OUR PERSPECTIVES
Introduction
As organizations navigate an era of rapid change, the role of HR has become increasingly critical in driving both business performance and employee outcomes. Today, HR leaders face mounting pressure to demonstrate their value, compete for top talent, and embrace technological transformation. To help organizations assess and elevate their impact, SHRM developed the HR Excellence (HR-X) Framework, which consists of four foundational dimensions. This report focuses on the Talent Optimizer dimension. This dimension sits at the intersection of business strategy and workforce execution, encompassing critical practice areas such as Leadership and Manager Development, Learning and Development, Performance Management, and Employee Experience.
The HR-X Framework is designed to be viewed holistically, but the Talent Optimizer dimension stands out for both its potential impact and the significant opportunity it presents. This report explores the current state of this dimension, highlighting a distinct gap between its strategic importance and its current maturity levels within organizations. By examining strengths in compliance against weaknesses in strategic talent management, this research provides HR professionals with a clear road map to strengthen their capabilities, align talent with organizational goals, and drive meaningful improvements in overall business performance.
The HR-X Framework
As organizations navigate an era of rapid change, the role of HR has become increasingly critical in driving both business performance and employee outcomes. Today, HR leaders face mounting pressure to demonstrate their value, compete for top talent, and embrace technological transformation.
To help organizations understand and assess HR’s impact, SHRM developed the HR-X Framework. This foundational model defines HR across four dimensions: Functional Accelerator, Talent Optimizer, Market Discerner, and Organizational Driver. Together, these dimensions capture the full scope of HR responsibilities through 16 core practice areas and more than 70 sub-practice areas.
SHRM research has shown that higher levels of HR maturity across these four dimensions are associated with better organizational outcomes.
- High HR maturity is associated with stronger financial performance and greater productivity, resulting in higher revenue projections.
- High HR maturity results in lower turnover and voluntary turnover rates along with higher worker intention to stay with the organization.
- High HR maturity results in higher employee engagement, increased job satisfaction, and stronger employer brand ratings.
Exploring the Role of Talent Optimizer
The HR-X Framework is designed to be viewed holistically, but this report intentionally focuses on the Talent Optimizer dimension, which stands out for both its impact and the opportunity it presents. Talent Optimizer encompasses critical practice areas such as Leadership and Manager Development, Learning and Development, Performance Management, and Employee Experience. These capabilities sit at the intersection of business strategy and workforce execution, making them essential to aligning talent with organizational goals.
The table below provides an overview of each practice area within the Talent Optimizer dimension:
| Dimension and Practice Area | Definition |
|---|---|
| Talent Optimizer | Drives performance, engagement, and retention through innovative talent management approaches. |
| Leadership and manager development | Enhancing skills for guiding teams and managing organizations effectively. |
| Learning and development | Training and resources to foster worker growth and development. |
| Performance management | Process of aligning individual objectives with organizational goals to optimize worker and organizational success. |
| Employee experience | Holistic approach to enhancing workforce engagement, productivity, and satisfaction. |
| Inclusion and diversity (I&D) | Fostering an inclusive environment that leverages diverse perspectives to enhance organizational success. |
| Talent analytics | Data-driven insights to inform workforce planning and optimize performance. |
| Talent management | Comprehensive integration of HR processes for recruiting, developing, and retaining talent to support organizational goals. |
| Labor and employee relations | Managing workplace dynamics and ensuring compliance with labor laws to foster a harmonious and legally sound work environment. |
The significance of the Talent Optimizer dimension is evident in its prominence among CHRO priorities. In both 2025 and 2026, four of the top five priorities for CHROs fell within the Talent Optimizer dimension, including leadership and manager development and employee experience.1 The 2026 SHRM State of the Workplace report further highlighted the urgency of addressing employee experience, which has become a critical priority for workers, HR professionals, and HR executives.2
Despite the critical importance of the Talent Optimizer dimension, advancing it is not without challenges. Nearly half of CHROs identified maintaining employee morale and motivation as an organizational talent challenge. What’s more, 37% identified establishing effective leadership development programs as a challenge.3 As this report explores, organizations can make an enormous impact on HR maturity by strengthening their Talent Optimizer capabilities.
The Underdeveloped Power Player
Among the four dimensions of the HR-X Framework, Talent Optimizer is the most influential, with the largest relative impact on overall HR maturity. Its focus on aligning talent strategies with business goals makes it a cornerstone for driving organizational success. Prioritizing this dimension can deliver outsize returns, reinforcing its role as the top driver of HR maturity.
However, despite Talent Optimizer’s importance, it remains the least mature dimension of the HR-X Framework. Only 1 in 16 organizations has reached a high level of maturity in this dimension. This gap highlights a significant opportunity for HR leaders. Strengthening the practice areas within the Talent Optimizer dimension can accelerate progress toward overall HR maturity and, in turn, drive meaningful improvements in business performance and employee outcomes.
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Inside Talent Optimizer: Strengths and Gaps
A closer examination of the Talent Optimizer dimension reveals meaningful variation in maturity across its eight practice areas, highlighting both established strengths and areas for improvement. Labor and Employee Relations, which focuses on managing workplace dynamics and ensuring compliance with labor laws to foster a harmonious and legally sound work environment, is the most mature practice area, with nearly half of organizations (47%) achieving high maturity. This reflects its status as table stakes for HR because getting it wrong can carry significant legal and financial consequences, including labor disputes and regulatory penalties. Organizations with strong capabilities in this area benefit from well-defined processes, clear governance, and consistent investment, making it a foundational element for HR operations.
Learning and Development, defined as the training and resources that organizations provide to foster worker growth and development, shows substantially lower levels of maturity, with only 6% of organizations achieving high maturity. This suggests that while organizations increasingly recognize the importance of upskilling and reskilling employees to meet evolving business needs, many struggle to implement scalable, strategic approaches. According to Learning and Development executives, key challenges include effective upskilling to address skills gaps, activating managers or champions of learning and development, and fostering an organizational culture of learning.4
Talent Management, encompassing the comprehensive integration of HR processes for recruiting, developing, and retaining talent to support organizational goals, also lags, with just 7% of organizations achieving high maturity. Low maturity in this area reflects persistent fragmentation across the talent life cycle, in which recruiting, performance management, succession planning, and development are often siloed rather than integrated. Without a cohesive approach, organizations risk gaps in talent pipelines, ineffective deployment of key skills, and challenges retaining critical employees over time.
Taken together, these findings highlight a significant opportunity within the Talent Optimizer dimension. Labor and Employee Relations demonstrates the necessity of a strong foundation, but the low maturity of Learning and Development as well as Talent Management points to areas where targeted investment can yield substantial impact. Strengthening these capabilities enables organizations to improve workforce agility, better align talent with business strategy, and ultimately drive meaningful gains in overall HR maturity.
47%
Labor and Employee Relations, which focuses on managing workplace dynamics and ensuring compliance with labor laws to foster a harmonious and legally sound work environment, is the most mature practice area, with nearly half of organizations (47%) achieving high maturity.
6%
Learning and Development, defined as the training and resources that organizations provide to foster worker growth and development, shows substantially lower levels of maturity, with only 6% of organizations achieving high maturity.
Strengths and Opportunities: A Closer Look at Sub-Practice Areas
To provide a more comprehensive view of the Talent Optimizer dimension, SHRM examined the 30 sub-practice areas that underpin the eight practice areas within the Talent Optimizer dimension. The data underscores a clear tendency toward foundational, compliance-driven activities, contrasted with a need for a stronger focus on the talent-centered strategies that are necessary to power organizational growth.
Compliance, Health, and Safety Lead the Way
Consistent with high maturity in the Labor and Employee Relations practice area, it is unsurprising that Labor Law Compliance and Workplace Safety & Health emerge as the highest-performing sub-practice areas. These are fundamental to effective HR practice — ensuring legal compliance and safeguarding employees are not negotiable. Organizations invest heavily in these domains because the consequences of neglect are substantial, both legally and financially. Furthermore, I&D Training and Performance Reviews are also highly ranked, demonstrating a commitment to creating workplaces in which all employees are respected and performance is rewarded fairly. Alongside these areas, organizations perform well within Culture, a sub-practice area that is foundational to organizational success and to employee experience. Collectively, these strengths confirm that most organizations are meeting key operational requirements.
Organizations Are Falling Short in Strategic Talent Management Areas
However, the analysis also reveals pronounced opportunities at the strategic end of the Talent Optimizer landscape. Areas such as Skills Identification & Gap Analysis, L&D Strategy, Talent Analytics Application, Talent Analytics Metrics, and HIPO Development rank lowest in maturity. As the workplace rapidly evolves, accelerated by new technologies and shifting workforce expectations, organizations cannot afford to overlook these essential drivers of future success. The ability to pinpoint workforce skills, forecast needs, and deliver robust learning pathways is not just advantageous, it is strategically vital in an era defined by rapid innovation and digital transformation.
For HR professionals aiming to elevate their impact, these findings deliver a decisive call to action. Maintaining strong foundations in compliance and workplace safety is essential, but true strategic advantage lies in advancing the maturity of talent-focused capabilities. Organizations that prioritize skills intelligence, leverage advanced analytics, and are committed to intentional talent development will be best positioned for future success.
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Charting the Course: Where to Begin in Talent Optimizer Development
The Talent Optimizer dimension covers a wide range of HR practice areas. As such, understanding the pathway to excellence within the dimension requires identifying where to begin. To address this, a relative importance analysis was carried out on practice areas within the dimension. Through conducting this analysis, it is possible to determine the degree to which each practice area contributes to Talent Optimizer maturity.
Three practice areas emerged as slightly more influential than the others: Leadership and Manager Development, Learning and Development, and Performance Management. When taking into consideration both maturity level and relative impact, Talent Management ranked third in terms of overall return on investment (ROI) rank. However, the weights are largely comparable across all of the practice areas, which suggests that progress in any one area can meaningfully advance Talent Optimizer maturity. As such, HR professionals should focus their efforts across multiple practice areas, namely those that are of low maturity within their own organizations. As the data shows, improvement within the Talent Optimizer dimension requires a holistic approach and investment across a wide array of areas
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Practical Recommendations for Progress Within Talent Optimizer
Achieving high maturity within each practice area is essential for driving organizational success and fostering a thriving workforce. This requires a deliberate and sustained investment of time, resources, and strategic focus. The following recommendations outline actionable steps that organizations can take to enhance program maturity across each Talent Optimizer practice area. These steps are broadly applicable, but organizations should also consider their unique strengths and weaknesses when planning their approach, providing a clear road map for improvement and long-term impact.
Build leadership excellence by implementing a data-informed process to identify high-potential talent and support them through a formal development program with mentorship and stretch assignments.
Implement a structured coaching program and a leadership competency model to guide development at all management levels.
Elevate skills intelligence by establishing a dynamic skills inventory and using predictive analytics to anticipate future needs, ensuring learning and development strategy is aligned with business priorities.
Evaluate the business impact of training by tracking metrics such as time-to-proficiency and correlating them with on-the-job performance improvements.
Elevate performance management by implementing a standardized rating scale with calibration sessions to ensure consistency and fairness across the organization.
Require managers to conduct and document quarterly performance check-in conversations to support continuous development.
Integrate workforce planning and mobility by conducting an annual strategic exercise to model future talent needs and launching an internal talent marketplace to connect employees with opportunities.
Strengthen succession planning for all critical roles by systematically identifying candidates at various readiness levels and developing comprehensive contingency plans.
Design a flexible, data-driven remote and hybrid work model by establishing a formal policy and using quarterly pulse surveys to make informed adjustments.
Develop key employee personas to map workforce journeys and address critical pain points, continuously improving the overall experience.
Implement organizationwide inclusion training and use structured, job-related interview processes to ensure fair hiring.
Institutionalize inclusion and diversity by prioritizing investments in tools that improve fairness in talent processes and measuring progress through employee experience indicators such as psychological safety and perceived fairness.
Elevate talent analytics into a strategic function by developing a road map that prioritizes key business questions and using data visualization tools to create executive-level dashboards.
Optimize data-driven decisions by using predictive analytics to identify employees at a high risk of leaving, enabling proactive retention efforts.
Strengthen compliance by conducting semi-annual audits of HR policies and implementing a comprehensive safety program with regular inspections and mandatory training.
Institutionalize fair resolution of grievances by establishing a formal, multistep grievance procedure and training all managers on employees’ rights under the National Labor Relations Act.
CONCLUSION
The Talent Optimizer dimension represents a critical yet underdeveloped area within the HR-X Framework, offering organizations a significant opportunity to drive both business performance and employee outcomes. While strengths in areas such as Labor and Employee Relations as well as Employee Experience highlight existing capabilities, the gaps in Learning and Development along with Talent Analytics underscore the need for targeted investment and strategic focus. By implementing the actionable recommendations outlined in this report, organizations can elevate their HR maturity, align talent strategies with business goals, and unlock the transformative potential of their workforce.
How to cite: A Closer Look at HR Excellence: Becoming a Talent Optimizer, SHRM, 2026.
Methodology
HR professionals: A sample of 1,287 HR professionals were surveyed from April 29 to May 21, 2025, using the SHRM Voice of Work Research Panel and SHRM Membership. For the purposes of this study, participants were required to currently be employed at the director level or higher. In addition, these HR professionals were required to be employed by organizations with at least 50 workers. Each response represents a unique organization, and data cleaning measures were implemented to ensure that there are no duplicate organizations included in the results. Data is unweighted.
U.S. workers: A sample of 2,003 U.S.-based workers were surveyed from April 29 to May 12, 2025, using a third-party online panel. For the purposes of this study, participants were required to be employed by organizations with at least 50 workers and they could not work in the HR function or in an HR role. SHRM utilized U.S. Bureau of Labor Statistics benchmarks, as of March 2025, to implement a balanced sampling approach on the basis of gender, race/ethnicity, age, and full-time or part-time work status that controlled for under-sampling and over-sampling on any of these characteristics. Those who were self-employed, retired, or independent contractors did not qualify. Data is unweighted.
1. Source: 2026 CHRO Priorities and Perspectives, SHRM, 2026.
2. Source: 2026 SHRM State of the Workplace, SHRM, 2026.
3. Source: 2026 CHRO Priorities and Perspectives, SHRM, 2026.
4. Source: L&D Executives: Priorities and Perspectives, SHRM, 2025.