HR departments in companies and their strategic roles

In most companies, human resources (HR) is split into several departments, each with a clear responsibility: recruitment, training and development, performance appraisal, compensation and benefits, employee relations and workforce planning. This split decides who owns each area, who answers for its results, and how the departments work together for both employees and the company.

This article covers the departments themselves and their roles, how their set-up changes with company size, and how Dave Ulrich's model helps divide the strategic roles between them. For the responsibilities of the HR manager who leads these departments, see HR manager responsibilities and their role in meeting company goals.

What are the departments of HR in a company?

Names vary from company to company, but the most common departments are:

• Recruitment and selection: identifies vacancies that need to be filled, advertises them, screens applicants and runs interviews through to choosing the right candidate and making the job offer.
• Training and development: identifies training needs, designs training programmes and paths, and measures their effect on employee performance.
• Performance appraisal: sets appraisal criteria and indicators, runs the appraisal cycles and follows up on improvement plans.
• Compensation and benefits: manages the structure of salaries, allowances, bonuses, incentives and benefits, and in many companies prepares the monthly payroll register.
• Employee relations: manages communication between employees and management, and handles complaints, disputes and disciplinary procedures under the company's work regulations.
• HR administration: keeps employee files and contracts, tracks attendance and leave, and completes the administrative and government transactions for employees.
• Workforce planning: estimates how many employees the company will need in future, and with what skills, and links this to its growth plans.
• Talent management: identifies high performers and employees with leadership potential, and plans succession and career paths to keep them.

Larger companies sometimes add a separate organisational development (OD) team that looks after the organisational structure, company culture and change management.

Read more: HR planning: its steps and why it matters for company growth

How does the set-up of HR departments change with company size?

Not every company needs eight separate departments. The split follows the company's size and how complex its work is:

• Small company: usually one HR officer, or a manager who combines HR with administration, covers most of these areas and uses outside providers for some of them.
• Medium-sized company: small specialist teams appear, such as one for recruitment and another for payroll and HR administration, under a single HR manager.
• Large or multi-branch company: the areas become full departments. Routine daily services (payroll, leave and transactions) may be grouped in a shared services centre, while HR specialists work alongside business units as their partners.

In every case, what matters is that each area has a clear owner, even if one person covers more than one area.

Why split HR into departments?

• It divides the administrative and technical work around employees clearly, so there is less overlap and confusion about who does what.
• Each team can specialise in one area, such as recruitment or payroll, which raises the quality of the work and the team's expertise.
• It helps HR become a partner in meeting company goals, because workforce planning becomes a named team's responsibility rather than a side task.
• Employees get faster service, because each request goes straight to the team responsible for it.

What are the strategic roles of HR in Dave Ulrich's model?

In his 1997 book Human Resource Champions, Dave Ulrich set out a model of four roles that HR needs to play at the same time to add real value to a company:

Strategic partner

Links HR practices to the company's strategy and goals, and asks: what skills, structure and culture does the company need to deliver its plan?

Employee champion

Represents employees' voice to management and looks after their commitment, needs and working environment, which raises their satisfaction and sense of belonging.

Change agent

Manages organisational change inside the company and helps managers and employees adapt to changes and carry out new initiatives.

Administrative expert

Improves and simplifies HR's daily processes, such as payroll, records and leave, so that they run efficiently and accurately with as little paperwork as possible.

How do you apply Ulrich's model to HR departments?

The four roles are not necessarily separate departments: the model asks HR to play all of them at once. It does, however, help you divide responsibility between departments clearly:

• Administrative expert usually sits with HR administration and with compensation and benefits: accurate, on-time payroll, up-to-date records and simple procedures.
• Employee champion sits with employee relations, which measures employee satisfaction through surveys and follows complaints through to closure.
• Change agent sits with training and development or organisational development, which prepares managers and employees for any change in structure, systems or ways of working.
• Strategic partner sits with HR leadership and workforce planning, which turns the company's plan into the roles and skills it will need.

To put this into practice:

1. Give each role a department or person who owns it, even in a small company.
2. Set clear measures for each role, such as payroll accuracy for the administrative expert and satisfaction survey results for the employee champion.
3. Start with the administrative expert: well-organised daily processes free up the team's time for the strategic roles.
4. Review how the roles are divided regularly as the company grows and its needs change.

How do HR departments help reduce employee turnover?

Every department has a part in keeping employees:

• Recruitment chooses candidates who fit both the job and the company culture, so fewer people resign early.
• Training and development gives employees a path to grow, so they are less likely to look elsewhere.
• Compensation and benefits keeps pay competitive in the market and fair inside the company.
• Employee relations picks up the causes of dissatisfaction early through surveys and regular meetings.
• HR administration and workforce planning collect data on leavers and why they left, and calculate the turnover rate for each department and branch.

Read more: Employee turnover rate: what it is and how to calculate it for your company

Contact the Dawmt team

The role of technology and AI in developing HR departments

HR systems help each department do its job more efficiently:

Automating routine tasks

Systems handle repetitive work such as calculating attendance, leave and payroll and routing requests for approval, so the team can focus on work that needs human judgement.

Supporting data-driven decisions

Systems bring employee data together in one place, so departments can read trends, such as absence, overtime or leavers, instead of relying on impressions.

Improving the employee experience

Employee self-service lets employees submit and track their requests from their phone, which takes pressure off HR administration and makes procedures clearer.

Enabling HR strategy

When daily processes take less time, the strategic partner and the change agent have more time for planning and development.

See also: How do managers measure the ROI of HR systems?

How Dawmt supports HR departments

Dawmt brings the departments' work into one system, including:

• HR administration: employee files, attendance through the app or biometric terminals, leave and leave balances, and integration with the Muqeem platform for companies in Saudi Arabia.
• Compensation and benefits: payroll calculation with the GOSI deduction, end-of-service benefit settings, and exporting the bank file in the Wage Protection System (WPS) format.
• Recruitment: a recruitment portal for vacancies, and AI CV parsing.
• Performance appraisal and training: performance appraisal cycles and competencies, and training paths.
• Employee relations: an employee app where employees submit requests, answer surveys and read company policies.
• Reports: workforce reports and dashboards, and "Analysis by AI", which helps you read the data.

Conclusion

HR departments are how a company turns the many areas of employee management into clear responsibilities. Start by giving each area an owner, use Ulrich's model to check that all four roles are covered, and add departments as the company grows. If you want to see how this works in one system, contact the Dawmt team.

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Sources

• Dave Ulrich, Human Resource Champions: The Next Agenda for Adding Value and Delivering Results, Harvard Business School Press, 1997.