Functional Organization. When the company is comprised of
a single business, it competes by gaining leverage and focus.
The role of HR in the single business is to support that business
focus through its people practices. Generally, startups and small
companies have little or no HR staff . Until a company has 50
to 75 employees, it hardly needs a full-time HR professional; a
line manager can usually handle required basic HR activities. As
companies grow, HR departments and staff s grow as well. But as
long as the organization remains primarily a single line of business,
HR expertise most logically resides at a central offi ce, establishing
company-wide policies. HR generalists are typically in the plants
or divisions responsible for the implementation of these policies.
They do so because there is no meaningful diff erentiation
between the business and the corporation.
The HR functional organization suits a single business strategy. It
should not be abandoned in favor of the more popular shared service
organization unless the structure and strategy of the business
mandate the choice. I see only about 15 to 20 percent of large
organizations following this functional organization alignment.