There is a direct relationship between organisational maturity levels and the value derived from HR systems, writes Rob Scott
Clients often ask me what the primary influencer is when selecting new HR software, and are generally surprised when I respond that they should first ask their executive management team what they really think of their HR department and what current and future expectations they have of this function.
The executive view is generally very telling, and while there are many factors which influence the selection of HR software – including key business drivers, people focus areas, industry challenges, budget availability and existing vendor relationships – one overriding influencer, and one that is rarely applied sufficiently, is the impact of organisational maturity. Your maturity level is a direct result of how your executive team defines and drives the concept of value (including people value) through the business. It is also the lead indicator of what the HR function will succeed at, and hence the likely value an organisation will get from an investment in HR software.
Your views of people
I like to think about HR software as a mirror. It generally reflects the reality of management’s view of people. In many cases, I see HR departments being blamed for “poor service” and “terrible software” – and while HR incompetency may be a contributing factor, the real issue is often a misalignment of what the HR function does and what the organisation needs in relation to its maturity level.
Some organisations see people primarily as a cost, whereas others see people as a means of producing broad financial and societal returns. While there is no right or wrong position, what your organisation maturity level reveals is the true “expectation” executives have of employees. It also frames any value they would assign to proposed HR initiatives and tools.
According to the Maturity Institute’s framework (ARC) there are nine other “pillars” aside from how people are viewed that when measured together, determine an organisation’s stage of maturity . The “stage” effectively shows the current limit of HR’s value and expectations.
Aligning to maturity levels
When a company has a low level of organisational maturity (e.g. stage 1 or 2), it is unlikely that senior management would regard the HR function as strategically influential, nor see significant benefit in introducing solutions like performance management, career & succession and analytics. In this scenario we often see HR managers using a “stick” approach to drive process compliance with line managers, but few managers actually derive any business value from these HR tools, because the executive team fundamentally don’t see the need to use them to execute their goals. At a maturity level of four or five, there is a completely different expectation of people by executives who understand the importance of these tools to create business value.
The argument against using maturity for software selection is tied into the “HR best practice” and “best practice technology” belief. Stories of engaged employees, massive cost savings and improved shareholder value are the typical rationale provided by software vendors to buy all their software. I am yet to meet a vendor who is prepared to accept financial accountability if the “best practice” they want you to buy does not work.
Aligning your HR software selection and purchases with your maturity level will give you the greatest opportunity to succeed in HR and build credibility at the executive level. As you improve your maturity level, the need for more strategic and sophisticated HR systems will become obvious and support from executives will easily be attained.
HR systems and organisational maturity
- There is a direct relationship between your organisational maturity level and the value you derive from HR systems.
- HR systems are like a mirror – they reflect how your organisation views people. When people systems are in disarray, it is often a sign of a low organisational maturity level, not poor software or process.
- When HR managers and executives understand and accept what their maturity level means, the role of HR and expectations become clear to both parties.
- Improving your level of organisational maturity is the real catalyst for HR to become a strategic influencer in your company.
Rob Scott is global lead: HR strategy & innovation for Presence of IT, a leading consultancy in HR, talent, payroll and workforce management solutions.