HR Service Models: Definition & Examples

Instructor: Tanya Birch

Tanya Birch is an HR/Training Consultant and a Freelance Writer. She's authored two guidebooks. Her credentials and more info can be found at www.tanyabirch.com

How should your HR organization be structured in order to be most effective and to operate as a more unified entity? This lesson goes over the various types of service models that HR departments have in place, and why HR professionals might favor one over another. Updated: 08/20/2020

What is an HR Service Model?

Starting a new company? Which human resources (HR) model will be the most beneficial for you? An HR service model is the method by which Human Resource organizations frame their structure in order to deliver services in the best way.

The technology company IBM states that ''service models provide...more consistency and reuse in the creation of services.'' The key word here is consistency. All HR service models should be structured for efficiency and, above all, consistency, with reliable methods in place to operate.

Let's go over the three service models so you can weigh the pros and cons of each.

Centralized Model

A centralized model is a structure in which all employees of the HR team are centralized in one office location, and tasked with setting policies and making all decisions as it relates to HR matters. Imagine a regional bank, we'll call them BreakTBank, with 15 branch locations spanning North Carolina to Florida. The HR department is structured in the bank's largest and first original location in Charlotte North Carolina.

If employee Jim in Miami has an HR concern, he can email or call a team member in the centralized location who will assist him with a solution, whether it be about his benefits plan, a payroll discrepancy, or a question on the company's leave policy.

There are many advantages to this model for all sized companies. It's easy to

  • standardize policies and processes
  • find efficiencies in payroll processing, benefit administration, etc
  • share insights across HR functions where areas overlap

Decentralized Model

A decentralized model employs more than one HR unit/office location across the organization where each unit or location has the power to make their own decisions and set policies.

For BreakTBank, this model would dictate that each of the 15 locations would have their own HR manager. They would be in charge of managing all HR tasks within their local branch. Each location can therefore choose to have its own attendance and vacation policies, HR handbook, and processes that apply solely to their local location. This way, Jim can speak in-person to his HR representative at his location to get his issue resolved.

An advantage to a decentralized model is that it is a more personal, hands-on approach. Employees can see their HR managers in person and put a face with a name, vs. emailing or calling someone in an office far away.

Hybrid Model

The hybrid model is a mix of the centralized and decentralized model, with aspects of centralized and local decision making. For BreakTBank, the executive HR leadership, benefits team, and payroll team would be centralized at the headquarters in Charlotte.

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