The HR “Center of Excellence” (COE) concept was conceived a couple of decades ago by Dave Ulrich in his seminal text “Human Resource Champions.” It was identified as one of three key pillars of a highly impactful HR operating model and organization structure. The idea was to bring together people with deep expertise in critical HR capabilities that were best centralized to benefit the organization’s diverse and dispersed operations. It was designed to bring best practices, common-need resources, methods, and tools that could be shared and implemented in an organized and standardized manner.

The entire HR operating model and functional structure have been under scrutiny due to significant organizational changes and market shifts that have pressured HR to design and deliver services in new and unique ways. The labor market is undergoing significant changes with a shrinking working population, critical skill shortages with rapidly increasing needs in STEM, medical, and skilled trades, higher growth rates amongst diverse immigrant workers, and changing generational workplace and career development preferences.

Business changes are also exerting significant pressure on HR teams, with organizations shifting direction due to the rapid adoption of advanced technologies, changing consumer preferences, geopolitical shifts, and social pressures for organizational mission, values, and governance changes. These forces are driving HR to adapt and evolve, often in ways that were not anticipated. This underscores the importance of HR COEs and the need to design them not as static entities but to exercise greater flexibility, tailoring, business alignment, and responsiveness.

Understanding the Center of Excellence

COEs exist primarily to bring deep expertise in leading practices, guidelines, and processes in a standardized and structured way across the organization. They are established to create robust solutions, processes, and tools that address fundamental people management needs and common challenges. They may also have specialized capabilities that bring strategic value to a company’s unique needs, such as workforce planning, people analytics, or contingent workforce management.

While data is sparse on the prevalence of COEs, one study found that approximately two-thirds (2/3) of surveyed companies reported having COEs or an HR Service Center. The most common areas of HR expertise in Centers of Excellence are Total Rewards (89%) and Talent Management (80%). Other focus areas are typically established for 50% or fewer of the companies surveyed. The most common types of HR COEs and their responsibilities include:

Recruiting or Talent Acquisition. Responsible for hiring requirements definition, attraction and recruiting process design, systems, assessment tools and techniques, candidate interface, decision-making support, candidate due diligence, selection process documentation, offer and acceptance administration.

Learning & Development. Dealing with learning content requirements, content design and development, vendor management, scheduling and registration or enrollment, program delivery, technology management, process and outcome measurement. It is responsible for the skill development of all job families and roles and may also incorporate leadership and management development in its offerings.

Total Rewards. In charge of developing and managing the job architecture (job analysis, evaluation, families), market research and benchmarking, base salary and wage pay scales, bonus program design and administration, and non-cash (e.g., stock) incentive programs. It also often covers employee benefit plan design, pricing, communication, enrollments, and associated technologies. It may also manage employee wellness if not owned or co-owned with a Shared Services organization (as with Employee Assistance Programs (EAPs)).

Talent Management. This popular COE brings related HR disciplines together to integrate and share data, insights, and practices that can feed on and with each other. Experts and teams in talent acquisition, learning & development, and performance management are most commonly combined, with others such as internal recruiting and talent mobility, succession management, and leadership development also considered for inclusion. Some organizations may also have assessment and employee engagement as areas of additional expertise.

Advantages of the COE model

Designing HR COEs as part of an organizational structure can bring significant benefits when well organized, staffed, resourced, and integrated with other HR teams.  As initially conceived, it brought the promise of:

• Concentrated expertise. This structure exposes team members to more senior subject matter experts, external resources, and experts from (ideally) consulting, academic, and other industries to drive the continuous development and deepening of knowledge. It can develop a cadre of professionals who might eventually move to other roles and bring experience and knowledge to other parts of the organization. This is often the primary rationale for establishing HR COEs.
• Standardization of leading practices, processes, and programs. These provide the opportunity to create best practices in people management that spread across an enterprise, regardless of its geographic scale and scope or variations of business operations and models. The appeal may be dated, as tailoring and implementing different concepts often make better sense in different types of businesses and locations. However, the value of readily sharing leading practices when designing HR COEs still holds.
• Significantly enhanced innovation. This is achieved with the COE experts having the requirements to continuously research and keep current on the latest advances, technologies, process refinements, and emerging practices in their assigned HR discipline. Participation in specialized HR professional associations (WorldatWork, Association of Talent Development, American Staffing Association), subscriptions to professional publications and research, and relationships with or following the work of large management consulting firms offer insights into new models and frameworks, techniques and advances.
• Economies of scale. With centralized authority, responsibilities, and access to business leaders and HRBPs, COEs can create solutions that cross job family, geographic, cultural, and business unit requirements. These are designed for use by every part of the organization and include corporate employment branding, employee value proposition (EVP), skills and capabilities training offerings, compensation and benefits benchmarking, and common pay scales for equitable compensation. They can also access designated budgets to purchase professional memberships, subscriptions, and supporting process management systems.
• Trend analysis. With unique access and expertise in discipline-specific employee data across the entire population, cross-geographic and business unit trends can be generated. Data can be subsequently filtered and viewed by job, department, function, business unit, location, or demographically for focused issue identification.
  
  

Challenges with the COE model

When designing HR COEs, CHROs seek to optimize the potential of syndicating a few or small teams of experts across various functions, operations, and business units. Common issues arise with this that are typically due to poor or insufficient communications, a natural resistance by field HR professionals to having standardized processes and tools “foisted upon” them, a lack of attention paid to change management techniques, and a lack of resources to help successfully engage field partners and managers. These are HR staff capability issues related to the weaknesses in HR skills related to project management, collaboration, partnership, and even HR strategic planning.  

The real foundational issues, however, lie with the original design and execution of Centers of Excellence efforts. The Ulrich model, which combines COEs with HRBPs and HR Shared Services, represents the dominant HR operating and organizational model. However, history has demonstrated many issues that make its classic interpretation less impactful in the modern enterprise environment. For example:

1. The focus is too narrow

Having deep expertise is beneficial, but context can be lost without broader consideration of talent and business issues that Centers of Excellence should address. The risk of becoming too insulated from business strategies, local need shifts, and being too inward-looking is significant. It can discourage COE team members from understanding other HR functions' standards, advances, and best practices. This also contributes to the common complaint that HR focuses too much on properly executing its processes, such as merit pay cycle or annual performance evaluation vs. understanding their impact and continuing business value proposition.

2. They struggle with internal partnering

The governance of the relationship between HRBPs and Centers of Excellence has been challenging for most HR organizations. Issues with “who owns” or strategizes with the internal customer weigh heavily on cross-HR relationships. Research has found that only 22% of COEs work “extremely well” with HRBPs. The very nature of the COE calls for their resolving common-need issues, while HRBPs are expected to be laser-focused on resolving local or business unit needs. Lacking regular business leader contact and, at times, divisive perspectives on what is needed lessens the potential effectiveness of COEs. This often leaves COEs isolated, requiring an overreliance on HRBP's perspectives, lacking the self-knowledge of the details and root causes of local issues, and being less able to provide tailored and targeted responses to those that arise.

3. Process ownership reduces the ability to generate innovations and solutions

The fact that COEs are responsible for designing and managing vital enterprise-wide processes and systems leaves less time for responding to changing conditions with new or updated ways and tools to conduct necessary talent processes. The role of the Center of Excellence is dampened and reduced to an administrator of the applicant tracking, learning management systems, or the performance management process cycle. Data suggests that COE professionals and HRBPs spend as much as 86% of their time on administrative and operational work efforts.

4. Non-integrated solutions prevail

In a world where a single “fix” rarely suffices to resolve a talent issue, integrated offerings often make the most sense. The fact that many Centers of Excellence have a single discipline as their charter gets in the way of better coordination, collaboration, and integration of efforts. Even in the notable case of the Talent Management COE, the Chartered Institute of Personnel and Development (CIPD) found that fewer than 25% of organizations have fully integrated talent processes that use the same data and have a shared understanding of how the activity in one area impacts the others.

5. Some crucial HR processes are left without an expert owner

When COEs are limited to a sole focus on recruiting, learning & development, or total rewards, there is a risk that no one has responsibility for other critical people management processes. Many organizations have instituted only a loosely shared oversight for critical processes such as performance management, succession management, and career development. The same goes for organizations with certain talent and operational outcome priorities such as employee experience (EX), employee engagement, culture, and well-being. Lacking a continuing eye on these can deny their value as significant drivers of human potential, performance, productivity, and contribution to achieving business objectives.

Design considerations for improving COE contributions

The value of specialized expertise being housed under a single roof remains valid up to a point. When establishing HR COEs, consider how expert knowledge repositories save work, time, and effort by providing ready access to proven tools, methods, frameworks, databases, calculations, and case studies on topics that tend to recur. The worth of consolidating those resources is substantial for teams trying to tackle a turnover problem, install a short-term sales incentive plan, or better identify future managers not considered in a larger corporate succession plan. Leveraging past successes with proven methods and tools in ways that meet corporate standards and expectations is what a center of excellence does.  

Therefore, when designing HR COEs, the question is how to improve this to meet today’s challenges best? How can the Centers of Excellence model best be deployed to meet universal and local challenges and needs? The key is to answer some basic questions:

• To what extent should a COE be centralized vs. decentralized? 
• Where should process, program, methodologies design vs. execution responsibilities lie? 
• Where should the COE staffers reside in the organization?
  
  

Determine how to blend centralization with decentralization  

Promoting and using standardized and company-vetted leading practices and approaches is a solid governance approach. When designing HR COEs, the issue is whether or not to use a centralized Center of Excellence to research and push best practices into the business or design tailored solutions vs. leaving that to local business units as issues arise. Consider variables such as the diversity (and types) of business units and operations, the number of available experts, the availability of shared technologies (collaboration, knowledge management, tailorable HR systems), and the leadership culture around corporate vs. local or business unit control of policies and practices. Making a conscious effort to decide where and how much control should exist centrally vs. locally is core to designing HR COEs and their operating model.

Decide where design vs. execution responsibilities best sit   

The traditional view is that HR strategy, process, and policy determinations are best made and led by recognized subject matter experts in a central location; the fact is that many experts may exist within a variety of company locations and operations. The latest thinking on developing more responsive and effective processes, practices, and programs focuses on using experts from across business units and locations to leverage human-centered design and “design thinking” methodologies. These engage end-users directly in articulating pain points and contributing ideas to improve their employment-related experiences. After design, understand where execution responsibility can best reside. With an eye on using the experts more for their deep expertise, access to information on the latest advances and methods, and focusing local ownership on increasing their credibility and contributions, look to shift responsibility for execution to the field, with HRBP, HR Manager, and other team members engaged.

Establish where to allow the expertise to live

Significant proposals by Josh Bersin and other experts have created a solid case for decentralizing the distribution of COE headcount. While it can negatively impact innovation and collaboration, spreading the expert resources out across different types of business units and operations has several advantages. First, it puts experts in the field where they can gain significant insights into the unique business needs and challenges faced. Secondly, it allows for local expertise using corporate-generated tools and methods that can be brought to bear on that business unit's immediate challenges. Thirdly, it allows for developing more HR professionals with knowledge and capabilities that map to the company’s direction and preferred methods for solution development. Finally, aggregating creates a cadre of similarly trained and capable professionals who can bring business, function, and location-unique insights to developing new or updated approaches, policies, processes, and technologies for the entire organization.

Ideas for designing COEs tailored to unique organizational needs and culture

1. Adopt a single set of methodologies for all of HR

Decide how COEs should approach problem identification, solution development, and implementation consistently, objectively, and repeatably. Training and requiring teams to use these can create a culture of consistency in centralized or distributed teams, lessening the risks associated with dispersed or decentralized work teams. Methodologies such as evidence-based HR (EBHR), design thinking, Agile development, and business process improvement (e.g., Six Sigma, Kaizen) are proven approaches that are more effective in determining root causes, process flaws, and workable solutions.

2. Establish “freedom within a framework” as a design standard

Create a culture where HR teams design solutions using standardized frameworks, models, tools, and methodologies and then explicitly enable them to adapt those to meet local needs within certain parameters. Push decision-making to local business leaders, HRBPs, and COE experts to tailor their approaches within aligned and defined cost, timeframe, and strategy parameters. Move the centralized COE from monitoring and restricting unique and innovative solutions to minimize its administrative burdens.

3. Create “networks of expertise”

Designing HR COEs more effectively calls for opening their membership to engage a broader set of HR team members who can become champions and distributed expert advocates. Formally engage them in centrally-hosted and -led annual strategy and design sessions, such as when planning the annual merit pay levels, policies, standards, and process workflows. Bring them together to educate and keep them engaged with regular (e.g., monthly) calls to provide updates, raise issues, request help, and plan collaborative efforts. Give HR managers or generalists with the right skills, interest, and motivation the formal designation as a local expert in a given HR discipline.

4. Develop knowledge management repositories

Create digital systems where expertise can be accessed whenever and wherever needed. Whether purchased or subscribed to, housed in shared folders, a formal knowledge management system, or a collaboration system, they respond to the need for self-guided learning and awareness. Include standard educational materials, “how-to” guides, tools, templates, calculation methods, user guides for common-use systems, FAQs, and expert locators for guidance and coaching.

5. Organize integrated COEs 

Consider designing HR COEs that create better value by integrating their covered HR disciplines. Like the promise offered by integrated talent management, organize them “horizontally" by shifting from a process or function-driven approach to an integrated and combined employee lifecycle or experience focus. These also allow for the assignment of formal responsibility for broader objectives such as EX or employee engagement. Examples include:

• Talent Planning and Deployment: Strategic workforce planning with recruiting, mobility, talent planning, contingent labor, and candidate and contractor experience.
• Talent Development: L&D with career development, skills management, and onboarding.
• Total Rewards: Salary and wages, bonuses, non-cash rewards, welfare benefits, well-being and lifestyle benefits, recognition, and leave programs.
• Leadership and Engagement: Leadership development, management development, succession management, employee listening, performance management, and employee engagement.
• Transformation Management: Change Management with organization development (OD), organization effectiveness (OE), and digital transformation.
• Employee Experience: Combine EX with employee listening, process excellence, HRIS, human-centered design, and HR or people analytics.
  
  

6. Move process execution into Shared Services 

Centralize the administration, automation, and management of all HR processes in the organization with the necessary expertise and resources dedicated to managing large-scale processing and management. Bring expertise in process design and improvements into this function and have them formally contract with each COE to review and update their process workflows and system capabilities’ configurations regularly and continuously.
 

Ideas for smaller HR organizations

Smaller organizations and lean HR teams often do not have the luxury of separate and multiple Centers of Excellence or well-staffed HR Shared Services. The reality is that bringing the right mix of talent and skills together requires a more flexible and resourceful model for COEs. Many of the ideas above can be leveraged with a smaller staff, including:

• Leverage an existing knowledge management or expert resources portal, such as Wowledge, with insights into scalable best practices, how-to guides, tools, templates, and frameworks that teams can leverage. These can be accessed by all designated HR team members. Additionally, consolidate in a central repository all relevant policies, process maps, system user guides, communications materials (e.g., executive presentations, employee education sessions), financial-related documents (e.g., resource requests and approved budgets), and design or implementation summary documents.
• Assign HR staffers secondary expertise assignments based on individuals' skills, interests, potential, and business needs (e.g., An HR Manager or generalist with a functional specialty in TA or L&D) to engage and develop a broader group of COE participants. Build their capabilities by creating individual development plans to take classes, research or read books and articles from established experts, pursue certifications, attend conferences, and manage annual internal events and processes. Require them to demonstrate their learning and hone their skills by creating smaller-scale interventions critical to the company’s (or business unit’s) needs. Allow mobility and career-broadening across discipline assignments so expertise can be developed in a new area every 2-4 years.
• Leverage external resources for COE strategy and design by outsourcing process-specific planning and education on updated models and advanced thinking to outside consultants, contractors, or gig workers. Use them for specific, short-term assignments that educate distributed COE team members and raise their awareness about possible improvements or customization opportunities. Secure group memberships to HR knowledge platforms and sites that provide specific guidance and instruction for the full array of HR disciplines, with best practices and associated frameworks, tools, templates, and how-to-design and implement guides for teams to leverage as needed.
  
  

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