The HRO Need for an HCM Maturity Continuum

HRO service providers need to assess potential and current clients for business development just as clients assess vendors.  Evaluating HR organizational and enterprise leadership human capital management (HCM) maturity would help both buyers and providers select appropriate HRO and technology investments now and in the future.

My hypothesis – HRO vendors have more business development opportunities with a maturing client HR organization and enterprise that values and invests in its HCM capabilities.

For HRO service providers, HR is usually the direct client and knowing HCM maturity of the HR organization and the business is valuable in the initial sale and on-going relationship and revenue growth of the client relationship. Gauging client HCM maturity can guide the HRO services set selection and approach to winning and growing the business – and even determine if the opportunity is worth pursuing.

For HRO buyers, knowing realistically where you are and where you intend to go is important when selecting service providers.  The lowest cost provider of basic HRO technologies and services may meet today’s pressures for cost efficiency, but may not be able to help you improve HCM results and business outcomes in the future.  This can lead to disruptive changes in vendors and technologies or a network of vendors and services that does not sufficiently enable best in class performance for HR or the business.

There are pieces and parts available in many places and in many guises to develop a working HCM maturity model.  A wealth of internal knowledge is waiting to be tapped across the HR and HRO communities as well as within organizations.

Aberdeen Group’s “The 2011 HR Executive’s Agenda” report, which is based on findings from 439 organizations, states that HR is still spending too much time on tactical activities.  At the same time, the uncertain economy and focus on efficiency is the top HCM driver at 52%, which may then focus HR on tactical activities!  HR process standardization and automation are seen as top solutions, providing opportunity for HRO.

The second and third most important HCM drivers at 33% each are also good news for HRO: the return of interest in organic growth goals and perceived scarcity of key skills in the marketplace.  As NelsonHall has reported, increasing spend on RPO has already taken off and there is renewed interest in talent management solutions.

How HR balances conflicting drivers to be efficient and less tactical while investing in growth initiatives and upgrading the talent base may depend on the maturity of the organization itself and the enterprise leadership it supports.  “The 2011 HR Executive’s Agenda” is about and for HR executives, but it is also applicable to HRO and is helpful in understanding elements of HCM maturity.  Are you ready to assess the HCM maturity continuum and align HR service delivery investments with multiple and often conflicting business needs?  If you are, 2011 should be a good year!

Linda Merritt, Research Director, HRO, NelsonHall

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One Comment on “The HRO Need for an HCM Maturity Continuum”


  1. […] HRO vendors – the state of HRSSC leadership, capabilities, vision, and current operation is a component of the HRO Maturity Continuum. […]


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