The HR Operating Model Has Not Kept Up: Why Most HR Functions Are Structurally Misaligned with Business Needs

The gap between what business leaders expect from their HR function and what most HR functions are organised to deliver has never been wider. Business leaders want a strategic partner that helps them make better people decisions faster. What most HR functions are structured to deliver is accurate payroll, compliant hiring, and policy administration.

This is not a failure of intent. Most HR leaders understand what a strategically valuable HR function looks like. It is a failure of operating model design.

What the current model was built for

The dominant HR operating model in Indian organisations is a variation of the Dave Ulrich model from the late 1990s and early 2000s. It divides HR into three components: HR Business Partners embedded in business units, Centres of Excellence providing specialist capability, and a Shared Services function handling transactional administration. This model works reasonably well when the business is stable and challenges are predominantly transactional in nature. It struggles when the business is changing rapidly and challenges are predominantly strategic.

What a better-designed HR operating model looks like

Business partnership that is genuinely strategic

The HR Business Partner role, as originally conceived, was a strategic adviser to senior business leaders. In practice, in most organisations, HR Business Partners spend the majority of their time on operational and transactional matters: employee relations cases, hiring approvals, and performance management administration. This is not because they lack capability. It is because the shared services function has not absorbed the transactional work it was designed to absorb, and the HR technology platform has not automated the administrative work it was designed to automate.

Workforce planning as a core capability

Most HR functions have a talent acquisition capability. Very few have a workforce planning capability. The difference is significant. Talent acquisition fills today’s vacancies. Workforce planning identifies what skills, capabilities, and headcount the organisation will need in three to five years, and builds the pipeline, development programmes, and sourcing strategies to ensure they are available. In a period of rapid technology change, this is not a nice-to-have.

HR technology that actually works

The promise of HR technology was that it would automate the transactional and release HR to focus on the strategic. In many organisations, the technology has been deployed but the promise has not been realised. The reasons are typically not technical. They are adoption and process design failures. The technology was implemented without adequately redesigning the HR processes it was meant to support, and without sufficiently training HR teams to use it effectively.

The HR operating model redesign question is not primarily a question about structure. It is a question about what the organisation needs from its people function, and whether the function is genuinely organised and resourced to deliver it.