How mature is your organisation’s HR?
The benefit an organisation receives from the HR function typically depends on the maturity level. HR must evolve to support business growth. At each level of maturity, the HR department improves the way they align with the business to nurture leadership, enhanced talent management capabilities and which has a direct impact on the overall success of the business.
The following sections are reprinted with permission from Maturity Matters: Build Business Impact, by Laurie Barnett and David Mallon of Deloitte Consulting LLP. Any references to the HR maturity model and its four levels of maturity are from Deloitte’s proprietary research that serves as the basis of its article.
Most organisations go through four key stages of HR maturity. The goal is to reach the fourth and final stage, because this will enable the HR department to best support the needs of the business. By this fourth stage, the function will be mature enough to offer insights that will inform business goals to help to achieve the ultimate business goals.
Stage 1: Becoming intentional – Establish fundamental HR processes
Stage 2: Becoming Professional – Increase adoption and data gathering
Stage 3: Becoming Expert – An emphasis on being strategic
Stage 4: Becoming Wise – Focus on optimising the workforce to meet business needs
The process of moving from one level of maturity to the next can take two years or more. This can depend on an organisation’s willingness to progress and available resources.
How mature is your organisation’s HR?
In 2016 Deloitte Development produced a revised version of the HR function maturity model.
Level 1 – Becoming intentional
At the lowest level of maturity (Level 1), the “compliance-driven HR” organisation focuses primarily on fulfilling mandatory HR requirements. Leadership is often shared with an Operations or Finance role.
Early on, organizations generally start by engaging in only the most essential activities simply to support the running of the business. Regardless of the type of business, most organizations hire employees and most do some sort of training. While some individual activities may be sophisticated, it is more common for these talent practices to be ad hoc and inconsistent. Decisions are made in isolation, as are assessments of success. Companies at this stage are often considered “reactive,” aiming mostly for efficiency, cost savings, or compliance with standard operating rules and legal requirements.
As organizations start to grasp the nuts and bolts of basic processes, their leaders’ principal task is to become intentional—developing a framework for critical decisions, sharing information, discussing talent, and making targeted investments.
Level 2 – Becoming Professional
As the organization continues to grow, this ad hoc, in-the-moment style of HR management begins to cause pain. Leaders start to see the need for formality and structure. Dedicated employees or departments begin to take over specific functions (e.g., recruiting, performance management, and learning and development). These talent / HR departments then train staff in specific disciplines, building and implementing proprietary processes that often include tools and systems as foundational support. These organizations may also begin to put in place the groundwork necessary for a talent strategy.
At this stage in development, HR leaders increasingly focus on the professionalism with which their functions handle company needs, a shift that can lead to a more proactive state of operation and the use of data to monitor trends.
Level 3 – Becoming Expert
As HR functions increase in competency and capability, and as the organization begins to reap the benefits, these functions are asked to tackle broader issues and support the big-picture success of the organization itself. This expansion in focus requires increased sophistication in approach as well as substantial integration or coordination with other allied functions—and ultimately increased expertise in both these related disciplines and the business. At Level 3, many organizations have mastered a variety of the core activities of organizations at Level 2 in that they have a relatively clear, data-based talent strategy.
At this stage, leaders are becoming strategic, using statistical rigor to understand the drivers of their organizations’ business outcomes. These leaders also have shifted their mindsets from one of seeing employees as a cost to one that sees talent as an asset in which the business should invest.
Level 4 – Becoming Wise
HR leaders of Level 4 organizations have genuine perspective, having come into their own with regard to driving value in the business. They’re now proficient in having authentic, substantive conversations with their stakeholders and have a seat at the executive table. They have the sagacity to know what works and what doesn’t for their particular company; that is, what their HR functions can do well and what they can’t. Generally speaking, these mature organizations often have clear, targeted, and communicated talent strategies and have designed most of their entire talent system to reinforce those strategies.
As a result of the deliberate design of their HR / talent systems, leaders at these organizations tend to have a strong sense of which practices their unique organization needs and those which they may be able to step away from—a concept we refer to as “talent wisdom.” At this stage, companies can be truly predictive, using models to identify potential risks and benchmarks that can transform their business.
Click here to learn more about Deloitte’s HR maturity models and its Research & Sensing market offering.
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