The 3 Operating Models: Driving Future Success

With a rapidly advancing business environment, HR continues to evolve. Organizations must calibrate their HR department to support and align their workforce with strategic goals. To support these goals, HR operating models are in high demand. These models serve as the blueprint for HR service delivery, resource optimization, improved efficiency, a culture of continuous improvement, employee engagement, data-driven decision-making, globalization, and diversity. 

So, let’s dive into 3 HR operating models that will reimagine HR in 2025.

The Expanded Competency Model

This model adds an HR partner role to enhance the traditional setup. HR Business Partners (HR BPs) and Centers of Excellence (COEs) guide strategy, while HR partners and shared services manage daily tasks. It is ideal for large global firms with key hubs. This model ensures that HRBPs remain focused on strategy. Local HR managers take up tasks like employee relations and community building, which can't be centralized. However, not all transactional tasks can be standardized or transferred to these centers. By introducing the HR Manager role, this model addresses local transactional tasks that service centers can't always handle, like employee relations, engagement, and community building. 

For instance, with strategic thinking, HR professionals develop the ability to think strategically, align HR initiatives with broader business objectives, and anticipate future workforce needs. In terms of data analytics, given the amount of workforce data, HR must foster analytical skills to extract insights and inform data-driven decision-making. This empowers HR to identify trends, predict outcomes, and optimize talent management strategies. And finally, there is change management. In a rapidly evolving business environment, HR must manage change and cultivate a culture of continuous improvement. This eases organizational transformations, helps navigate disruptions, and supports employees through periods of change. 

The Internal Consultancy Model

This model positions HR professionals as trusted advisors, providing expert guidance and solutions to address organizational challenges and drive continuous improvement. It's a cyclical model where HRBPs are part of the business organization. Enterprise resources in the COEs act as internal consultants and help with specific business unit needs on a project-to-project basis. For example, there are compensation experts for sales and incentive design and talent management experts for learning and development projects. 

These internal consultants handle the project delivery and provide results for the business. This model is relevant for organizations that work as large global groups of independent business units. Internal HR consultants bring deep knowledge and expertise to the table. They can assess organizational challenges objectively and provide data-driven recommendations tailored to suit the organization's unique needs. They also foster a collaborative partnership between HR and business units. Internal consultants are pivotal in driving continuous improvement initiatives, identifying opportunities for process optimization, implementing best practices, and facilitating organizational learning and development.

The External Leverage Model

Finally, the external leverage maximum outsourced model is used. This model utilizes the services of external partners to manage various HR functions. This allows HR to focus on core strategic activities while relying on external expertise for payroll and benefits administration tasks. Now, this operating model has a twist on the traditional one. It includes business partners, centers of expertise, and a service center. But here's the kicker! The centers of expertise here run with very few resources because these centers focus on internal strategy while outsourcing event-driven tasks like merger integration, change enablement, seasonal recruiting, and hiring external talent from contractors to consultants as needed to meet business unit needs.

This model also significantly depends on an outsourced provider to manage its service centers. The focus is on simple processes and low-cost delivery. This approach helps HR cut fixed costs for the organization while supporting HR initiatives when the business requires them to. This model is ideal for low-margin and stable organizations that mainly operate within one country or location. Smaller-scale organizations might not find it practical to invest in ongoing design work or staffing within centers of expertise.

Advantages of Operating Model

What are the advantages? Well, there are quite a few. Outsourcing specific HR functions or processes to external service providers allows them to focus on core competencies and strategic initiatives. Common areas for outsourcing include payroll processing, benefits administration, and recruitment support. Strategic partnerships with specialized firms or subject matter experts can provide access to specialized knowledge and resources, supporting areas like leadership development, diversity and inclusion initiatives, or employee engagement.

Engaging specialized consultants or advisory firms offers access to cutting-edge expertise and best practices, objective assessments, guidance on organizational design, and support in implementing transformational initiatives. And finally, leveraging external technology solutions like cloud-based HR platforms can streamline processes, enhance data management, and enable advanced analytics capabilities. These solutions can be customized to align with the organization's needs and integrate with existing systems. By harnessing external leverage, organizations can augment their internal capabilities, access specialized expertise, and drive innovation within their HR operating models, ultimately enhancing organizational agility and competitiveness.

To conclude, these operating models provide a framework for navigating the challenges and opportunities of the future. By adopting these innovative approaches, HR departments can drive efficiency, foster employee engagement, and remain agile in a rapidly changing landscape.

Also Read:

Reimagining HR in 2025 with HR Operating Models 

Blueprint for a Successful Transition to Future HR Models