What is the structure of HR department?

The main function of HR department is to oversee department functions and manage employees by planning, implementing, and evaluating human resources policies, principles, and programs. Basically, it involves functional activities including hiring qualified employees, establishing compensation structure, training staffs, addressing employee relations matters, and maintaining workplace safety.

Function Units:

• Recruitment
• Compensation and Benefits
• Employee Relations
• Training and Development
• Workforce Safety

An HR organizational chart example:

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1. Recruitment:

Recruitment is a vital task for HR department because it determines what kind of people will work for the company – whether they have the right knowledge and skills, and whether they are suitable for the position or not. To accomplish this mission, they HR department need to develop and execute quality recruitment strategies to ensure that recruitment meets all affirmative action commitments.

2. Compensation and Benefits:

HR manager needs to establish strategic compensation plans, ensuring wages and reward programs are administrated equally throughout the workforce. They need to provide employees with benefit options, including health insurance, retirement planning, life insurance, etc. What’s more, they are responsible for authorizing salary changes, position changing an election.

3. Employee Relations

HR department is also responsible for investigating and solving employee complaints, conflicts and concerns. Many possible issues might arise in a company. For example, an employee is not satisfied with his performance assessment result and seeks for revision. If this kind of circumstance happens, the HR department needs to research on this issue, and solve the problem by negotiating with his superior.

4. Training and Development

Through effective training, employees could enhance their knowledge, skills and work abilities, so that they can improve their job performance. Human resource department conduct needs analysis to decide what training is necessary to improve performance and productivity.

5. Workforce Safety

HR department needs to ensure every staff working in a safe environment. It’s their obligation to research and develop safety policies for the company that is in compliance with state and federal laws and regulation. They need to identify unsafe conditions and make clear notice on potential dangerous matters such as dangerous equipment, chemical drugs, radioactive substances, etc.

1. Career development
2. HR Department Structures: A Definitive Guide

By Indeed Editorial Team

Published January 3, 2022

The presence of a human resources department is important in any company, regardless of the size of an organization. The organizational structure of an HR department can have a big impact on business functions, productivity and efficiency. In this article, we explain what an HR department is, its functions, how an HR department is structured, steps to structure an HR department and some tips for structuring an HR department.

What is an HR department?

A human resources (HR) department is a company division that manages employees, ensures their satisfaction and that they have what they need to perform their job. HR departments work to give a company a defined structure and improve a company's productivity and workplace culture. In a business environment that's constantly changing, HR departments can make it easier for companies to find qualified employees.

Related: Human Resources: Definition and How It Works

What does an HR department do?

An HR department handles activities related to an organization's personnel. HR departments are often responsible for finding, screening, interviewing, onboarding and training job candidates. HR departments also oversee employee compensation and benefit programs. They make sure the company is in compliance with all labor laws, including applicable employment regulations based on the geographical area the business operates in such as the number of allowable breaks for employees.

Another responsibility of an HR department involves managing employee relations and mediating areas of conflict to keep the work environment running efficiently. HR departments often encourage employees to bring their concerns directly to them. The department can also play a crucial role in ensuring employees stay productive and on task. Many departments use performance improvement plans to help employees improve their performance level and better meet objectives. Many HR departments also routinely gauge employee satisfaction through surveys and questionnaires.

Related: What Does Human Resources Do?

How is an HR department structured?

Factors such as the type of industry, size of the organization, business climate and budget of the organization can influence how a company decides to structure their HR department. Here are the different ways companies can structure their HR departments:

Centralized structure

Most larger organizations have a centralized HR structure, where a corporate office makes decisions on behalf of the entire organization and supports activities for the whole company. Centralized structures often operate hierarchically, with a designated HR manager that reports to upper management, who gives them a set of goals to meet with the HR team. There are often separate managers for recruitment and employee development, who both report to the designated HR manager of the company.

Companies that use a centralized structure hire HR personnel with background and training, specifically in human resources. Consolidating HR activities into one location can also improve operational efficiency because all divisions and components of the organization receive the same, consistent training and compensation.

Decentralized structure

With a decentralized structure, the company distributes HR functions across different units of the business, such as geographical area, product line or department. The HR team often operates independently of other units and there are multiple points of authority that make decisions. A decentralized structure can also mean each department in a company takes an active part in the decision-making before HR makes a final decision.

One advantage of a decentralized HR structure is that it can often increase the communication level between employees and management and improve the working relationship between the two. A decentralized model can also increase flexibility in the company because it allows departments to address their needs to management separately.

Matrix structure

A matrix structure combines the centralized and decentralized structure, with a central department but independent HR functions that are specific to different business units. In this structure, personnel can report to the designated HR manager but also report to separate departments in the company.

Many businesses use a matrix structure because it can make it easier to assign a separate HR professional to handle a certain aspect of human resources, such as employee benefits, as the company grows in size. A matrix structure can be advantageous because having different levels of HR can help ensure that important information becomes widely shared, therefore allowing for a faster response.

Outsourced structure

With an outsourced structure, a company often hires an outside agency or third party that becomes solely responsible for the primary HR functions in the company. This structure is common in smaller organizations that typically don't have the resources or budget to hire in-house HR staff. An outsourced structure can be beneficial for a company that wants to control costs and save time, which enables management to focus more on business processes within the company.

How to structure an HR department

It's important to be aware of what your company's growth projections look like and what your needs are before deciding on a structure. Here are a few steps to help you effectively structure your HR department:

1. Understand key functions and company needs

Understanding and identifying the functions of an HR department and how it strengthens organizational goals is an important first step in structuring a department. Most companies have a consistent need for recruitment, training and development, conflict resolution and compensation and benefit administration. Smaller companies often have different HR needs than larger ones, and identifying the specific HR needs of your company can help you decide on the right structure.

2. Choose a structure that meets your goals

Thinking about the distinct divisions in your company, the size of your company and your company's operational plan can help you decide on a structure that best meets the needs of the organization. It's important to consider the size of your team in deciding on an HR structure.

If you have a larger company, you may want to think about hiring different positions that oversee separate aspects of human resources. If you have a smaller company, you may want to look into outsourcing an HR department and check that the third party you choose offers everything you require.

3. Identify your HR team competencies

Competencies are knowledge, skills, abilities and characteristics that contribute to individual performance. In building an HR team, you may look for certain core competencies to better ensure your HR department can effectively manage employees in the company. Here are some competencies often required of an effective human resources professional:

• Communication: Since HR professionals often interact with many employees of different areas including management, the ability to communicate effectively is highly important.

• Leadership: The ability to lead a company in building a collaborative, welcoming environment and engage employees helps companies to retain talent and keep employee satisfaction high.

• Business acumen**:** Having strong knowledge of an organization's vision, mission, strategic goals and culture can help an HR professional craft policies and design activities that best serve the interests of the organization.

• Relationship management: A large part of managing employees involves the ability to manage relationships and having skills in this area can help HR professionals advocate for employees.

Related: 5 Essential HR Career Competencies

4. Consider the department's size

The size of an HR department will vary depending on the size of the organization and scope of the HR department. For example, an HR department that uses extensive training and development programs to improve business results through an organization will most likely be significantly larger than one that only handles recruitment, benefits and payroll. When business focuses change, an HR department may also undergo restructuring to better accommodate the shift.

5. Define measures of success

Once you have your HR department, defining measures of success can help you ensure the company is operating at the right level. HR metrics use a variety of data to measure the efficiency of a company's HR program. Common HR metrics include workplace productivity, employee turnover, employee satisfaction, manager satisfaction and training efficiency.

Related: 31 Essential HR Metrics and How To Use Them

Tips for structuring an HR department

Here are a few tips for structuring an HR department in a way that provides value:

Choose the right provider

When outsourcing an HR department, it's important to carefully select a provider that can best meet the needs and strategic vision of your organization. You can create a list of your specific needs to make it easier to match your company to the right provider. Assess each potential provider on factors such as cost, record of service and financial stability.

Use benchmarking

With benchmarking, you can compare your HR department with the industry or with similar organizations. You can also set internal benchmarks by comparing data from different locations, business units or points in time. This can give you insight into how HR practices impact performance and what needs improvement.

Consider diversity

A diverse HR department can better understand the individual perspectives and needs of employees. When selecting an HR team, consider one that best reflects the entire organization. It's also important to think about local differences if your team is in different locations.