March 20, 2025
Five factors to help shape HR leadership teams
For a role that is ostensibly behind the scenes, HR leaders have faced an increasingly intense spotlight in recent years. While the function, and its leaders, have always been crucial to the health of any company, issues such as AI adoption, hybrid working and debates about DE&I have propelled HR to the forefront of boardroom priorities.
Against this fast-changing backdrop, Spencer Stuart has interviewed HR leaders in large corporates across various sectors to understand their latest thinking. These discussions revealed that as part of efforts to serve the business more effectively and efficiently, almost every HR leadership team (HRLT) is currently under review.
While most HRLTs still follow the conventional model of divisional HR, specialist, and HR Ops leaders, the variations and innovations within this reflect a function in flux. So how can chief people officers successfully adapt this structure to meet today’s challenges?
Here are five factors for them to consider.
1. HR’s expanding role and remit
Modern HR leaders may have additional responsibility for issues such as sustainability, communications and transformation. Given that the HRLT will include direct reports who look after those additional areas, traditional HR activities now often reside within non-traditional teams, such as wellbeing sitting within communications. This also leads to ‘double-hatting’ within the HRLT — something that is not always positive (see below).
2. The decentralisation of the business
Since HRLTs mirror the business, a highly decentralised structure will typically mean that divisional HR directors have indirect reporting into the chief people officer. A more centralised HR function may benefit from greater scaling, efficiencies, and simplification. It may also instil a more coherent group culture, but might also produce less experimentation and increased groupthink, disempowering HR leaders as a result.
Empowered HR directors, operating as ‘mini-chief people officers’, are typically found where regions operate on very different rules, where divisions operate in very different sectors, or where divisions have very different levels of maturity due to factors such as M&A. Indeed, a lack of integration following M&A tends to mean a more federated model where divisional HR directors may lead teams which also follow the Ulrich model, with dedicated Centre of Excellence support.
3. The ‘double-hatting’ of HRLT members
Chief people officers may choose to combine roles within their HRLTs. For example, a divisional HR director may also look after engagement, inclusion or reward. This approach can enable the chief people officer to manage fewer people (especially critical if they themselves have an ‘HR plus’ scope). It can also be cost-efficient, ensure more coherent messaging and creative synergies, while also being an effective tool in executive development.
However, we have found that in reality, ‘double-hatting’ can often lead to negative consequences. The hoped-for synergies may not arise and the morale of the teams below may well be impacted by seeing someone without deep domain expertise be promoted.
4. How do specialist roles sit together?
The constellation of roles within ‘talent’ ranges from the high-volume machine of talent acquisition and the high-touch apparatus of leadership development — a combination which does not always sit easily together.
Some companies separate talent acquisition and talent management, which allows the latter to focus on building strategic capabilities over the long term, without being distracted by the operational complexities of the former. Others separate executive talent acquisition and/or executive development from ‘talent’ as standalone reports, reflecting their distinct skillsets and priorities.
The same applies to reward. While the core responsibilities of reward are well-defined, companies may look to incorporate HR technology, HR operations, or people analytics. The viability of these extended remits depends on the executive’s skillset and on the maturity of sub-functions. For example, HR Information Systems do not always require deep in-house expertise, but a true ‘data science’ team demands a specialist.
5. The role of DE&I as a leadership priority
In the context of social, political and cost pressures, as well as scepticism around outcomes, many companies are rethinking the DE&I remit.
Where DE&I sits within HR, many companies have combined inclusion with factors such as culture, talent and employee experience. This might be designed to give the DE&I leader levers of direct control, to ensure that s/he is expert in the processes that shape inclusion, and/or to double-hat as a strategy of simplification or development. How DE&I is organised may also depend on the appetite of the chief people officer to personally act as sponsor and mediator, and on whether short-/medium- term DE&I goals have been achieved.
A function in motion
Recent history shows that HR leaders should be factoring in a great deal of uncertainty into their immediate plans: a stable business environment it is not.
But this intense volatility is exactly why chief people officers should always be considering the effectiveness of their HRLTs. As times change, businesses also need to adapt and evolve — and HRLTs are no exception.