HR Operating Models

May 12, 2021 By ascendadmin

May 12, 2021 By ascendadmin

HR Operating Models

HR has evolved over the years and the kind of HR department in each organization depends on its business context. There is no ‘one-size-fits-all model. Depending on the organization’s strategy, structure, culture, industry, sector, etc the right HR model needs to be selected.


Several organizations, especially SMEs outsource some or all of their HR activities to a third-party provider. The greatest benefit is efficiency and expertise. Outsourcing is often sought for payroll, recruitments, and other transactions.


This model is similar to outsourcing but deals with more complex, specialist, and strategic HR issues than transactional HR. The HR professionals within an organization manage routine, transactional HR processes but call in the consultants when something more complex or strategic needs to be done. For example, design a new organization structure, change the compensation and benefits strategy, provide certain legal experts, etc. Consultants provide the recommendation to the organization but the actual implementation is done by the internal HR team.
For small organizations, it may be cost-effective not to have an in-house HR and use consultancy services as and when required.

Shared services-

These are centers that will handle routine, transactional administrative work of HR. Usually, this model is seen as a call center that handles HR concerns and queries with links to the business.

The many benefits include :

  • economies of scale
  • efficiency
  • cost benefits
  • quality of service
  • effectiveness
  • sharing of knowledge

The Ulrich model (Ulrich 1997)

The Ulrich model is a 3-legged stool- shared services center, business partner, and centers of excellence.

  1.  Shared services-In-house team that handles high volume transactions and routine HR processes like absence management, payroll, etc.
  2.  HR business partner makes strategic decisions and works closely with the business leaders in formulating strategy.
  3.  Centers of excellence- These are the various HR specialisms like a reward, L&D, employee engagement, organizational design, etc. These teams are up-to-date and their practices are evidence-based, research-driven, and legally compliant.

The key findings from a CIPD Survey conducted in 2014 were-

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