Stages of HR function maturity
The benefit an organisation receives from the HR function typically depends on the maturity level of the HR function. At each successive level of maturity, the HR function improves their business alignment, talent management capabilities, organisational efficiencies and overall business impact.
How mature is your organisation’s HR function?
In 2011 Bersin & Associates released a model that defines four levels of HR function maturity.
Level 1 – Compliance-driven HR Services
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, and the philosophy concentrates on the local legal requirements concerning hiring and employment. These organisations have no documented HR strategy and few, if any, consistent talent processes. Instead, line managers assume many of the responsibilities for recruiting, managing and motivating employees.
Level 2 – Fundamental HR Services
At Level 2, a “fundamental HR services” organisation has an HR strategy focused on improving processes and creating HR depth. Core HR services are standardized and efficient. In addition, the organisation begins to focus on talent management services, such as recruiting, succession planning or training. These organisations typically have siloed HR structures for functions, such as recruiting, development, compensation and workforce planning, with separate, automated systems for these processes.
Level 3 – Strategic HR Department
At Level 3, a “strategic HR department” is defined by its approach to business partnership. These organisations are focused on creating deep connections with the business goals, while maintaining an optimised HR department. Leadership is seen as a critical member of the executive team. The focus for this level is on integrating processes, data capturing and business advising. This function includes more strategic talent management, as well as flexible frameworks for core HR functions that meet both legal and business needs. Some core HR services may be outsourced or automated, while strategic HR functions are improved. System integration and communication are critical to this level.
Level 4 – Business-integrated HR
At the highest level of maturity (Level 4), the “business-integrated” HR organisation helps to drive the business through workforce strategies and people data. These organisations are focused on optimising the workforce to meet business needs, and offering insights that will inform business goals and directions. The HR leader is a strategic role in the organisation and is closely connected with business executives. HR systems are tightly linked and connected to business systems, enabling HR and business leaders to access the necessary people data to make decisions. Major initiatives at this level involve data analysis and trending, providing business guidance, and continuous improvement of HR processes.
The continuous improvement aspect is key among business-integrated (Level 4) HR organisations. Even though these organisations have reached the highest stage of maturity, they never stop improving; in a sense, they are in a constant state of evolution. The focus is on continuous adaptation, ensuring that the HR structure, team, programs and systems are optimised and aligned with the needs of the business.