ORGANIZING THE HR FUNCTION

The organization and staffing of the HR function clearly depends on the size of the business, the extent to which operations are decentralized, the type of work carried out, the kind of people employed and the role assigned to the HR function.

There is no standard ratio for the number of HR specialists to the number of employees. It can vary from 1 to 80, to 1 to 1,000 or more. In the 128 organizations covered by the IRS 2004b survey, there was on average one HR practitioner for every 109 employees.


The ratio is affected by all the factors mentioned above and can only be decided empirically by analysing what HR services are required and then deciding on the extent to which they are provided by full-time professional staff or can be purchased from external agencies or consultants. The degree to which the organization believes that the management of human resources is the prime responsibility of line managers and team leaders affects not only the numbers of HR staff but also the nature of the guidance and support services they provide.


There are, therefore, no absolute rules for organizing the HR function, but current practice suggests that the following guidelines should be taken into account:

● The head of the function should report directly to the chief executive and should be on the board, or at least be a member of the senior management or leadership team, in order to contribute to the formulation of corporate strategies and play a full part in the formulation and integration of HR strategies and policies. In practice, however, this does not happen as frequently as one would wish. Only four out of 10 of the organizations surveyed by IRS in 2004 had a director with sole responsibility for HR. 

● In a decentralized organization, subsidiary companies, divisions, or operational units should be responsible for their own HR management affairs within the framework of broad strategic and policy guidelines from the centre. 

● The central HR function in a decentralized organization should be slimmed down to the minimum required to develop group human resource strategies and policies. It will probably be concerned with resourcing throughout the group at senior management level and advising on both recruitment and career development. It may also control remuneration and benefits policies for senior management. The centre may co-ordinate industrial-relations negotiating if bargaining has been decentralized, especially where bargaining is related to terms and conditions such as hours of work, holidays and employee benefits. Although rates of pay may vary among subsidiaries, it is generally desirable to develop a consistent approach to benefit provision. A recent development is to operate as a ‘service centre’, providing shared HR services to other parts of the organization, as described later in this chapter. 

● The HR function has to be capable of delivering the level of advice and services required by the organization. Delivery may be achieved by the direct provision of services but may be outsourced. 

● The function will be organized in accordance with the level of support and services it is required to give and the range of activities that need to be catered for, which could include resourcing, management development, training, reward management, employee relations, knowledge management and HR services in such areas as health and safety, welfare, HR information systems and employment matters generally. In a large department, each of these areas may be provided for separately, but they can be combined in various ways.

The organization and staffing of the HR function needs to take account of its role in formulating HR strategies and policies and intervening and innovating as required. But the function also has to provide efficient and cost-effective services. These cannot be neglected; the credibility and reputation of the function so far as line managers are concerned will be largely a function of the quality of those services to the HR department’s internal customers. It is, in fact, important for members of the function to remember that line managers are their customers and deserve high levels of personal service that meet their needs. 

The most important principle to bear in mind about the organization of the HR function is that it should fit the needs of the business. Against that background, there will always be choice about the best structure to adopt, but this choice should be made on the basis of an analysis of what the organization wants in the way of HR management guidance and services. This is why there are considerable variations in HR practice.