Building an Effective HR Operating Model to Optimize HR Operations

Key Takeaways

• HR effectiveness is not driven by headcount or budget but by the operating model: how HR work is structured and distributed. Companies with a mature model retain people far better, with voluntary turnover of 12.8% at multinationals versus 20.3% at local firms.
• An effective model rests on three pillars: HR business partners kept in their strategic role, a shared services center that consolidates repetitive tasks, and a centralized data platform for decisions.
• As many as 84% of HR functions are restructuring or about to, yet only 11% operate systemically. The gap lies in the quality of model design, not in the level of effort.
• Restructuring succeeds only when the executive team leads it and stays anchored to strategy. Only about 34% of change initiatives meet their goals, so timing and execution decide most of the outcome.

Most business leaders measure HR by headcount or budget, when the real differentiator is the HR operating model. This article breaks down what a model is made of, how to choose the right one, how to redesign the structure, and when to restructure so that people become competitive advantage.

What Does an HR Operating Model Consist Of?

An HR operating model is how an organization structures and distributes HR work to create value, not the number of people in the department. A complete model rests on three pillars: HR business partners (HRBP) who work closely with business leaders, a shared services center that handles repetitive tasks such as payroll and records management, and a centralized data platform for decision-making.

In practice, companies tend to run on a few common models (per McKinsey’s classification):

• Ulrich+ (an extended three-legged stool)
• Employee experience-driven model
• Agile model
• Leader-led model
• Machine-powered model

Operating model vs. organizational structure

Knowing which models exist is not enough. The real question for every leadership team is which model fits its own context.

Which HR Operating Model Should a Company Choose?

There is no single right model for every company. The choice depends on four factors:

A multi-plant manufacturer needs a strong shared services center to standardize, while a fast-growing technology company needs an agile model that prioritizes speed over standardization.

The cost of choosing wrong is not small. About 65% of manufacturers cite employee retention as their biggest challenge, while replacing each departing worker costs the equivalent of 3 to 5 months of salary (per Talentnet). The voluntary turnover gap between multinationals (12.8%) and local firms (20.3%) in 2025 reflects the maturity of the operating model itself, not just a pay difference.

Global data shows the problem lies in design. As many as 84% of HR functions are restructuring or about to, yet only 11% operate systemically (per CIPD). In other words, most companies recognize the need to change but choose the wrong model or fail to see the change through.

Choosing the right model is only the start. Value appears only when that model is designed into a structure that actually works.

How to Design an Effective HR Operating Model

Designing an operating model is not about redrawing the org chart. It is about separating two kinds of work with fundamentally different natures: strategic work that needs proximity to the business, and operational work that needs standardization and scale. The two design decisions below address exactly that separation.

Separate the HRBP Role From the Shared Services Center

The first pillar is separating the strategic partner role from operational tasks. When one HR person both advises leaders on strategy and processes payroll and records, the strategic part almost always gets crowded out by administrative work. Talentnet describes four core roles of an HRBP:

An HRBP only creates value when given real decision-making authority and freed from repetitive tasks.

That repetitive work belongs in the shared services center. According to Deloitte’s research, a shared services model consolidates overlapping and duplicative processes into a single hub, which improves the performance of general and administrative costs as the volume of transactions handled rises. For companies with many units or plants, this is nearly the only way to standardize without duplicating cost at every location.

Leading companies in Vietnam such as Unilever, Prudential, and Mobile World have adopted the strategic partner model along these lines. The point is not adding a layer of HR staff, but clearly delineating who solves strategic problems and who runs the system, so that no single role has to carry both.

Govern Data on a Single Unified Platform

The second pillar is bringing HR data onto a single unified platform. When data is scattered across spreadsheets and disconnected systems, every decision is slow and poorly grounded. Standardizing data on a common platform lets leaders see the workforce picture in real time and decide faster.

C.P. Vietnam is a clear example. This company of more than 30,000 employees moved its entire HR process onto SAP SuccessFactors, replacing the fragmented systems it had before. According to SAP, standardizing on a single easy-to-use platform significantly reduced complexity, increased transparency, and improved the ability to make data-driven decisions. At a scale of tens of thousands of workers, a centralized management platform is no longer a choice but a condition for operating efficiently. Centralized data is also the foundation for the first pillar: an HRBP can only advise well when there are reliable numbers to rely on.

Good design only creates value when it is implemented at the right time and led by the executive team.

When Should a Company Restructure Its HR Operating Model?

Not every company needs to restructure right away. But there are clear signals that the current model has run out of room:

• The company is growing fast or has just merged
• Turnover is rising abnormally
• The HR function is so buried in operational tasks that it has no time for strategy
• The model no longer fits the business direction

The decision to restructure must be led by the executive team; it cannot be delegated to the HR department alone.

Transformation must stem from the company’s purpose: consistent in purpose, flexible in approach.

Tiêu Yến Trinh, CEO, Talentnet (2026)

Delay has its own cost. Only about 34% of change initiatives meet their goals, so timing and leadership largely determine the outcome. On the upside, the benefits of a strong operating model are tangible: according to Gallup figures cited by Talentnet, engaged frontline workers are 44% more profitable and 78% safer than their disengaged colleagues; a 2024 PwC survey found that 60% of executives see the CHRO as an effective strategic partner.

Conclusion

HR effectiveness is a question of model, not scale. Companies should start by reviewing whether strategic work and operational work have been separated, and whether HR data has been centralized. Talentnet’s HR consulting and organizational development services partner with companies to design and implement an operating model that fits their strategy.