If You Were to Separate "Human Resources" and "Labor Affairs"

——A New Trend in Back-Office Reform

Back-office reform in Japanese companies is entering a new phase.
Movements are accelerating to separate the tasks traditionally handled centrally by the "Human Resources Department" into "Strategic HR" and "Specialized Labor Affairs" to increase organizational agility.
At the core of this division of labor is the principle of "30% Regulation, 70% Implementation." We explain a new era of organizational theory where Labor Affairs designs the systems and HR brings them to life in the field.

Traditionally

in Japanese companies, the "HR-centralized model," where the HR department managed everything from hiring to payroll, was the mainstream.

As shown, this model harbors significant challenges.

• Dilution of Expertise: Labor law professionals cannot devote time to HR strategy, while conversely, strategy planners are bogged down by labor procedures

• Concentration of Risk: Because one department handles all functions, reliance on specific individuals and a chronic shortage of human resources occur

• Inhibition of Innovation: Being chased by daily tasks prevents the transition to human capital management

In advanced companies, a division-of-labor model where "Labor Affairs handles regulations (system design) and HR handles implementation (field execution)" is becoming widespread.
This structure aligns with the philosophy advocated by Tatsuo Kinoshita of Panasonic.

as a philosophy.

New Definition of the Labor Affairs Department——"Professionals of Regulation"

• Legal Coordination: Drafting labor contracts / Formulating Article 36 agreements / Developing anti-harassment regulations

• System Design: Designing salary structures / Frameworks for evaluation systems / Benefit programs

• Risk Management: Compliance with the Labor Standards Act / Safety and health management / Workers' compensation response

• Data Infrastructure: Selection of attendance management systems / Standardization of payroll calculation

Evolution of the Strategic HR Department——"Artists of Implementation"

• Organizational Development: Operational improvement of evaluation systems / Resolution of inter-departmental conflicts

• Talent Strategy: Optimization of hiring plans / Execution of reskilling programs

• Engagement: Quality control of 1-on-1 meetings / Fostering psychological safety

• Data Utilization: Building turnover prediction models / Productivity analysis

The Synergistic Effects of Separation: A Case Study of Summit, a Food Retailer

At Summit, which garnered attention for its 2024 organizational reform, the traditional HR department was dismantled and split into the "HR Strategy Division" and the "Labor Management Department", resulting in:

1. Labor Management Department achieving a 95% automation rate for payroll processing (via VBA and API integration)

2. HR Strategy Division improving the turnover rate to a record low of 3.8%

3. Management's time allocation shifted from "70% administrative tasks to 70% strategic tasks"

The key to this success lies precisely in the practice of "30% regulation, 70% operation."
Labor affairs standardized operations by utilizing ERP and RPA, while HR concentrated the freed-up resources into talent development.

Five Success Conditions for the Separation Model

1. Clarification of Boundaries

   • Labor: Creation of human capital reports based on ISO 30414

   • HR: Operation of reverse mentoring programs / Customization of AI recruitment tools

2. Building a Collaboration Platform

   • Common database (Introduction of Workday or SAP SuccessFactors)

   • Institutionalization of quarterly joint review meetings

3. Optimization of the talent portfolio

   • Labor Affairs: Ratio of certified social insurance labor consultants at 50% or higher

   • Personnel: Development of HRBPs (HR Business Partners)

4. Uneven distribution of technology investment

   • Labor Affairs: AI audit tools / Blockchain-based contract management

   • Personnel: VR training systems / Organizational Network Analysis (ONA)

5. Differentiation of performance indicators

   • Labor Affairs: Zero legal violations / 30% reduction in processing time

   • Personnel: Engagement score +15 points / Job offer decline rate -5%

The separation model is not merely a reorganization of tasks, but an essential foundation for Japanese companies to transition to "human capital management."
Among the 11 areas required by the Ministry of Economy, Trade and Industry's "Human Capital Visualization Guidelines",

• Labor Affairs: Health management / Diversity / Safety

• Personnel: Skill visualization / Career paths / Leadership development

are handled by their respective specialists.
This division of labor is the key to balancing the ESG data demanded by investors with the ease of working demanded by the front lines.
However, not all companies are suited for the separation model.

as pointed out,

• Under 100 employees: Prioritize agility through integration

• Rapidly growing companies: A hybrid model incorporating HRBP functions is effective

• Traditional manufacturing: Delegating some labor affairs functions to production departments

What is important is to identify the optimal solution that aligns with your company's growth stage and management strategy.
For example, in startups, there is an increasing trend of outsourcing labor affairs through AI tools and placing management-oriented personnel in HR roles.
The separation of HR and labor affairs is not merely an organizational restructuring, but a "redesign of the meaning of work".
Labor affairs builds a robust foundation, and HR exercises human creativity upon it—this new division of labor model will become the cornerstone supporting the sustainable growth of Japanese companies in the AI era.
Ultimately, what matters is that the separated departments function as "partners sharing the same vision".
Those who design the systems and those who operate them must respect each other's expertise while nurturing the common asset of human capital.
That harmony is the driving force that triggers true organizational evolution.