This study will compare line and HR managers' ratings of the effectiveness of the HR function in terms of service delivery, roles and contributions to the business in Australian SMEs.Small to medium Enterprises (SMEs) have been identified as one of the growth engines for many countries around the world. Studies have found that SMEs account for more than 90% of the economy of these countries, for example, United States, 99.7% (Heneman, Tansky, & Camp, 2000), China, 99% (Cunningham & Rowley, 2008) , Europe, 99% (Rauch & Frese, 2000), Philippines, 95% and Taiwan, 96.5% (Lin, 1998) as well as Australia, 99.2% (Australia Small Business, 2012). In Australia, SMEs accounted for 70% of job opportunities in June 2011 and this number is growing (Australia Small Business, 2012). The figures above show that SMEs play a vital role in contributing to the economy and job opportunities. To maintain their competitive advantage, Australian SMEs have increasingly recognized and emphasized the importance of human resource management in achieving their business objectives. Studies have found that the effectiveness of human resources in its roles, services and contribution in the business leads to greater organizational effectiveness (Huselid, 1995, Becker, Huselid, Pickus and Spratt 1997, Teo, 2002). As expectations about HR roles in an organization change, an obvious evolution of HR roles in Australia can be observed from previously administratively focused to more business strategy oriented (Teo, 1998). Furthermore, human resources are moving from a focus on employee protection towards more strategic business management (Brown et al., 2000). Cascio (1998) identified several phases in the recent HR transformation was...... middle of paper ......and carried out.2. This department is very responsive in meeting customer needs (managers and frontline employees).3. This department provides me with useful and timely information on human resources issues.4. This department has helped improve the competitive position of the company.5. This department provides value-added contributions to the company's bottom line.6. This department helps build and/or maintain the company's core competencies.7. This department helps build the company's human capital (employees/managers) as a source of competitive advantage.8. Policies, practices and procedures from the Human Resources department help frontline business partners in their work.9. The human resources department has developed a well-coordinated set of policies, practices and procedures.10. Human resources policies, practices and procedures help support the company's business plan.