The world of work is shifting fast, and HR leaders are feeling the pressure. The rate of change has risen 183% over the past four years, according to C-suite executives surveyed in Accenture's 2024 Pulse of Change Index. SHRM's Vice President of Thought Leadership James Atkinson and SHRM Lead Researcher Derrick Scheetz, SHRM-CP, presented new research at SHRM25 in San Diego that revealed what it takes for HR to meet today's challenges and what's holding many HR teams back.
Between wage inflation, tight labor markets, and skill shortages, HR teams are navigating a perfect storm of rising costs and heightened expectations. "HR executives have shared that these challenges are numerous and increasing," Atkinson said.
What SHRM's HR-X Model Reveals About Today's HR Landscape
This is where SHRM's HR Excellence Functional Maturity Model (HR-X model) comes into play. Built as a framework of 16 HR practice areas and over 70 sub-practices, the HR-X model defines what high, average, and low HR maturity look like across the function. Those areas were rolled into a 90+ item assessment designed to evaluate an HR function's maturity across four core dimensions:
- Functional Accelerator: Internal HR strategy, technology, and operations.
- Talent Optimizer: Engagement, development, and retention.
- Market Discerner: Labor market and compensation intelligence.
- Organizational Driver: C-suite partnerships, change management, and ESG alignment.
The Opportunity Ahead: Closing the Gap
"To really envision the HR function of the future, we needed to first define the areas of focus for HR," Atkinson said. With those parameters in place, the research team built the HR-X model to help HR leaders assess where they are today and identify what to do next by providing a structured, data-driven path to maturity and business impact.
When SHRM applied this model across nearly 1,300 HR organizations, the results revealed just how far most functions still have to go:
- The average HR maturity score was just 3.85 out of 6.
- Only 1 in 8 HR functions are performing at a high maturity level
- 1 in 12 HR functions fall into the low maturity range, indicating difficulty in making a meaningful organizational impact.
Critically, the lowest scoring area was Talent Optimizer, the dimension including leadership development, performance management, learning and development (L&D), and engagement. "CHROs rated leadership and manager development as their number one priority for 2025, but this topic falls well short of that 3.85 overall maturity average, indicating many organizations have room for growth," Scheetz explained.
Why It Matters: Maturity Drives Measurable Business Results
While the model revealed a sobering view of the current state of the HR function, it also shows what effective, high-performing HR can achieve. Great HR doesn't just happen — it requires sustained investment. That's why the connection between HR maturity and financial performance is so important.
To secure investment from leadership, HR departments need to show tangible business value. SHRM's Business Case for HR Excellence report found that higher HR maturity is associated with:
- A 90% likelihood of meeting or exceeding financial goals (vs. 44% at low maturity).
- A $62,000 revenue gap per full-time employees for every one-point increase in HR maturity. This could result in the difference of millions of revenue dollars attributed to a one-point difference in HR maturity.
- Increased employee retention and engagement.
- Higher job satisfaction ratings and Employer Net Promoter Scores.
"It starts with orienting your function in a way that can deliver these types of results," Atkinson said. Now is the time to identify your lowest-scoring focus area and tailor your strategy to accelerate maturity in that dimension.
SHRM's analysis showed that maturity in HR is not just about optimization; it's about unlocking real business value through focused, strategic development. Despite the clear benefits of high HR maturity, the upcoming research report found that most teams aren’t there yet:
- Only 6% of organizations achieved high maturity as a Talent Optimizer.
- Only 1 in 4 did so as a Functional Accelerator.
- Just 1 in 8 were high maturity Market Discerners.
"High HR maturity is not common today," Scheetz said. The good news? Improvements in any one of the four dimensions can make a measurable difference, according to Scheetz, with Talent Optimizer having the largest relative impact on overall maturity.
Where to Start: High-Impact Actions Across the HR-X Model
SHRM's analysis revealed that targeted improvements in each HR-X dimension can drive meaningful progress — especially for teams not yet operating at high maturity. Below are high-impact actions HR leaders can take to boost performance in each area:
Talent Optimizer
- Adopt data-driven and personalized development programs.
- Use data and tech to optimize L&D.
- Enhance performance management systems to drive feedback, goals, and accountability.
Market Discerner
- Align total rewards with organizational goals using internal analytics and market benchmarks.
- Tailor benefits offerings to workforce needs and communicate them clearly.
- Build recruiting practices that reflect and amplify your employer brand.
Organizational Driver
- Deepen C-suite collaboration with data-backed influence.
- Embed compliance and environmental, social, and governance (ESG) into strategy, not just operations.
- Lead transformation by aligning talent strategies with the evolving demands of the future of work — including scenario-based, AI-informed workforce planning.
Functional Accelerator
- Strategically implement new HR technology by aligning tools with measurable goals.
- Focus on HR technology adoption and integration, not just purchase.
- Build an HR team skilled in connecting HR strategies with organizational goals.
HR Excellence Is Possible — and Profitable
Atkinson challenged the audience to ask themselves, "Is your HR team excelling or just keeping up?" The HR-X model helps leaders do more than adapt — it helps them lead with impact.
"High HR maturity results in stronger employee engagement, job satisfaction, and higher employer brand ratings," Atkinson concluded. "Done right, a function achieving HR excellence can show ROI and deliver on the financial and employee outcomes needed to move the business forward."
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