In today’s rapidly evolving business landscape, the transformation of the HR Target Operating Model (HR TOM) has become a necessity for HR organizations looking to stay competitive and responsive to changing market demands. Companies must streamline HR processes, enhance efficiency, and integrate modern HR technologies. When approached effectively, an HR TOM transformation can optimize HR delivery, improve employee experiences, and align HR functions with broader business goals. We have combined our expertise from many HR TOM projects, to define the critical steps and considerations for a successful HR TOM transformation.

However, before diving into the mechanics of an HR TOM transformation, it is essential to understand the purpose and what it seeks to achieve. At its core, the HR TOM defines how an organization’s HR function operates to deliver value. This includes the structure, processes, and technology that support the HR functions. If you first want to learn more about the importance and purpose of an HR TOM and our best practice approach, read about the binder|consulting HR TOM here.

Start the HR TOM Transformation by assessing the current HR operating model

The transformation process starts with an assessment of the status quo. This assessment serves as the foundation for the transformation. By identifying pain points and areas of inefficiency or misalignment, the priorities of the transformation can be set to ensure that the transformation focuses on high-impact areas and the achievement of business objectives. The analysis of the current HR Operating Model involves a thorough assessment of all elements of the binder|consulting HR TOM, such as e.g., HR processes, roles, and technology from various stakeholder perspectives and with a market comparison.

Designing the HR Target Operating Model

Once there is a clear understanding of the current HR Operating Model, the next step is designing a model that will best serve the organization’s future needs, the HR Target Operating Model (HR TOM).

1. Defining the Vision and Strategic Objectives

First, the vision for the transformed HR TOM must be established so that it aligns with the organization’s broader strategy. For instance, if the organization aims to grow rapidly, the HR TOM should focus on scalability and agility to support a larger workforce. Furthermore, defining the strategic objectives early on helps anchor the transformation in measurable goals and guides decision-making throughout the process.

2. Defining the HR TOM

To define the HR TOM all elements of the binder|consulting HR TOM eye must be considered. This should include among others designing E2E processes, defining the HR-IT landscape, organizational design, and governance frameworks.

Two aspects of the binder|consulting HR TOM we want to further dive into are

Implementing (AI) Technology and Automation

An HR TOM transformation often relies on new technology to drive efficiency, improve the employee experience, and elevate the overall quality of HR processes. In many cases, the technology transformation  serves as the key enabler for the broader HR TOM transformation. By implementing solutions such as cloud-based HR platforms, AI-powered recruitment tools, and self-service portals, organizations can streamline HR operations, significantly reduce the manual workload for HR teams, and ensure consistent and reliable service delivery.

Automation and AI also open up new possibilities for enhancing decision-making and strategic HR management. For example, data analytics and skill management tools empower HR leaders to make data-driven decisions in workforce planning, turnover analysis, and engagement tracking. Furthermore, AI-driven tools can enhance the quality of HR operations, e.g., in recruitment by identifying the best candidates more accurately, improving diversity in hiring, or in Learning & Development, by personalizing employee development paths.

By aligning automation and AI capabilities with HR TOM goals, organizations not only boost efficiency but also foster innovation and improve the overall quality and effectiveness of HR services.

Deciding to Outsource

Outsourcing can be a strategic and impactful approach within an HR TOM transformation, enabling organizations to focus on high-value, strategic activities while delegating time-intensive operational tasks to external partners. By outsourcing organizations can reduce costs, enhance operational efficiency, and improve service delivery consistency. Common functions for outsourcing include e.g., Payroll and Benefits Administration, Recruitment and Learning & Development.

However, successful outsourcing requires careful evaluation and planning. Organizations must identify the HR functions that will derive the greatest value from outsourcing while considering the complexity, scalability, and criticality of each process. Establishing clear performance metrics, service level agreements, and effective communication channels with external providers is essential to ensure alignment with business goals and mitigate potential risks.

Additionally, outsourcing decisions should align with the organization’s broader HR strategy and TOM objectives. When executed thoughtfully, outsourcing can provide a flexible and scalable model for addressing HR needs, allowing internal teams to concentrate on innovation, employee engagement, and strategic workforce planning.

3. Development of a transformation roadmap

To structure the HR TOM project, a strategic roadmap must be created, which outlines the steps needed to transition & transformation from the current state of the operating model to the desired target operating model. This roadmap should also incorporate other influencing initiatives, allocate resources, and establish timelines.

To manage risk and ensure continuous improvement a phased implementation approach can be considered. Next to allowing a more flexible resource allocation, a phased approach allows for testing and adjusting the new model before a full-scale rollout. A pilot program helps to refine the service delivery model and feedback can be used to make any necessary improvements.

4. Managing the stakeholders

Transforming the HR TOM is a major change that will impact the HR team as well as the entire organization. Effective project and change management is therefore critical to a successful transformation. It is important to engage key stakeholders from across the organization to gain buy-in and support for the transformation early on. Furthermore, involving representatives from all affected teams (e.g., IT, finance, and specific business units) ensures that the new model reflects the needs of all stakeholders.
Employees may feel uncertain about changes to the HR function, particularly if it involves outsourcing. Therefore, transparent communication about the purpose and benefits of the transformation, as well as how it will impact them, can help build trust and encourage buy-in.

Building a Sustainable HR TOM for the Future

Once the transformation is complete, maintaining the new HR TOM requires ongoing effort. Continuous monitoring and optimization are vital to sustaining the benefits of the transformation. Organizations must regularly reassess the model to ensure it continues to align with the organization’s goals. As business needs, technology, and the talent landscape evolve, the HR TOM should adapt to remain efficient and effective. Therefore, ongoing training and development of HR teams is essential, and metrics and feedback mechanisms must be established to track performance and identify areas for ongoing improvement.

An HR TOM transformation can significantly improve an organization’s HR operations, aligning them with the organization’s goals and enhancing overall efficiency while improving employee experience. By understanding the organization’s needs, designing a strategic model, and leveraging technology companies can create a modern HR TOM that not only supports organizational growth but also adapts to a dynamic business environment. Transforming an HR TOM is a complex journey and with our expertise we can support your organization to gain lasting benefits for both HR and the wider organization from this transformation.

Contact us to find out how we can support your organization!