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 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 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.
- The HR function has to be capable of delivering the level of advice and services required the organization. Delivery may be achieved the direct provision of services but may be outsourced.
- The HR department is 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 department needs to take account of its role in formulating HR strategies and policies and intervening and innovating as required. But the department also has to provide efficient and cost-effective services.
- The HR department should design to fit the needs of the business which results to considerable variations in in HR departments in various organizations.
One of the first HRM concepts called the matching model of HRM made the Michigan School argues that HR systems and the organization structure should be managed in a way that is congruent with organizational strategy (hence the name ‘matching model’). They further explained that there is a human resource cycle, which consists of four generic processes or functions that are performed in all organizations. These are:
- Selection – matching available human resources to jobs;
- Appraisal – performance management;
- rewards – ‘the reward system is one of the most under-utilized and mishandled managerial tools for driving organizational performance’; it must reward short as well as long-term achievements, bearing in mind that ‘business must perform in the present to succeed in the future’;
- Development – developing high quality employees.