Effective Structure of HR Function

Last evening was having a casual discussion with one of my HR friends who share another common interest with me of being a classical music fan. As discussion delved deeper into nitty-gritty of music, he mentioned a very interesting difference between western and Indian classical group music. Western orchestra has specific piece allocated to each individual/ section of instrument. Trumpet, violin, keyboard, saxophone all have their part well defined without any interference from any other instrument. Everything is finely orchestrated and we get the finest music to our ears. Indian classical music on the other hand, just defines the raga and the rhythm or taal when two or more classical musician come together. So when maestros meet, all they know the basic framework within which they need to operate. Within those defined rules and with a common objective of quality music, they work freely, competing with and complementing each other in a healthy way while producing a masterpiece. One is willingly ready to go solo or to take or surrender the lead during the entire orchestration depending on his command over the particular section of the composition and what suits the audience best.

As HR, it immediately rang a bell to me. We were looking at classical divisional structure and contemporary matrix structure through these two forms of music. HR in an organization also has a similar two choices available. They can choose to do a well-defined piece without interfering into other areas- the classical divisional structure. The other option can be to work freely with a common defined objective and simultaneously collaborating with others and creating an experimental symphony, something similar to a matrix structure. Matrix structure as we know, is arrangement where people are aligned to a vertical and horizontal teams simultaneously and have multiple reporting relationship. It is important to evaluate whether a matrix organization with more project based structure will be suitable or not for the particular organization. Just to refresh, any organization’s structure must exist to establish power and authority and define roles and responsibility for greater efficiency while achieving the desired objective.

Human resource has some critical sub functions. Some prominent functions within HR are talent acquisition, talent management, compensation and benefit, organization development, leadership and development, payroll and shared services. Sometimes functions like communication or immigration are also mapped under human resources. Though there can be ‘N’ number of functions under HR, but all actions of HR will fall under three buckets namely

•  Attract talent
•   Develop talent and
•   Retain talent

Since the prime three ask from HR are all interlinked like a train of gear, we need to have greater cohesiveness between functions as we cannot go targeting only one aspect at a time. All three need to be collectively raised as triplets without being partial towards one.

Figure 1: Interlocking of Aims of HR

As a function, HR needs to support the employee base at every point of time, from selection process to joining and till the point employee chooses to be in the organization. Hence, before we get into structure of organization, we need to understand the interventions different HR functions need to make at different juncture of employee life cycle. The below figure illustrates the same.

Figure 2: Employee Lifecycle and HR Functions in Action

Do we need matrix structure? Can we have HR functions with their role defined and confined?

This question reminds me of a famous watch company who used to teach their officers a basic watch inspection during the induction process at the time of joining. The idea behind was to inculcate a customer centric mindset. If any employee receives any complaint about the company’s watch anywhere, they should be able to offer the required help. HR too should have a similar mindset. They should be able to offer solution to an employee in need. We rarely see a case where people approach their business partner or compensation or payroll person for a specific query pertaining to that person’s area of expertize only. Employees generally approach their ‘HR’ for a solution irrespective of HR’s prime sub-function. It all depends on how much connect the HR person is able to establish with the employee. We see many cases where a hiring recruiter is able to establish personal connect with his hire and that connect never gets eclipsed till the hire stays in the system. If HR is assuming roles in two or more functions of HR, chances of having greater connect with the employees and ability to offer on the spot solution are higher.

Advantages of a team or matrix structure

As we have seen that at every stage of employee life cycle, there is intervention of two or more different HR functions. The interventions or actions of HR function(s) at every stage acts as input for other HR functions involved during next phase of employee life cycle. For instance, salary offered by hiring team initially act as a feed for talent management during performance pay out and the performance evaluation provides starting point for payroll as well as training function. Having participation from other functions of HR while setting up processes for one will ensure that between two processes gaps are plugged and there is a smooth handshake while passing on for required action during the employee lifecycle.

Some of the noted advantages of team structure in HR are as below

•   Provides a new learning opportunity to people in HR
• Retention of HR professional goes up as they keep getting newer opportunities
•  Co-ownership provides greater involvement and better coordination of task
• Improves communication within the team
• Close interaction with many people helps in breaking the shackles of silos and one’s ability to reach out improves
• Work becomes more system dependent than person dependent as a person’s back up is continuously created
•  Reduces blame game after failure of any HR process as processes are co-created by different people
• Proper handshake between two HR functions over employee life cycle.

The other side of the coin

If matrix or co working promotes so much synergy then why there is a hesitation? Human resource as a function requires some very specialized skills and deal with very confidential data. A complete matrix structure will dilute the function and will jeopardize the confidentiality of employee data. For instance, payrolling is a specialized function. Any organization would like to have zero payroll error and because of high impact associated, the provision to experiment is kept at minimal. Same way talent acquisition, compensation, talent management and payroll teams, all have the confidential compensation data at various points. Some of the data points can be of HR team itself or management team. Hence the sensitivity is very high. To avoid revealing of entire data to one individual, division of employee data among HR functions is important. A talent acquisition person doesn’t know about raises an employee gets post joining. The payroll person only knows the final salary to be processed and not the history of changes and so on. This helps in avoiding major conflicts and infringement into one’s privacy. There are many other reasons also why matrix structure can boomerang if not orchestrated with caution. Some of the notable disadvantages are

• Probability of free riding by an individual in the group is high
• Psychological stress on employees can be high as they need to manage two or more leaders with aggressive timelines and different working style
• There can be bias towards or against a particular project or individual.
• There can be pulling of resources between two teams
• Inability to prioritize between different jobs creates problem in team as well as a perception of being bias goes out.
• Clarity on KRA is less since people are involved in too many jobs.
• Power struggle between individuals as well as between teams goes up
• Performance management becomes difficult as there could be two or more evaluating managers and assigning weightage to every job may not reach consensus
• Additional cost of resources as sometimes team tend to hire extra resource since no one is able to give a dedicated time to one area only.

With due credit to all the advantages of pure matrix structure, we cannot ape it from text books in practical situations. This caused the emergence of a new structure which originates from matrix and end up in divisional structure. The structure uses 3Ps (process, policies and people) of HR to form the base with cross functional collaboration. On top of the base, individual superstructures can be built. With this approach, every individual function will be aware of the strength and weaknesses of the others. They will be aware of the load capacity of every function since they all are aware and have contributed to bricks and mortar of which the other function is made of. Similarly, it might be good to start up with matrix organization to propel HR in an organization but as the organization grows, we need champion of a process to keep it propelling within the system.

Figure 3: Possible Structure of HR

Conclusion

The debate can be endless as every organization will have different needs. Organization who have some of the HR processes outsourced, may not promote lot of cross functional working as information shall not be divulged to an outsider. An evolved organization will also minimal cross functional processes as they have most of the HR structure evolved. They would like to continue with evolved process, Hence, not too much of experimentation will happen. On the other hand, young organizations need to have more cross functional actions as they set up their HR processes. The collaborative efforts can bring greater synergy, a HR process with everyone aligned to it and less iteration in the process as group knowledge would have gone in. This is the time when HR has to do their capability building and hence experience of every professional will be vital. If an organization decides to go for a matrix structure, hiring of few specialists and a pool of generalist will be more appropriate. Going for vertical structure from beginning may create water tight compartments. This may create lot of friction, communication gap and disconnect between two HR processes. In case the organization has matured in terms of people processes and policies, specialists could add more value to the entire value chain of HR. After what point of time they would like to undergo a metamorphism from matrix to divisional structure, that is a call to take. The call may be subjective but surely options need to be evaluated carefully.