There is a recurring debate about the size and cost of HR functions. The question being asked is usually about headcount. The more useful question is about structure.
HR is a useful case study precisely because the debate about its value is live and contested. But the pattern it reveals is not unique to HR. It shows up wherever mandate is unclear and accountability is assumed rather than designed.
The question for boards is not whether any given function is too large.
It is whether the operating model is clear enough to tell.
Cross-country comparisons are complex. Employment law, litigation exposure, statutory consultation requirements and benefit structures differ materially between the UK, US and Europe. In some systems, employment risk sits more heavily within Legal. In others, statutory representation increases coordination demands.
Raw function size does not automatically equal inefficiency.
Inefficiency can still exist.
In my experience, what often sits underneath perceived ‘bloat’ is not intent. It is structural ambiguity.
Strong HR is necessary. It is not sufficient for enterprise execution.
When role clarity weakens, coordination costs rise across any function.
For boards, this is not a functional debate.
It is a governance issue.
Where Bloat Actually Begins
Some growth in HR is structural. Workforce expectations have evolved. Regulatory complexity has increased. Data demands are higher.
I have also seen internal issues create unnecessary expansion.
Take the classic Ulrich model: Business Partners, Centres of Expertise and Shared Services. In principle, it is sound. When implemented with discipline, it works.
Discipline is the operative word.
Without governance discipline, the model fragments rather than integrates. Where role segregation blurs:
• Business Partners lose visibility into what Centres of Expertise are driving.
• Talent teams operate transactionally, detached from the enterprise context.
• Shared Services make decisions outside their remit to ‘keep things moving’.
• Employee relations operates reactively without coordinated business input.
None of this typically stems from incompetence. It stems from an unclear mandate.
Duplication creeps in. Rework increases. Escalations multiply. Headcount grows to compensate for friction that structure should have prevented. The specific function is secondary. The pattern is structural.
When accountability is diffused across boundaries, organisations compensate with headcount rather than clarity.
In one enterprise role, I led a major organisational design that was agreed quickly at executive level. The structure was approved. Governance sign-off was clear.
Once implementation required difficult trade-offs across functions, support softened. Executives who had backed the design became more cautious when explicit accountability shifted and reporting lines changed. No single executive was formally mandated to maintain the agreed structure amid those tensions.
Implementation slowed.
Once accountability was made explicit and the mandate clarified, momentum returned within weeks.
The lesson was simple: governance approval does not equal execution ownership.
Research from McKinsey’s Organisational Health Index has repeatedly shown that organisations with stronger organisational health significantly outperform peers on long-term shareholder returns. Structural clarity around decision rights and accountability is a consistent differentiator.
When Data Is Not Actively Managed
Another recurring pattern is workforce data governance. When core data is not clearly owned and maintained:
• Reporting confidence drops.
• Manual workarounds expand.
• Processes are repeatedly re-engineered.
• The same issues are ‘fixed’ more than once.
Activity increases. Capability does not. Boards see rising costs. Teams feel busy.
This is not a people problem. It is a design and ownership problem.
Of course, capability matters. Weak leadership in any function amplifies structural flaws. But strong individuals operating inside blurred mandates will still struggle. Structure determines whether talent compounds or compensates.
The Enterprise Question
The debate should not be framed as ‘Is HR too big?’ It should be:
• Are decision rights explicit?
• Is accountability single-threaded?
• Is the operating model actively maintained?
• Is data governed with the same discipline as capital?
Many organisations attempt to formalise this through RACI models. The framework works when it is actively enforced and reinforced under pressure. In practice, it is often documented and then ignored when trade-offs become uncomfortable.
Cost then becomes the visible symptom of unclear accountability.
CFO, COO and CPO
Research from Heidrick & Struggles shows only 22% of CEOs see their CPO as an enterprise leader. That perception gap has structural consequences.
In high-performing organisations, the CFO and COO already operate as enterprise leaders. They manage the flow of capital and the mechanics of process. Even the best CFO cannot audit a system where roles are blurred, and the best COO cannot drive velocity through a fragmented workforce.
This is where the CPO must step in.
When the CPO is positioned narrowly, HR absorbs friction. When the CPO is positioned structurally, friction reduces.
Not as programme owner. Not as cultural commentator.
As enterprise architect.
When positioned correctly, the CPO operates where the operating model is shaped and cross-functional accountability is designed, not assumed. They become the partner the CFO needs to ensure data integrity and the ally the COO needs to ensure execution speed.
Elevating the CPO role requires more than positional change. It requires enterprise systems capability – commercial fluency, operating model literacy and the ability to hold cross-functional accountability under pressure.
Not every HR career path develops that capability. If the mandate expands, the capability bar must rise with it.
This is not about ‘more HR’.
It is about better structural design.
The real cost is not headcount. It is ambiguity.
Ambiguity does not look like failure at first. It looks like slower decisions, cautious execution and missed momentum — until the performance gaps appear in the numbers.
The question for boards is not whether strategy is compelling.
It is whether the operating model — and the accountability within it — is designed to deliver it.
