Cost-benefit analysis of HR programs
ROI calculations for training initiatives
Global Workforce Management:
Tax-efficient compensation structures
Expatriate cost projections
Risk Management:
Fraud detection/prevention programs
Internal audit support
Marketing & Sales
Strategic Alignment Areas:
Market-Driven Workforce Strategies:
Push Strategy Support:
Compensation for retail/distribution roles
Staffing for direct sales teams
Pull Strategy Support:
attracts customers to the product.
Hiring creative/branding talent
Training for digital engagement roles
Brand Alignment:
Ensuring employee experience matches customer promise
Employer branding for talent attraction
Sales Force Effectiveness:
Designing tiered commission structures
Developing consultative selling skills
Research & Development (R&D)
Innovation Enablement:
Talent Strategies:
Recruiting specialized technical experts
Creating dual career ladders (technical vs management)
Knowledge Protection:
IP security training
Non-compete/non-disclosure agreements
Culture Building:
Failure-tolerant performance systems
Cross-functional team design
Hackathon/innovation challenge facilitation
Operations
Workforce Optimization:
Labor Planning:
Seasonal staffing models
Skills gap analysis for new technologies
Quality & Safety:
Behavioral safety programs
Quality mindset training
Global Coordination:
Cross-border team integration
Cultural competency development
Local compliance assurance
Information Technology (IT)
Digital Transformation Partnership:
Systems Implementation:
HRIS selection/deployment
Change management for tech adoption
Data Security:
Access control policies
Phishing/social engineering training
Future Skills Planning:
Upskilling for AI/automation impacts
Digital literacy programs
Emerging Cross-Functional Challenges
:warning: Key Content:
Digital Integration:
Aligning HR tech stack with enterprise systems
Managing data flows between functions
Agile Organization Design:
Creating fluid team structures
Developing T-shaped employees
Ethical Dilemmas:
Balancing productivity vs privacy
Algorithmic bias in HR systems
HR Organization
HR Team Members
Leaders
Play a strategic role in aligning HR with business goals.
Typically part of the senior leadership team (e.g., CHRO, HR Director, VP of HR).
Report to CEO or COO to support strategic decision-making.
Provide insight into organizational strengths, weaknesses, opportunities, and threats.
:warning: HR leaders must align HR strategy with business strategy and actively participate in enterprise-level planning.
Managers
Lead specific HR units like employee relations, talent acquisition, and organizational development.
Plan, coordinate, and direct unit activities.
Provide strategic input to HR leaders.
Specialists
Functional experts in niche areas like compensation, benefits, talent management, safety, metrics, etc.
Implement best practices to support HR and organizational strategy.
:warning: Specialists ensure technical excellence and discipline-specific HR innovation.
Generalists
Have broad HR knowledge across multiple areas.
May have specialty expertise but are proficient in various HR functions.
Work closely with specialists to ensure accurate HR service delivery.
Often embedded in business units or regions.
:warning: Generalists provide holistic HR support and connect managers/employees with appropriate HR services.
HR Business Partners (HRBPs)
Senior generalists who liaise directly with business units.
Use deep business understanding to align HR initiatives with functional goals.
Require strong competencies: Business Acumen, Consultation, Communication, Relationship Management.
:warning: HRBPs are key to demonstrating and delivering HR’s strategic value to the business.
HR Function, Service, and Structural Models
HR Function, Service, and Structural Models
Alignment with Strategy: HR structures must align with the organization’s strategic goals.
Structural Alternatives
Centralized
All HR is housed in one central department.
Advantage: Control and consistency.
Disadvantage: Less flexibility and slower communication.
:warning: Centralized HR ensures standardization but can reduce responsiveness.
Decentralized
HR is located in individual units or regions.
Advantage: Enhances responsiveness and local communication.
Disadvantage: Inconsistent policies and standards.
:warning: Decentralized HR builds closer internal partnerships and local responsiveness.
Functional
HQ specialists create policies; local generalists adapt and implement.
Advantage: Policy consistency with local customization.
Disadvantage: HQ may be disconnected from frontline realities.
Dedicated
HR tailored to each business unit’s unique strategy.
Advantage: Strategic alignment with unit needs.
Disadvantage: Risk of isolation, duplication, and inefficiencies.
Shared Services
Centralized transactional services (e.g., payroll, benefits) offered as-needed to units.
Advantage: Efficiency, cost-saving, and frees up HR for strategic work.
Disadvantage: May be underutilized if not well-known.
:warning: Shared services reduce admin burden and increase strategic focus.
Center of Excellence (COE)
Expert HR teams providing strategic guidance in specific areas (e.g., L&D, compensation).
Advantage: Drives innovation and improvement.
Disadvantage: Same risk of underuse as shared services.
:warning: COEs leverage deep HR expertise and virtual collaboration.
Business Partners
Senior generalists embedded in business units; report to both HR and local leadership.
Advantage: Builds HR’s relevance by aligning closely with business needs.
Disadvantage: Role ambiguity may cause issues.
:warning: Business partners enhance HR's visibility and impact across units.
Matrix
Dual reporting: to HR leadership and functional leaders.
Advantage: Flexibility and adaptability for complex work demands.
Disadvantage: Confusion and overload due to blurred reporting lines.
:warning: Matrix structures require clear communication and priority-setting to avoid conflict.
Global Resources
HR support sourced worldwide, often via outsourcing.
Advantage: Brings global perspective to local decisions.
Disadvantage: Risk of cultural misalignment and communication issues.
Outsourcing
Definition:
Outsourcing: Third-party vendor provides selected HR activities.
Cosourcing: Third party provides dedicated services while working inside the HR organization.
Best Use Cases:
Non-strategic, resource-intensive, or specialized HR tasks.
Examples include payroll, benefits, employee self-service, learning systems, recruitment, investigations, and analytics.
:warning: Outsourcing: Offers cost savings but reduces managerial control.
:warning: Cosourcing: Costs more but provides greater control over the contractor.
Strategic Consideration:
Must align with organizational and HR goals.
Contractors must be reliable, capable, ethical.
Contracts must clearly define deliverables and standards.
Special types:
Professional Employer Organization (PEO)
Definition: A formal co-employment arrangement where a business outsources most HR functions.
Structure: The organization transfers all or most employees at a site to the PEO’s payroll.
PEO's Role:
Becomes the employer of record.
Handles payroll, benefits, HR compliance, and risk management.
Leases employees back to the original employer.
Purpose: Reduces administrative burden and enhances compliance; strategic HR outsourcing.
Payrolling
Definition: A staffing arrangement where the organization refers specific individuals to a staffing agency.
Structure: The staffing firm becomes the legal employer, but the individuals work at the referring organization.
Use Case: Often used for known workers (e.g., retirees, interns, or previous contractors).
Cost: Typically cheaper than traditional temporary staffing, since sourcing and recruitment are not needed.
The Outsourcing Process (9 Steps)
Analyze Needs and Define Goals
Multidepartmental team identifies goals and constraints.
Example: New HRIS needs gathering from various departments.
:warning: Most critical stage—ensures alignment with real needs.
Define the Budget
Establish cost expectations and compare with in-house costs.
Example: Budget for planning, implementation, and support.
Create Request for Proposal (RFP)
Document outlining needs, scope, and pricing expectations.
Ensures consistency among proposals.
Send RFPs to Chosen Contractors
Include submission instructions and deadlines.
Example: Narrowing list to top vendors before sending.
Evaluate Contractor Proposals
Criteria: scope, specs, site visits, price, quality, reputation, flexibility, customization, etc.
:warning: Use structured evaluation process (see Exhibit 3-4).
Choose a Contractor
Select based on best match of specs, customization, and cost.
Example: 85% fit with ability to customize remaining 15%.
Negotiate a Contract
Includes deliverables, timeline, pricing, service standards, training, upgrades, etc.
Implement the Project and Monitor
Initial planning meeting with contractor; track timeline and budget.
Example: Meet implementation deadlines with shared plan.
Evaluate the Project
Review contractor and system performance.
Use benchmarks to plan future updates or improvements.
Example: Annual evaluations based on system metrics.
Demonstrating the value of HR
HR Performance Measurement
Benefits of Measuring HR Performance:
Reinforces HR’s strategic role.
Identifies opportunities for improvement.
Strengthens partnerships with internal stakeholders.
Supports future investment in HR.
Key Performance Indicators (KPIs):
Set using balanced scorecard method.
Includes both outcome and process evaluations (e.g., budget variance, alignment with goals).
:warning:
Balanced Scorecard for HR
Links HR objectives to business goals.
Focuses HR efforts on strategic priorities.
Demonstrates HR’s strategic value with measurable, concrete outcomes.
Example Contributions by Perspective:
Financial: Flexible staffing strategies.
Customer: Easier access to HR services.
Internal Processes: Tech-enabled efficiency.
Learning/Growth: Leadership pipeline development.
Requirements for Effectiveness:
:warning: Accountability and measurable results.
:warning: Valid, understandable, and actionable metrics.
:warning: Focus on strategic results (e.g., productivity, retention).
:warning: Careful planning and execution.
HR Metrics (Efficiency + Strategic Impact)
Traditional Metrics:
Cost per hire, time to fill, HR staff ratio, turnover cost, etc.
Strategic Metrics:
Key talent retention, promotion patterns, training ROI, human capital ROI/value added.
See Exhibit 3-5 for comprehensive metric examples.
Absence Rate: Ratio of lost days to number of employees – reflects workplace condition changes.
Accruals: Comparison of budgeted vs actual assignee costs – monitors assignment budget alignment.
Applicant Yield Ratio: % of applicants moving to next step in selection process– assesses recruiting method effectiveness.
Cost per Hire: Total hiring cost ÷ number hired – evaluates efficiency of hiring process.
Customer Satisfaction: Survey-based score of HR services – measures HR service quality impact.
HR Staff per FTE: Ratio of HR staff to total full-time employees – checks HR team adequacy.
:warning: Human Capital ROI: Ratio of employment costs & (Revenue −
non-employment costs
) – shows HR program value.
:warning: Human Capital Value Added: (Revenue −
non-employment costs
) ÷ number of FTEs – tracks employee productivity.
Key Talent Retention: % of key talent retained – gauges effectiveness of development/rewards.
Promotion Pattern: % of promotions that are internal – indicates strength of internal development.
Success Ratio: % of hires later deemed successful – measures quality of selection process.
Training ROI: (Performance gain − training cost) – measures economic value of training investment.
Transfer Rate: % of employees moving across divisions – tracks internal mobility and development.
:warning: Turnover Costs: Costs of separation, vacancy, replacement and training – quantifies turnover impact.
Turnover Rate: Proportion of exiting employees to all employees – used with cost data to support pay/benefit decisions.
Vacancy Costs: Costs of substitute labor (temporary workers, contractors, outsourcing partners) minus wages and benefits not paid because vacant – supports outsourcing or staffing decisions.
HR Audits
Purpose:
Evaluate alignment of HR policies with goals.
Identify gaps and improvement opportunities.
Respond to changes (laws, KPIs, strategies).
:warning: Audit triggers include poor KPI results, strategy shifts, legal/tech updates.
Types of HR Audits
Compliance: Legal and regulatory adherence.
Best Practices: Compare with top-performing peers.
Strategic: Alignment with business goals.
Function-specific: Focus on specific HR functions (e.g., payroll).
:warning: The Audit Process (Steps)
Determine audit scope and type.
Develop audit questionnaire.
Collect data using consistent methods.
Benchmark results (internal/external comparisons).
Provide feedback to management.
Develop action plans (prioritized by risk).
Foster continuous improvement culture.