Strategic HR

Reinventing the HR Organization

14 July 2025|

Updated on 15 July 2025

HR is (or should be) full of advice on how firms should be organized. However, when has anyone last taken a close look at the structure of HR itself?

The organization of HR in India was not always so complex or confusing. It was born in a simple factory household. Its maternal parentage (which it didn’t always own with pride) came from a long line of bookkeepers and 'munshis' who needed employee records to make payments and record attendance. As the children became increasingly unruly, a maternal uncle with legal training, kept them in check and dealt with the gang-leaders with whom they kept company. The father’s line, which didn’t have much time for its offspring, was production and engineering. They imparted the technical skills that the youngsters needed to work in the family business. Thus, in less convoluted terms, Industrial Relations (with Establishment, i.e. record-keeping, folded in) and Technical Training were the two parents of factory HR. Without necessarily drawing a parallel with the way we were treated, by the time I joined the function at Telco (now Tata Motors) Poona (now Pune) in the ’70s, HR could say, like Topsy, "I spect I grow’d. Don’t think nobody never made me." 1 There was no pre-thought design behind the structure that evolved. In addition to HR’s two parental pillars, our fast-growing operations in Telco demanded a centrally shared recruitment service and a dedicated cell for inducting and developing the burgeoning number of engineers and other professionals (who didn’t have unions to represent their needs). We even had a prototypical business partnering presence for our vast Engineering Research Centre. As an aside, it was 'personned' by the redoubtable Anil Sachdev, who went on to create the fertile SOIL for many more young minds to grow.

Specializations continued to be added to HR haphazardly, as needs arose over decades and geographies, resulting in the tree trunk structure that we have today which, if sliced through, reveals all the rings of the years, seasons and styles it has weathered. This is not to say there has been no effort at systematization and streamlining. Almost three decades ago, my brilliant teacher, Dave Ulrich, expounded an appealing model that fit all the then extant pieces into four super-roles. Some of these left worthy progeny (e.g. Strategic Partners parented Business Partners) while others (e.g. Employee Champions) never went forth and multiplied. While Ulrich’s framework helped HR departments all over the world to conceptualize and group activities, it did not change the nature of the building blocks encompassed by the super-roles. Functional Experts, for instance, remained rooted in updated versions of the process specializations in which they originated. As a result, even today, most HR structures ignore three basic changes that have destroyed the assumptions of our Topsy-turvy growth. Most of the specializations, that traditionally had to be honed and periodically tweaked in-house, are now better handled through standardization, automation and outsourcing (to vendors with scale and in lower cost locations). By outsourcing "…organizations hope to achieve significant cost savings, greater efficiency, increased value creation, and better leverage of capital investments in HR systems; create career opportunities for HR employees; and enable HR to focus on more strategic activities." 2 In hanging on to those specialized structures past their sell-by dates, however sophisticated-sounding the Centre Of Excellence & Shared-service (COEDS) boxes in which we pack them, we are deprived of the innovation, quality and cost benefits new ways of organizing HR can bring. This column seeks to address this lacuna. If the specific recommendations fall short of readers’ expectations, I hope they will at least prompt them to make their own voyages of structural discovery and reinvention.

Outgrowing Outdated Organizations

Jay Galbraith’s work on organization design is considered definitive by many (myself included). While his work is focused on the corporation as a whole, it is a useful starting point for analyzing HR structures in large corporates.

According to Galbraith: "An organization can be structured in five primary ways:

Function
Geography
Product
Customer
Front-back hybrid

In addition, there are overlay structures (teams, matrix) that complement these primary forms." 3

Despite the guidance it supposedly provides others, HR itself remains essentially rooted in the functional form. Sub-functions, such as Recruitment, Training and Comp & Ben (sometimes combined in COEDS cabinets), take the place of corporate level functions, like Manufacturing and Sales, in the Galbraith model. "While functional and product organizations have internal advantages, they don’t necessarily provide an easy interface to the customer. What is a simple and rational structure for managers is cumbersome and complex for clients… Organization structures based on customer, market, or industry segments make it easy for the buyer to do business with the organization. For service businesses that must intimately know the preferences of their clients in order to stay competitive, organizing by market segment makes sense." 4 Concomitant with the growing demand for understanding the (internal) customer’s needs intimately, comes the hollowing out of the internal specialization that justified the adoption of the functional / product form. The trigger provided by automation, to which we referred in the previous section, is itself about to take a quantum leap through the growing applications of AI. Similarly, the outsourcing of traditional processes, also referenced earlier, has become far more sophisticated, tailorable and cost-effective in recent years. This has been aided by internal users getting over their fastidious insistence on home-cooked deliveries. "Line managers are [now] basically agnostic to where these services are performed as long as they are accurate and user-friendly." 5

Admittedly, the Business Partnering concept, to which many corporates have given at least lip service, has the potential of growing HR into a front-back hybrid. "The front-back hybrid structure combines elements of both the product and customer structures in order to provide the benefits of both. It allows for product excellence at the back end while increasing customer satisfaction at the front end." 6 The reason business partnering doesn’t deliver the full potential of the front-back hybrid structure in HR is primarily due to the resource starvation of the Business Partner relative to the rest of HR. If s/he cannot create tailored solutions that raise customer delight, the role becomes simply one more overhead layer between customer and provider. In this scenario, it is not surprising that HR Business Partners focus on honing business knowledge instead of concentrating on learning that grows their HR expertise. 7

Put differently, HR has outgrown Topsy’s hand-me-downs. To face the future, it has to transform itself:

From Closed Creating to Co-creating: Whatever innovation HR undertook in the past (and very often it was best practice adoption from trend-setters rather than something startlingly new) was within its own boundaries. Reinvented HR must actively engage employees in the process. A prototype model had been suggested earlier. "One way to get a behavioural science research movement going in Indian industry is to encourage the formation of myriads of Action Research Teams (ARTs)… [A]n ideal ART composition would be of Panchadhatu. Apart from a far-sighted leader, each team would have some energetic and fresh-thinking youngsters (either from new additions to the HR team or even students wanting industry exposure) balanced with more experienced HR practitioners who have not lost the urge to learn as well as to create knowledge. To bring perspectives from outside HR there would be team members from the rest of the organization – preferably representative of the population under study. Finally, the cooption of an academic keen to bridge the industry-institute divide would bring an invaluable degree of rigour in methodology as well as access to knowledge that has already been established, both in our country and abroad." 8 The re-invented HR organization must institutionalize the people involvement portion of that suggestion.
From Scientific Management to Partnering AIDA: Large chunks of even our sunrise sector firms seem to be reverting to Scientific Management principles. As Bill Cook points out "ante-bellum slavery is demonstrated to have been managed according to classical management and Taylorian principles." 9 The Scientific Management credo, that thinking should be left to managers, also implies that an employee "… is never for a moment to exercise either his will or his judgment in opposition to a positive order' " 10 Change a few words and you have the operating philosophy of many large-scale people and precariat users today.' 11 The advent of AI can take us in two strikingly different directions. We can thoughtlessly slip into a thoroughly dystopian people-substituting or slaving mode. Alternatively, we can encourage an employee- partnership model for AIDA (Artificial Intelligence, Decency, and Affection) to "enter a business organization and contribute to the well-being of its people." 12 HR has a vital role to play in facilitating the latter mode.
From Maximizing Delivery to Maximizing Happiness: It is time we got serious about treating employees as co-equal partners in the enterprises to which they contribute far more hours of their lives than, say, most shareholders whose mutual fund managers take less than a few minutes before deciding to buy or sell the firm’s stock. The best way to involve HR in the process "… is by making HR responsible primarily, if not solely, for the preservation and increase of aggregate happiness in the organization. … [B]y happiness we mean not just 'what makes experiences and life pleasant and unpleasant' 13 in a Hedonistic sense but also the Aristotelian view of true happiness consisting in doing what is worth doing and 'striving for perfection that represents the realization of one’s true potential. ' " 14 15

Having reviewed the factors that make reinvention imperative, let’s turn to the design of the structure itself.

HR Structure for the Twenty-second (yes, it will last till then) Century

The HR structure of large business organizations in the future will need to consist of five kinds of teams. The size and complexity of the business will determine the number of people in each team. Its geographic spread and business verticals may demand a reflective nesting of the teams. However, their core purposes will remain the same. The descriptors for the teams are relatively brief since their central justifications have been elaborated in previous columns (or ones that remain to be written).

Happiness Raising (HR) Teams: HR Teams will form the core cocoon for providing the PEOPLE PARTNERING needed by the organization’s employees and leaders. 16 While their prime effectiveness measure will be aggregate people happiness, they will have secondary roles in growing productivity, quality and innovation at work. 17 Apart from catering to all employees rather than partnering only leaders, HR Teams will be distinct from (at least the current edition) of Business Partners in the extent to which they will run people processes themselves instead of relegating them to COEDS. The theoretical loss of scale and consequential economies will be made up by personal-touch-satisfaction gains and inter-process integration and friction reduction.
Intelligent Asset Synergization (IAS) Teams: HR is critical in ensuring the use of AI AS AN AID for employees rather than a substitute, spy or liege lord for them. 18 While individual employees should call the shots in directing their AIDA partners, IAS teams must facilitate the process and provide the INDRA (Integrated Network for Development, Rewards & Assistance), GOPI (Governance Observation & Policy Implementation) and DHARMA (Democracy / Happiness Assessment & Realtime Augmentation) sub-systems. 19 The referenced column will assuage your thirst to understand these absurd acronyms.
People-Participating Policy & Process (4P) Teams: These teams permit the WISDOM OF THE MULTITUDE to be put to practical directional and guard-rail use by the corporation. This is not as farfetched as it might seem. I was impressed to find Indian organizations that have instituted mechanisms for gaining such involvement and believe it has made a major difference to their superlative engagement scores. As 4P Teams build muscle and confidence they will be invaluable partners in the ultimate goal of corporate democracy. 20
Service & Expertise Access (SEA) Teams: Employees and their managers, as well as more generalist HR teams, will need GUIDES AND HELPERS. The SEA Teams will conduit these. Unlike the individual specializations guarded by COEDS, SEA Team expertise will lie in the creation of integrated and intuitive interfaces internally while handling relationships with experts and managing contracts on the outside. No previous column targets this competency conglomeration directly. Watch this space for one in future.
Management Exception-reporting Norm Setting & Approving (MENSA) Teams: Teams that partner with people or play other facilitative roles are not well-placed to wear the somewhat sterner and more objective hat of checking conformity to norms or approving resource requests. Hence, the facet of HR that confirms whether the rest of the organization is PLAYING BY THE RULES and reports on it, needs structural segregation. Once again, details must await a future column.

Names may be gloried, corners may be trimmed, sizes and importances may change, but it is my belief that the most effective HR organizations of the future will follow this blueprint.

The Transition

Transitioning to the first really ground-up design of an HR organization will not be easy. Three building blocks will need to be managed particularly carefully.

1. Design: As pointed out already, the foregoing is just a blue-print. Each firm will need to flesh it out depending on its:

Industry and technology
Size and management structure
People strategy and processes

The extent to which the HR team and its line clients participate in the design process, the easier will be the transition and the likelier the new structure will deliver on its promise.

2. Phasing: Individual companies may have some overriding considerations but, otherwise, the desired sequence of activating teams (and de-activating the interfering or superfluous portions of the previous structure) is the one followed in the previous section. As such, HR Teams should be the first off the mark, possibly with COEDS resources (see below) wearing two hats till their own activities are reconstituted. Next would be the IAS Teams and so on.

3. Sourcing: Once again, there are no hard and fast rules but it is suggested that the following sources be considered (left to right) for each team-type before turning to others:

Team to be Staffed	Internal HR Sourcing	Other Internal Sourcing	External Sourcing
HR Teams	COEDS	Line managers and employees	Behavioural Science interns
IAS Teams	Coaches and Training designers	IT professionals	AI and Infotech employees
4P Teams	Industrial / Employee Relations	Informal leaders from employees	HR consulting
SEA Teams	Business Partners	Procurement Interface designers	Service Provider consultants
MENSA teams	Business Partners	Management Control Systems	Business consulting

Many of the ideas contained in this blueprint had been tossing around in my head and even surfaced piecemeal in earlier columns. It was only when a bright young HR professional posed a question about how HR organizations ought to look like in future that I tried pulling the jig-saw puzzle together. I was fortunate that most of the pieces fit.

Then felt I like some watcher of the skies
When a new planet swims into his ken;
Or like stout Cortez when with eagle eyes
He star'd at the Pacific – and all his men
Look'd at each other with a wild surmise –
Silent, upon a peak in Darien. 21

Notes:

Harriet Beecher Stowe, Uncle Tom's Cabin, Modern Library, 2000.
Mirian M. Graddick-Weir, Life after Outsourcing: Lessons Learned and the Role of Human Resources as a Strategic Business Partner, from The Future of Human Resource Management: 64 Thought Leaders Explore the Critical HR Issues of Today and Tomorrow, Mike Losey, Sue Meisinger and Dave Ulrich (Editors), Wiley, 2005.
Jay Galbraith, Diane Downey and Amy Kates, Designing Dynamic Organizations: A Hands-on Guide for Leaders at All Levels, McGraw-Hill Education, 2001.
Jay Galbraith, Diane Downey and Amy Kates, Designing Dynamic Organizations: A Hands-on Guide for Leaders at All Levels, McGraw-Hill Education, 2001.
Mirian M. Graddick-Weir, Life after Outsourcing: Lessons Learned and the Role of Human Resources as a Strategic Business Partner, from The Future of Human Resource Management: 64 Thought Leaders Explore the Critical HR Issues of Today and Tomorrow, Mike Losey, Sue Meisinger and Dave Ulrich (Editors), Wiley, 2005.
Jay Galbraith, Diane Downey and Amy Kates, Designing Dynamic Organizations: A Hands-on Guide for Leaders at All Levels, McGraw-Hill Education, 2001.
Visty Banaji, Partner People First, Angry Birds, Angrier Bees – Reflections on the Feats, Failures and Future of HR, Pages 119-126, AuthorsUpfront, 2023.
Visty Banaji, Action Research for HR, Angry Birds, Angrier Bees – Reflections on the Feats, Failures and Future of HR, Pages 135-141, AuthorsUpfront, 2023.
Bill Cooke, The Denial of Slavery in Management Studies, Journal of Management Studies, 40:8, December 2003.
Bill Cooke, The Denial of Slavery in Management Studies, Journal of Management Studies, 40:8, December 2003.
Visty Banaji, Twinkle, Twinkle, Leadership Star, Can You Unlearn What You Are?, Angry Birds, Angrier Bees – Reflections on the Feats, Failures and Future of HR, Pages 135-141, AuthorsUpfront, 2023.
Visty Banaji, An Appeal to AIDA (Artificial Intelligence, Decency, and Affection), People Matters, 13 March 2025.
Editors: Daniel Kahneman, Edward Diener and Norbert Schwarz, Well-Being: Foundations of Hedonic Psychology, Russell Sage Foundation; Paperback Edition, 2003.
Carol Ryff, Psychological well-being in adult life, Current Directions in Psychological Science, August1995.
Visty Banaji, HR’s Business Should be Happiness Raising, Angry Birds, Angrier Bees – Reflections on the Feats, Failures and Future of HR, Pages 488-496, AuthorsUpfront, 2023.
Visty Banaji, Partner People First, Angry Birds, Angrier Bees – Reflections on the Feats, Failures and Future of HR, Pages 119-126, AuthorsUpfront, 2023.
Visty Banaji, HR’s Business Should be Happiness Raising, Angry Birds, Angrier Bees – Reflections on the Feats, Failures and Future of HR, Pages 488-496, AuthorsUpfront, 2023.
Visty Banaji, Will AI transform HR Into IRA?, People Matters, 1 June 2023.
Visty Banaji, An Appeal to AIDA (Artificial Intelligence, Decency, and Affection), People Matters, 13 March 2025.
Visty Banaji, A Company Of People, By People and For People, Angry Birds, Angrier Bees – Reflections on the Feats, Failures and Future of HR, Pages 534-541, AuthorsUpfront, 2023.
John Keats, On First Looking into Chapman's Homer, John Keats: Complete Poems, Penguin, 1977.

Author

Visty Banaji