The pressure on HR to demonstrate measurable value is growing. Between tightening financial oversight stemming from economic pressures, intensified talent shortages, and accelerating technological change, being "good enough" is no longer an option.
SHRM's latest research underscores the need for advancing HR maturity, not simply as best practice but as a business imperative. HR maturity is associated with financial performance. Over half (51%) of HR leaders at organizations with high HR maturity reported exceeding financial objectives over the past year.
To address this, the HR Excellence (HRX) Functional Maturity model offers a structured road map to help HR functions drive organizational impact, from foundational effectiveness to strategic partnership.
Let's unpack the key elements of the HRX model, review the evidence behind its impact, and consider practical steps to elevate your HR maturity.
Why HR Maturity Matters
Mature HR organizations do more than deliver basic services. They directly drive superior business outcomes, including revenue growth, talent retention, and workforce engagement. The SHRM study spanned nearly 1,300 HR leaders and over 2,000 U.S. workers and draws a direct line between HR maturity and organizational success.
While over half of leaders at organizations with high HR maturity reported exceeding financial objectives over the past year, the opposite is true at organizations with low HR maturity. Over half (51%) of HR leaders at organizations with low HR maturity reported missing financial objectives in the past year. This demonstrates the impact of a robust and competent HR department on the bottom line. “We studied and controlled for organization size and industry and sector. This means that the relationships we find are true regardless of those three things,” explained James Atkinson, VP, Thought Leadership at SHRM, in a recent webinar, “Unlock the Power of HR Maturity to Drive Measurable Business Outcomes.”
Key finding: Only 1 in 8 HR functions reach high maturity. Most fall in the average category, and more than 1 in 10 struggle at a low level. The differences are striking — and actionable.
The HRX Model at a Glance
The HRX framework organized 16 HR practice areas into four dimensions, each essential to success:
1. Functional Accelerator
Maximize your HR team's effectiveness by leveraging people, data, and technology. This dimension ensures strong foundations in HR strategy and operational management, enabling efficiency and freeing resources for wider impact.
2. Talent Optimizer
Go beyond recruitment to develop, engage, and retain talent with focused programs in learning and development (L&D), performance management, analytics, and employee experience. Talent Optimizer is the lever that is traditionally associated with the functions of HR, with a focus on everything from employee experience to leadership and manager development.
3. Market Discerner
Proactively monitor external trends, from labor market shifts to compensation practices, to reliably attract and reward top talent. This dimension improves competitive advantage in acquiring and keeping the right people.
4. Organizational Driver
Shape broader business outcomes through strategic initiatives including organizational design, C-suite and board engagement, change management, and a future-focused approach to work. Mature HR functions become true partners in executing growth strategies.
Maturity in Practice
HRX defines what low, average, and high maturity look like for each practice area and dimension. This clarity enables benchmarks, continuous improvement, and targeted change. For HR leaders, the framework provides concrete language and metrics to explain HR's value to executive stakeholders.
The Evidence: Why Raising HR Maturity Works
The SHRM research not only identified what makes up HR maturity but also the impact high-maturity HR organizations have on revenue growth, talent retention, and employee engagement.
Revenue Growth
- Seventy-five percent of high-maturity HR organizations achieved revenue growth over the past two years, compared to 50% of average-maturity and just 40% of low-maturity organizations, according to SHRM’s the Business Case for HR Excellence report.
- Example: For two companies with 1,000 employees, the one with high HR maturity generated $62,000 more revenue per employee — a $62 million company-wide advantage.
Talent Retention
- Over half of high-maturity HR organizations enjoy low turnover, while only 20% of low-maturity counterparts can say the same, according to the same SHRM research. Nearly 30% of low-maturity organizations suffer from high turnover rates.
- Raising your HR maturity score by a single point decreases annual turnover by 1.2%. The business impact: reduced recruiting costs, less lost productivity, and higher workforce stability.
- Employees recognize this: four-fifths of staff in high-maturity organizations are unlikely to seek another job within the year, compared to just one-third in low-maturity ones.
Employee Engagement
- More than 80% of high-maturity organizations report highly engaged employees; Low-maturity HR functions have a near-zero chance of fostering high engagement.
- Moving from average to high maturity can yield a 15-point increase (on a 100-point scale) in employee engagement scores, which impact productivity, retention, and culture.
Action Steps: Advancing Your HR Maturity
Focus on practical actions to drive meaningful progress:
1. Benchmark and Assess
Start by evaluating your current state using the HRX model, looking at all dimensions and practices areas. In addition, use surveys, self-assessments, and analytics to better understand the full picture of strengths and weaknesses.
2. Prioritize Talent Optimization
The data is clear: investing in L&D, leadership and manager development, and analytics are key to organizational success. Most organizations underperform in this area, so improvement here can set you apart.
3. Elevate Data and Analytics
Move beyond anecdotal evidence. Leverage data to demonstrate how your programs impact revenue, retention, and engagement. Align reporting metrics with business priorities and communicate results in the language of the C-suite.
4. Align Initiatives with Business Strategy
Make sure every HR initiative ties back to clear, measurable business objectives. Engage executives early and often in strategy discussions to ensure alignment while reinforcing HR's strategic value.
5. Embrace Technology as an Enabler
Adopt HR technologies that boost operational excellence, personalize employee experiences, and provide actionable insights. Stay current with technology trends to keep your function, and business, ahead of the curve.
6. Drive Change from the Center
Use your central position to build a culture of adaptability and resilience. Facilitate change management initiatives, promote inclusion and diversity, and ensure that talent strategy remains at the heart of all business transformation efforts.
HR Maturity to Tackle the Road Ahead
For HR leaders, the path to better business outcomes is paved by higher levels of HR maturity. The HRX model provides a framework for assessment while delivering a roadmap to support increased revenue, stronger retention, and a more engaged, high-performing workforce.
By focusing your efforts on talent development, utilizing data to communicate value, and aligning initiatives with strategic business goals, you position HR not simply as a cost center, but as a driving force for sustainable growth. Assess where you stand today, take deliberate steps forward, and demonstrate through evidence and outcomes that HR can and should lead the way.
Investing in HR maturity isn't just good for your department. It's essential for your organization's future success.
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