Rethinking The HR Operating Model - Time for Evolution or Revolution?

Melissa Old brings extensive expertise to her Executive Leader in People and Culture role. With broad HR generalist experience and deep expertise in Organizational Development, Melissa excels in Business Partnering, Leadership, Capability and Talent Management. Her career spans strategic and operational roles across Australia, New Zealand, Asia, the Middle East, and Africa, with industry experience in FMCG, Pharmaceutical, Technology, and Financial Services.

Melissa has a proven track record of influencing and partnering at the Executive/C-suite level in multinational, matrix structures. She is known for bringing pragmatic, innovative ideas and implementing them at pace and scale to deliver business outcomes. Her leadership in transformational change, including MandA, has consistently built high-performing teams and strengthened organizational culture. Melissa's dedication to coaching across all levels drives commercial success and fosters a thriving work environment.

In this article, Melissa Old, Head of People and Capability Business Partnering at Bega Group, reflects on her experience working within the popular Ulrich “three-legged” HR operating model. While this paradigm has benefits, low collaboration and trust between each sphere or “bubble” can also hinder the model’s effectiveness.

As a senior leader within People and Culture, my goal is to partner with leaders to create a high-trust culture that can attract, engage, inspire the best people, and help the organization achieve its strategic goals. I recognise that I can never do this alone. I am reliant on my colleagues and network to collaborate with, plan, and deliver results.

I have enjoyed working in several medium—to large-sized organizations across various industries over my career. While the organizations differed in size, strategy, structure, and culture, the operating model for the P&C/HR function has remained constant.

An HR operating model is a framework that sets out how an organization's HR function creates value to enable its success. Since the late 1990s, the business partner/Ulrich model has endured as a popular framework for structuring an organization’s HR function. Sometimes referred to as the “three-legged” model, HR is organized into three spheres/bubbles - Business Partners, Centres of Expertise (COE), and Shared Services – each with distinct, interdependent roles that (should) coordinate and combine to support service delivery.

The role of the strategic business partner is to work with senior leaders in the business to develop people strategies that align with business objectives. COEs provide the frameworks and expertise across specialist disciplines (such as Learning and Development, Rewards and Benefits, and Talent). Shared Services typically cover payroll and benefits administration, policy guidance and core transactional activities.

I started my career in “Personnel” (as it was called back then) performing routine, administrative and transactional work, mainly covering payroll, benefits and leave administration. This was back in the days when people completed a paper leave request form, received a manual payslip, used desk phones and fax machines to communicate. Working from home was unheard of. Part of my duties involved making sure personnel forms were approved and processed in accordance with the relevant enterprise agreement.

Today, tasks like these are thankfully automated and supported by self-service technology. People can use self-service to apply for an internal vacancy, check their leave balance, update their address, banking, emergency contact details, or superannuation fund. Shared Services teams are enabled by online portals, which have recreated how HR delivers the customer experience for individuals and organizations. 

There is no doubt that HR has evolved significantly and adapted to changing technology, legislation, and societal trends since the 1990s. While there are other operating models for HR, the business partner model prevails in about 75 percent of organizations. Lately, I have been wondering why we have not managed to shift away from this model.

While there are benefits in providing economies of scale, service efficiency and enabling businesses to operate effectively, in my reality, the experience of working in this model is far from perfect. There are silos, lack of coordination, and inadequate communication to contend with, sometimes daily.

Having worked within each of the spheres, I have experienced inevitable tension between COEs and business partners, including inflexibility, slow decision-making, and responsiveness. As a business partner, on occasion, I have felt hamstrung by COE decisions, that seemed disconnected from what was “truly happening” in the business. Similarly, working in a COE, I have been frustrated by a lack of responsiveness and engagement from business partners. These instances can arise from unclear agendas, poor communication, or misalignment.

The model works only if everyone understands their role and has the capability to execute against it. To achieve this, trust and confidence need to be maintained among the people operating within the model. There needs to be regular assessment of skills, with investment and capability building to support the development of HR proficiency. In practice, there is often low trust between each sphere, a lack of investment in capability, and competing priorities. This lack of transparency, alignment, and communication ultimately leads to dysfunction.

Well-intended professionals can waste time and energy duplicating effort, tripping over each other, resulting in a poor customer experience. The root cause of these challenges is low trust, ineffective collaboration, and a lack of commitment and alignment to the model. While I do not believe the business partner model was intended to encourage a silo mentality, unfortunately, this has been a common challenge among peers. Perhaps we have failed to execute the model as it was conceptualized.

The reputation and success of People and Culture depend on our ability to be responsive and adaptive to the needs of the organizations we proudly serve. Regardless of the operating model, we need to evolve together, increase trust, experiment, and commit to more collaborative ways of working. Whether we organize ourselves into agile teams, project teams or design something entirely different, we should be focused on delivering an outstanding value proposition for our stakeholders; one that is contemporary and fit for purpose.