From Administration to C-Suite: Five Stages of Human Resources Evolution

From Administration to C-Suite:
The Five Stages of Human Resources Evolution
While to many, it
may seem that
moving HR through
the Stages is a bit
like pushing a rock
uphill, it doesn't
have to be that
way!
www.CaliberLeadership.com hhilliard@caliberleadership.com 416.406.3939
By Anne Dranitsaris, Ph.D. & Heather Hilliard February 2015
In our work over the years, we have iden fied five dis nct Stages of evolu on
that the Human Resources func on grows through in organiza onal life. The
Stages go from the administrator func on in a small business or start up to a
C‐Suite office and seat on the execu ve team in a mature organiza on. While
each of the Stages coincides with the growth of the business, the number of
people employed and the capabili es of the leader of the HR func on, there
are many factors that impede or interfere with this natural evolu on.
As an organiza on grows, it experiences predictable crisis points rela ng to
human resources that indicate when it is me to begin looking at a different
approach and to bring the right HR talent aboard to deal with the crisis. The
challenges that both the leaders and the HR employees face are symptoma c
of needed growth and development of the func on, leaders and HR
employees. While crisis points do occur because of increasing numbers of
employees, the pervading a tude toward human resources as the company
grows is also a key factor.
Unfortunately, many business leaders including those in HR, mis‐read or fail
to respond appropriately to the crisis, o en crea ng even bigger messes for
the organiza on to deal with and de‐valuing or marginalizing the HR func on
in the process. We have worked with organiza ons of varying sizes and
complexity that are struggling to come to terms with the evolu on of their HR
func on and how to take it to the next stage. In fact, we have seen CEOs make
decisions to regress the func on – diminishing its role and impact – out of
frustra on around it being stuck.
This ar cle describes the five stages of evolu on that HR goes
through and each of the crisis points that indicate the need for
business leaders to evaluate what it is the organiza on truly
needs get unstuck and shi to the next Stage. It also provides
insight into the common mistakes made at each crisis point
and what to do to successfully navigate the evolu on of the
func on from Stage to Stage.

Stage 1: Infancy
In a start-up or small business there is rarely a
dedicated HR administrator. As the owner or leader(s)
is focused on the survival of the business, generating
revenue and getting their product or service to market,
they are not so concerned with spending time on
standardizing their human resources policies and
procedures. During this Stage, HR is done by the
owner/leader, administrative assistant or bookkeeper.
Often the focus is primarily on creating a certain type
of culture or experience for employees that is a
significant part of the reason why employees join and
stay. Protecting this desired “culture” which is usually
a reflection of leader’s personality, takes priority over
effective HR practices, so HR administration is kept to
a minimum with no defined practices, systems, or
policies. Most leaders in this size business don’t see
the value or feel the need to spend money on a
dedicated human resource professional and will use
employees who have some of the necessary skills to
get the tasks done.
Crisis of Growth & Stuck Point
When the business hits 25 to 30 employees,
administration of the HR function starts to get too big
to handle. The growth of the business causes leaders
to spend too much time resolving employee conflicts
and putting out fires. The person doing the hiring is
often inexperienced or untrained and while they do the
best they can, with no standardized process for hiring,
success is hit and miss. Turnover due to wrong hires
is high, expensive and time consuming, getting in the
way of the growth of the business.
During Stage 1, there is a lot of emotional decision
making that goes on. For example, hiring people a
leader likes or knows, giving an employee a raise
because they are upset and you don’t want to lose
them, or deciding problems are the result of one
person’s performance and firing them in the hopes the
problem goes away.
Because HR tasks are performed by inexperienced or
untrained employees, issues are never really
completely resolved and employee morale
deteriorates. Band-aid solutions are applied to
problems; leaders increasingly do their employee’s
work; and poor performance, complaining and bad
attitudes are ignored. Any systems solutions are not
given the time they need to make the necessary
changes and everything is being done too quickly to
have a significant impact.
To Move to Stage 2:
Leaders have to give up on the idea that they cannot
do it all themselves and that the needs of their
employees must be tended to by a dedicated HR
person. They recognize that this is the only way for
them to get back to revenue generating activities.
They have to be prepared to pay for what the business
needs and not withhold investing in the HR function.
What gets in the way...
An organization will continue to grow, albeit not
to its potential, when the HR function stays
stuck at this crisis point. Here are some of the
most common mistakes made at this Stage.
PROMOTING A NON-HR PERSON TO SET UP AND
RUN THE NEW HR FUNCTION.
HIRING A NEW HR GRAD TO MINIMIZE COSTS
INSTEAD OF INVESTING IN EXPERIENCE.
NOT DEFINING “HOW” HR SHOULD ACTUALLY
WORK.
©2015 Caliber Leadership Systems Page 2

Stage 2: Foundation
Building
Employing an HR Generalist to be in charge of the
many tasks of Human Resources is a critical first
step of this Stage. This person is may also be called
an HR Coordinator or HR Manager. This role
manages all aspects of HR in the business and is
generally without a team. The HR Generalist is
responsible for laying the foundation for the HR
function. This involves creating and standardizing
policies for things such as pay raises, sick days, etc.
The Generalist also needs to create an employee
manual as it saves them a lot of face time with
employees, especially during the onboarding process.
Employees who have questions will then be referred
to the manual instead of calling or coming to ask
questions.
This crisis is similar to Stage 1. Following a period of
growth, the HR Generalist finds the administrative
requirements of the role to be excessive. They tend to
be in a constant state of overwhelm, dealing with
employee issues, too many people starting at once
and the fallout from inexperienced supervisors and
managers. Even with standardized policies and an
employee handbook in place, there are too many
employee issues to deal with and the pervasive feeling
of the HR Generalist is that they can never do enough.
They try to delegate to others, but there is no one to
help them as HR is supposed to be there for others
and not the other way around.
With no formal performance management training,
managers aren’t skilled at managing the performance
of their people. Salaries may be all over the place.
Some employees make as much money as managers
do and there is a lot of complaining going on. Rising
pay inequality issues and other employee problems
aren’t adequately addressed. So much time goes into
fighting fires and HR administration that it just doesn’t
get done.
During Phase 2, the reactive nature of the business
results in an inability to find the workers in a timely
fashion and people are often hired because of the
need for someone to do the work. New hires are lost
because there is no time for proper onboarding.
Employees are thrown into the job and expected to
learn without formal training.
While some policies and structures are in place, they
don’t necessarily support the growth of the business.
Most often, managers don’t get trained to deliver
expectations to employees or hold them accountable
to desired behaviors needed for a high-growth
environment. Or policies or benefits in place are not
flexible enough or no longer make sense. The
structure is not linked together in a way that alleviates
human resources issues.
To Move to Stage 3:
In order to shift out of this crisis point, leaders need to
understand the risks that are involved with not growing
an in-house HR team. They need to be aware of the
perceived or actual legal risk due to issues such as
wrongful-termination lawsuits, pay inequity,
harassment claims, lack of supervisory skills, lack of
policies and processes, and so on. Making the
decision to build an HR Team allows them to identify
the processes, policies and training that needs to be
put in place to support further business growth.
The most common mistakes made at this
stage of the evolution include:
LEADERS ABSENTING THEMSELVES FROM HR
PROGRAM DESIGN DECISIONS.
TOO MUCH EMPHASIS PLACED ON POLICY AND
NOT ENOUGH ON PERFORMANCE.
STAYING REACTIVE.

Stage 3: Building the HR
Team
Building an HR Team requires the specialized areas of
HR to be taken care of by a competent employee. It
also requires that an experienced HR Manager be
hired to build and lead the HR team. The HR
Manager needs an understanding of how to transition
to this Stage and has the confidence to hire technical
specialists vs. making junior hires. In addition to
supervisory duties, HR Managers perform a more
analytical role, using their detailed knowledge of
employment polices and regulations, best practices
and benchmarking. The HR Manager spends less time
on administrative tasks and more time determining
whether the HR policies and programs are a fit for the
size and needs of the business.
HR Managers also identify how people practices limit
organizational growth, create solutions and provide
management with the information they need to make
decisions about which systems needs to be put in
place. In addition, they coach managers on how to
deal with people issues, recruitment and performance
problems. They should have the ability to design and
administer employee policies and compensation
programs. They are there to make sure that the
company is taking care of their people.
Having the HR team in place, taking care of core HR
services and making sure the company is following
legislation makes for smooth sailing. However, the
challenge to the HR team comes following times of
rapid growth or acquisitions when they are expected to
perform with the same HR team with a larger
employee base or in response to changing business
needs. HR once again goes into crisis, with the
manager fighting fires and reacting to increasing
problems and, at times, power struggles.
The HR Manager ends up spending more time doing
damage control, especially when they have to deal
with ineffective managers who fail to get to know the
policies or lack the skills to lead. They lose time and
credibility when management opts for the cheap, off-
the-shelf performance management system instead of
finding one that fits their culture. Worst of all, their
main role becomes policing employees and managers
to make sure everything is done right and on time. The
HR Manager and their employees are overwhelmed,
undervalued, and ultimately unavailable.
The crisis is made worse when management wants
HR to solve their people problems without spending
any more money. While a HR team doesn’t generate
income, an under-resourced (people and money) HR
function certainly causes the bottom line profit to
decline and growth to stall due to lawsuits, bad hires,
systems that have no connection to the performance
drivers of the business, etc.
To Move to Stage 4:
In order to shift out of this crisis point, leaders need to
see HR as critical to the growth of the business and
recognize the need for HR to be more strategic. They
begin to see the value in investing in their people’s
development needs in order to retain valuable
employees. They also see the issues that have arisen
by not taking a holistic approach to aligning people
systems and processes to organizational goals. They
become more forward thinking around the value of HR
to the organization and stop blaming individuals for
issues that are systemic in the organization.
Here are some of the most common
mistakes made at this Stage.
PROMOTING EXISTING GENERALIST WITHOUT
DEVELOPMENT SUPPORT.
ADDING MORE GENERALISTS TO COVER THE
WORKLOAD VS. SPECIALISTS.
NOT BUILDING A PLAN THAT FOCUSES HR’S
EFFORTS AND OUTCOMES.
©2015 Caliber Leadership Systems Page 4

Stage 4: Building the HR
Function
During this Stage, a senior HR role is created to
oversee the many functions of Human Resources. HR
Directors (or VPs) are less involved in the day-to-
day operations and more in ensuring HR programs
are aligned with the goals of the organization. Their
mandate is to build a function that can oversee
cohesive people systems and practices. HR Directors
spend a great deal of their time communicating
between management and employees.
The HR Director is often a member of the senior
leadership team. This position is more strategic, with
long range goals for the function focused on where the
business is growing to. They are in charge of all
aspects of workforce planning in the organization and
may or may not oversee all hiring and onboarding on
new employees. The HR Director often serves as
counsellor for the leadership team and they are sought
out when peers have challenges with their people.
As with other senior leaders, HR Directors are
responsible for building and defending annual
budgets. They focus on building relationships with
executive team members and ensuring people related
needs don’t get in the way of growth and results.
This crisis can occur through growth or can also be
the result of significant growth for the person leading
the HR function. Many senior HR leaders fall short of
really understanding the business’ challenges. They
can get so caught up in best practices for programs
that they are disconnected from the experiences and
needs of the people. They make the mistake of
focusing on policies and programs that are sometimes
impractical or even irrelevant to the bottom line of the
business. They focus on leading the HR function the
way they think it should be run, with their intention to
enhance the work life of their employees, that they
miss the mark for the business.
If the organization allows leaders to conduct their own
HR activities without utilizing the HR team, crisis
occurs. Often, managers externally want to use what
worked for them before and when allowed, can create
significant challenges. HR can feel disempowered and
disenfranchised when this happens. They end up
being the ones who have to deal with negative fallout
and end up resenting having to do so.
HR Directors often lack the assertiveness to drive their
agenda. They can lack the business skills to build a
business case for necessary programs or changes
and as a result, are easily dissuaded or rebuffed.
Other executives may fail to take them seriously if they
can’t defend their ideas.
The opposite can also happen. The Director of HR can
spend so much time listening to the concerns of
employees and making attempts to resolve their
issues, they lose sight of the business of HR. While
the HR Director champions the needs of employees
and vigorously represents their concerns to senior
management, during crisis they run the risk of being
divisive and creating and “us vs. them” position, with
them siding against the leadership team they are a
part of. Both of these scenarios diminish the value of
HR to the business. Too often they can appear to be
like a mother defending their children from an
unsympathetic father.
The most common mistakes made at this
stage of the evolution include:
LACK OF UNDERSTANDING ORGANIZATIONAL
READINESS.
FOCUSING ON BEST PRACTICES PROGRAMS
VS. SOLUTIONS TO BUSINESS NEEDS.
INABILITY TO OVERCOME RESISTANCE OF
LEADERS TO DEVELOP.

To Move to Stage 5:
More than at any other Stage, the leader of the HR
function has to make a significant change in the way
they lead. They have to shift from champion of
employees to a business leader who is responsible for
HR. They must become more focused on ensuring that
all functional areas add value to the bottom line. Their
mandate is to maximize the company’s human capital
and lead their function in a way that ensures HR is seen
as a strategic business partner.
Because leaders need the counsel that a talented HR
leader can bring, the HR Director must align themselves
with the executive team and be held accountable when
they are not. HR leaders need to know the business
better in order to bring greater value to the table. HR can
become too narrow, too specialized, too people focused
and must be broader in its approach to the business.
There is also a need for HR to be able to manage the
ecosystem of the business by aligning the same
programs and practices for hiring, managing and
rewarding employees. Leaders need to help HR hold its
integrity by not allowing HR practices to be performed
independently.
Stage 5: Strategic
(C-Level) HR
Strategic human resource leadership is all about
creating a competitive advantage through a
company's workforce. At this Stage, the VP of HR works
with the executive team to determine business goals and
challenges, then translates these into people and culture
strategies that ensure success.
The VP of HR is a business person first and an HR
leader second. They are able to analyze, assess and
translate upcoming critical trends into policies and
programs that really matter to the business, and to gain
buy-in so they can be implemented successfully. They
consider how HR drives growth and increases human
capital. The VP works to integrate people into the full
scope of business operations evaluating how the impact
of human capital benefits the organization. Like other
leaders on the executive team, they focus on business
metrics, reporting and analytics and how human capital
affects bottom line results.
The VP of HR is an integral part of strategy execution,
helping to move strategic objectives to action plans
throughout the organization. They are responsible for
ensuring strategic objectives are cascaded down
through performance management system. They
enforce a comprehensive planning process and ensure
work is organized and executed.
Because an organization’s culture is so connected to its
people, the HR VP is responsible for identifying desired
behaviors, aligning processes and evaluating
performance against it espoused culture. They are often
the member of the executive team that holds their peers
accountable to leadership behaviors and commitments
to employees. One of the most significant roles of an HR
VP is their ability to advise, counsel coach and mentor
the CEO and their peers.
Whatever Stage your HR is at, it is critical that
you identify it and take steps to build a solid,
cohesive function that will serve you as your
business grows. Resisting making the
investment creates significant blocks to
performance, regardless of size. Our experience
helping leaders evolve HR to create greater
alignment of people to business outcomes
allows us to expedite and maximize the impact
of HR on organizational effectiveness and
bottom line performance.
NOT EDUCATING EXECUTIVES FIRST BEFORE
PRESENTING PLANS.
PERSONALIZING EXECUTIVE DECISIONS.
LACK OF CHANGE MANAGEMENT.

Our experience helping organizations set up the HR function to create greater align-
ment of people to goals and business outcomes allows us to come into an organiza-
tion of any size and assess what needs to happen to secure HRs ultimate place as a
strategic business partner, adding value to people and bottom line performance.
At Caliber, we show business leaders how to cut through the noise in order to
build powerful companies and amplify their business results.
Why Caliber Leadership Systems?
We help by...
 Facilitating strategy development, business planning and retreats
 Building authentic, high performing leadership teams
 Designing organizational structures
 Leading cultural change
 Designing & implementing succession, performance, reward & recognition
systems
 Leveraging personality assessments
 Selecting candidates for key roles
 Providing individual coaching and career counselling
For more information, contact:
Heather Hilliard
hhilliard@caliberleadership.com
416.406.3939
www.CaliberLeadership.com

From Administration to C-Suite: Five Stages of Human Resources Evolution

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From Administration to C-Suite: Five Stages of Human Resources Evolution