Maturity, Human Capital and Performance

The study discussed in the transcription explores the impact of HR on company performance. It found that while individual HR practices are beneficial, they are most effective when part of a larger, cohesive system. This system, known as HRM system maturity, involves 10 key areas that contribute to a company's success. These areas include viewing employees as valuable assets, aligning HR strategy with overall business goals, fostering a culture of continuous learning, and creating systems that incentivize the right behaviors. Companies with high HRM maturity involve employees in shaping HR policies and view HR as strategic partners rather than just an administrative department. Overall, the study emphasizes the importance of a holistic approach to HR that integrates practices into the fabric of the organization. HRM system maturity is a strong predictor of organizational success and goes beyond individual HR practices or an effective HR function. Hey everyone, we had an interesting piece of research sent in talking about HR's impact on company performance and, you know, it really got me thinking. Okay. Yeah. What is the magic formula? Right. Is it just about having all the quote-unquote best practices in place or is there something more? Yeah, that's a really good question and it's something that this study actually digs into and it turns out there's a little bit of a twist. Ooh, I love a good twist. It's not just about having the right tools in the HR toolbox. Okay. It's about how you bring them all together. Tell me more about the study itself. Yes. What kind of companies did they look at? So this study is titled, The HR Function's Influence on Organizational Performance Beyond High-Performance Work Practices Paradigm, an HRM Whole System Perspective. Gotcha. Yeah, it really rolls right off the tongue. Yes. But they analyzed data from 135 organizations. Okay. And a really interesting point here is they didn't just talk to the higher-ups. They got insights from both managers and employees to try to paint a more complete picture. That's smart because you're going to get obviously very different perspectives from someone who's maybe working on the ground floor every day versus someone in the C-suite making these decisions. Absolutely. So walk me through this twist. I'm hooked now. Okay. So we often hear about these high-performance work practices. Sure. So things like investing in employee development, giving people more autonomy, having a really rigorous hiring process to make sure you're getting the right people in the door. Yes. Things you would typically associate with good HR departments. Exactly. Yeah. And they actually found that while these practices are beneficial on their own, they don't reach their full potential unless they're part of a larger, more intentional system. Okay. So think of it like this. You can have all the best ingredients for a cake, but if you don't combine them in the right way, you're not going to have a cake. You're just going to have a mess. Right. Just a big mess. So how does this study explain then those companies who have all the right ingredients? They're doing all those things, but they're still not seeing the results, right? What are they missing? Well, the study calls this HRM system maturity. Okay. Essentially, it's the difference between having a bunch of disconnected HR initiatives and having a cohesive system where all of those practices are actually working together to support a company's overall strategy. So it's less about checking boxes, like, oh, yeah, we offer this, we offer that, and more about creating this unified approach to actually managing people. Precisely. It's about moving beyond these kind of isolated HR practices and creating a system where those practices are really woven into the fabric of the organization. I like that. And to kind of help companies understand that, what that really looks like. Okay. The researchers identified 10 key areas that really contribute to a mature HRM system. 10 areas. That feels like a lot. Are we talking like overhauling a company's entire culture here? Well, I mean, it might sound daunting, but it's actually about being intentional and creating a framework for how you approach your people. And no, it doesn't have to be this complete, you know, big bang overhaul. Okay. Some of these areas might already be strengths for companies. That's reassuring. So what are some of these key areas, like where do we even begin to think about this whole HRM maturity thing? Well, I think the first thing to consider is how a company views its employees. Okay. Do they see them as valuable assets or simply costs on a balance sheet? Yeah. That's a fundamental difference in how you're approaching, I guess, your people. I imagine companies with a more, you know, mature HRM system would see their people as their most valuable assets. Absolutely. And the study actually refers to this as human capital ethos. Okay. So it's about having a genuine belief in the importance of your people and that investing in them is a direct investment in the success of your business. So it's not just about, you know, giving it lip service. It's like truly believing and acting on that idea. Yeah, exactly. And another critical area is making sure that your HR strategy isn't just siloed off in some corner office somewhere. Right. It needs to be directly aligned with your overall business goals. So it's not HR doing their own thing. It's making sure that everyone's on the same page working towards the same objective. Exactly. Which, again, sounds like common sense, but I imagine it's easier said than done at some companies. Yeah. And I think you'd be surprised how often that connection is missing. Really? Oh, yeah. Interesting. So how does our approach to managing people actually help us achieve our strategic goals? Right. Because it's like having, you know, your sales team with these ambitious targets, but not giving them any of the resources or support that they need to actually go out and achieve them. Exactly. So what other key areas did this study kind of identify? Well, in today's rapidly changing world, a company can't afford to just rest on its laurels, right? Right. So it's important to maintain a culture of continuous learning and development. So encouraging employees to always be learning new skills, to be adaptable, to be ready to, you know, pivot when they need to. Exactly. And this isn't just about, you know, ticking off training requirements. Right. This is about creating an environment where learning is woven into the fabric of the company's culture. Okay. Yeah. That sounds like a pretty big shift for some companies, potentially. What about the more practical aspects of HR? Right. So things like performance reviews and compensation, how do those fit in? Yeah. That's another key area that the study highlights is, you know, are those systems actually incentivizing the right behaviors? Okay. And motivating employees. So I imagine a company with a mature HRM system is thinking very strategically about those systems and making sure that they're actually driving the outcomes they want. Absolutely. But it's not just about, you know, carrots and sticks, right? Right. It's about creating a work environment where people feel valued, where they feel respected, right? Absolutely. And that actually brings us to another important area, which is really about building trust, encouraging engagement, fostering collaboration. Yeah. Because nobody wants to work in a toxic environment where they don't feel valued, they don't feel respected. Like that, that just breeds negativity. And that can really hinder a company's success. Precisely. When employees feel like they belong, that they're heard, that their contributions matter, that's when you see real engagement and innovation. And when people feel good about where they work, they're more likely to, you know, go the extra mile. Right. They're more likely to really be invested in the company's success. Absolutely. It seems like we've only just, you know, scratched the surface of these 10 key areas. Perfect. Ain't more to go. Yeah, exactly. Exactly. But I'm already starting to see how this all ties together. Yeah. It's not about any one single practice. It's about creating this really holistic system. Right. That supports the employee and the organization. And what's really fascinating is that the study actually found that this idea of HRM system maturity is a stronger predictor of organizational success than either individual HR practices or simply having an effective HR function. Wait, really? So a company could be doing all the right things in HR? Yeah. Ticking all the boxes. But if they don't have that mature, holistic system in place, they're still leaving a lot on the table. Leaving a lot on the table. It's not enough to just go through the motions. You need that underlying foundation of a mature HRM system to really tie everything together. It really does. It drives home that point that it's not just about having, you know, a fancy HR department and checking all the boxes. It's about really weaving these people-centric practices into the DNA of a company. Precisely. In order for it to really, you know, I don't know, reach its full potential, right? It's about creating an environment where those practices can thrive and make a real impact. So it's almost like HRM maturity acts as a force multiplier, you know? Like even if you have all the best ingredients, if the recipe's off, the cake's not going to rise. Right. Exactly. So it makes me wonder, what sets those companies with, you know, high HRM maturity apart? What are they actually doing that others aren't? That's a great question. And this study actually offers some compelling examples. One of the most significant differences is how they involve their employees in actually shaping HR policies. Okay. So it's not just HR making decisions in a vacuum. Exactly. Yeah. They understand that policies are much more likely to be effective, embraced by employees, when they've actually had a voice in shaping them. Right. It creates that sense of ownership, that shared responsibility. Absolutely. And when people feel listened to, when they feel like their opinions are valued, they're naturally going to be more invested in the outcome. Absolutely. Yes. And another differentiator is how these companies view their HR departments. Okay. It's not just an administrative department. Okay. They see them as strategic partners. So less about pushing paper and more about contributing to the bigger picture. Exactly. In these companies, HR professionals are involved in strategic planning sessions. Okay. They're at the table when decisions are being made. Got it. And they're often seen as vital contributors to the company's success. So they're not just reacting to situations as they arise. They're proactively thinking about how to attract, develop, retain that talent. Exactly. That they need to actually achieve those strategic goals. They think about the long game, building a sustainable workforce that can adapt and thrive in the face of change. Because in today's world, I mean, the only constant is change. Precisely. So people with high HRM maturity understand that investing in their employees' growth isn't just like a nice perk. Right. It's essential for survival. Yeah. They create environments where learning is encouraged, where people have opportunities to expand their skill sets, where they're supported in reaching their full potential. It's about creating that culture where people feel empowered to learn, to grow, to evolve alongside the company. Yeah. It sounds like a much more, I don't know, engaging and fulfilling environment to work in. Absolutely. And that sense of fulfillment translates into greater engagement, higher productivity, ultimately better business outcomes. It's a win-win, right? Exactly. A win-win for everyone involved. So we've covered a lot of ground here, but I want to make sure we bring this home for our listeners a little bit. Sure. You know, I can imagine someone listening right now thinking, okay, this is all fascinating, but what does it mean for me? What can I actually do with this information? Where do we even begin to apply this whole concept of HRM maturity? That's a great question. And I think the first step is awareness. Okay. Just recognizing that this concept exists and understanding how it plays out in real world organizations is crucial. Yeah. And remember, you don't have to be in a position of power to make a difference. That's a good point. So even if someone, you know, isn't in HR or in a leadership role or anything like that, they can still, you know, take these insights and apply them. Absolutely. Yeah. Let's say you're a manager. Okay. This research underscores the importance of aligning your own leadership style and your team practices with a more mature HRM approach. Okay. You have the power to create a more positive and supportive environment for your team, even within a larger organizational context. So leading by example, if you will. Exactly. And involving your team members more in decisions that directly affect them. Okay. Seek their input on work processes. Okay. Give them more autonomy, more decision-making power whenever possible. Yeah. And create opportunities for open and honest feedback. Basically, create a space where everyone feels heard, respected, empowered to contribute their best work. You got it. And don't underestimate the power of advocating for more robust training and development opportunities for your team. Yeah. Investing in their growth is an investment in the success of your team and the company as a whole. So even if a company isn't quite there yet in terms of its overall HRM maturity, individual managers can still make a real difference by creating those pockets of excellence. Precisely. And if you're an individual contributor, not in a management position, this research is still incredibly empowering. Oh, I'm curious about that. Yeah. What would you say to those listeners who are maybe thinking, okay, but how does this apply to me? I'm not calling the shots here. It gives you a framework for evaluating your own company's approach to HRM. Okay. It allows you to ask yourself some important questions. Okay. Like what? How does my company view and value its employees? Okay. Do I feel supported and empowered in my role? Got it. Do I see a clear connection between HR practices and the company's overall strategy? Those are some really thought-provoking questions, and I imagine having those answers can really empower employees to either embrace the company culture or advocate for positive change. Exactly. By understanding these concepts, you're better equipped to navigate your own career, advocate for your own development, and contribute to creating a more positive and fulfilling work environment for yourself and those around you. It's like this research gives you a new lens with which to view your own workplace, regardless of your role, really. It empowers you to become a more conscious participant in shaping your own experience and advocating for positive change. I love that. Now, you mentioned earlier that the study identifies 10 key areas of HRM maturity. Yeah. I'm curious. Is there some kind of magic formula companies can use to assess themselves? Right. Like an HRM report card? That's a great question. While the study does provide a really robust framework, it doesn't offer a one-size-fits-all assessment tool. Okay. That's actually by design. Really? Why is that? Because every organization is unique. That's true. Right? A small tech startup is going to have very different needs and challenges than, say, a multinational corporation. Oh, cool. Their HRM system should really reflect those unique contexts. It's not about blindly following a checklist. It's about taking those core principles and figuring out what works best for your specific organization. Precisely. Yeah. It's about asking those tough questions. What are our strengths? Where do we need to improve? How do we create an HRM system that really aligns with our values, our goals, our culture? Less about achieving some perfect score and more about just creating that ongoing dialogue and commitment to improvement. Exactly. It's about recognizing that HRM maturity is not a destination. It's a journey. So true. Like any journey, it requires constant reflection, adaptation, a willingness to course-correct along the way. Well said. This isn't about ticking off boxes. It's about creating that culture of continuous improvement. And that requires buy-in and participation from everyone, not just HR. This has been such an eye-opening conversation. We've really gone beyond just the usual HR buzzword and really dug into what it takes to create a workplace where both people and the organization can thrive. But before we wrap up, is there one final thought you'd like to leave our listeners with? I think it's just important to remember that at its core, HRM maturity is about creating a more human-centered workplace. It's about recognizing that when people feel valued, supported, empowered, everyone benefits. The organization becomes more successful. Employees are more engaged, more fulfilled, and it creates this ripple effect that really extends beyond the workplace. Beautifully put. It's about shifting from a mindset of human resources to one of human potential. I love that. I think absolutely it's what this is all about. This has been an incredible deep dive into the world of HRM maturity. A huge thank you to our listener for sending in this thought-provoking research and for sparking such an engaging discussion. Remember, whether you're a CEO, a manager, or an individual contributor, you have the power to champion a more human-centered workplace. Start by asking those tough questions, be an advocate for positive change, and never underestimate the power of investing in your own growth and the growth of those around you. Until next time, keep those brains engaged and keep diving deep.