What is Benchmarking and How to Use It in HR?

By Techfunnel Author - Published on June 16, 2021
Article Describing About the Benchmarking in HR

Most organizations benchmark against their competitors to incorporate better practices into their work routines. HR experts can get important data from benchmarking(1). They can make use of benchmarking to detect the gap between procedures in their company, and similar methods in more successful organizations.

What is Benchmarking?

Benchmarking is a regular practice among business owners, including those in HR. Benchmarking in HR is essentially a technique that uses quantitative or qualitative data to compare between companies to regularly measure, challenge, and improve their practices.

As you measure areas like recruitment and retention procedures and how your business compares with the other businesses, you’ll be able to determine your performance. Benchmarking in HR has several additional benefits.

A benchmarking approach needs to focus on the things organizations are doing that consistently bring success. To understand the best practices to be obtained, benchmarking activities have to be strategically planned with specific objectives in mind. HR experts can create a benchmarking approach that is more reliable and valuable when they identify the types of patterns and data to look for.

Types of Benchmarking in HR

  1. Internal benchmarking

    Internal benchmarking involves the process of comparing a process or task to a similar process or task within the organization. This needs the ability to track metrics for these two comparable systems so that you can assess and compare the KPIs. This type of benchmarking produces results because it helps set and meet standards across the organization, establishing consistency and ensuring that each department is operating at its full capacity.

  2. External benchmarking

    External benchmarking involves the process of comparing an internal process with that of other companies. This technique can be more complicated because it needs access to the data of the company, which may not be immediately available. External benchmarking enables you to better understand where your business fits into the wider market and determine areas of weakness that you should focus on.

  3. Competitive benchmarking

    Competitive benchmarking is a form of external benchmarking that mainly focuses on comparing the processes and metrics of your business to those of direct competitors. This is vital because you can determine exactly why a competitor is succeeding or what drives customer satisfaction.

Three Ways to Use Benchmarking

  • Process benchmarking

    This highlights how a company rates in operational performance against industry leaders and shows the areas that have the biggest potential for process improvement. Process benchmarking produces empirical data that can be important in justifying a resource request.

  • Strategic benchmarking

    Strategic benchmarking specifically estimates how other organizations achieved success and the type of business strategies they used. For instance, the type of marketing campaigns they used. This form of benchmarking can help you learn from what has worked for winning brands in your industry.

  • Performance benchmarking

    By tracking metrics within your company, you can continue comparing past outcomes to current standards, regularly updating the standard for optimal performance. This benchmarking focuses on improving vital business functions over time because the idea is that benchmarks will keep on rising.

The Benefits of HR Benchmarking

  • Understand how a business stacks up against competitors

    Without the right research to back up your perception, it will be difficult to know how your business performs against your peers; this could put your business in a poor position. Understanding how your business stacks up against others in your industry is a form of external benchmarking.

    Even though benchmarking in HR can be time-consuming, the results could potentially help your business to perform better over time and keep you ahead of the competition. Once you know the strengths and weaknesses of your business compared to other brands in the industry, you can create strategies to improve your future performance levels.

  • Quality recruiting and retention programs

    The success of a company is based on the workforce that you hire. Hiring the most talented people is a vital goal for all businesses that want to thrive. Benchmarking in HR can help you attract high-quality candidates by defining what makes a great potential hire and the type of compensation employees look for when applying for jobs. HR benchmarking is also useful for retaining the staff that you already have.

  • Improve engagement

    If your company experiences a high turnover rate, it could mean that there is a problem. In most cases, a high turnover rate is due to poor employee experiences, poor management, or inadequate professional development training. Benchmarking in HR can help you determine issues that may be causing a high turnover rate.

  • Employee growth

    Hiring new talent is important to the long-term growth and success of your company. But where many businesses fail is in encouraging staff to take on leadership positions. You have to prepare early on for the next generation of management by training employees who have shown leadership qualities to take on these bigger roles in the future.

  • Improve workplace culture

    Workplace culture affects all things in the office – from employee performance to general morale. As a business owner, you must make it a goal to improve workplace culture and how employees view your brand. Your goals and those of your employees should align so that everyone is working to grow the business. When employees lack passion for their roles, it can reflect in the quality of work they do, which can negatively affect your business.

Process of HR Benchmarking

  1. Identify what is to be benchmarked:

    Executives should be involved in deciding the processes that are vital to the success of the business. The processes should then be prioritized according to the most important metrics.

  2. Identify comparable companies:

    Determine if you’ll benchmark processes within your organization, a competitor’s, or an organization outside your industry. It may be difficult to gather all the data you want if you benchmark a direct competitor.

  3. Determine data collection methods and collect data:

    This process is important but can difficult when you try to gather data from a direct competitor because most of that information may be confidential. You can gather information through research, interviews, and casual conversations with contacts from other companies.

  4. Determine current performance levels:

    Analyze the data you’ve gathered with other metrics. Layer your performance metrics on top of your process diagrams or map out the processes of your competitor to better see where you’re falling behind.

  5. Project future performance levels:

    Try to identify what causes the gaps in your organization. For instance, do you have enough people, and are they sufficiently trained to carry out their duties? Look for ideas to effectively and efficiently fill those gaps.

  6. Communicate benchmark results:

    Closely analyze the changes and employee performance. If new methods are not running as required, determine areas that should be adjusted. Ensure that all employees understand their roles and are properly trained.

  7. Develop action plans:

    Develop a plan to implement changes that you’ve determined to be the best to close performance gaps. Your plan has to have clearly defined objectives and should be written with the culture of the company in mind.

  8. Implement action plans and monitor progress:

    You can implement an action plan that achieves the desired goals. The detailed plan should mesh with the company culture so that employees will readily accept the new changes.

  9. Recalibrate benchmarks:

    After a particular time, you should follow up to make sure that the new changes are producing positive results. Provide a detailed report to share with collaborators.

Final Thoughts

Benchmarking in HR helps businesses to improve their policies, practices, and products. It is specific to the field of human resources and is used to examine best practices in the organization. By analyzing the causes of these gaps, HR professionals can know the practices and policies that are most effective and those that need to be adjusted.

Techfunnel Author

Techfunnel Author | TechFunnel.com is an ambitious publication dedicated to the evolving landscape of marketing and technology in business and in life. We are dedicated to sharing unbiased information, research, and expert commentary that helps executives and professionals stay on top of the rapidly evolving marketplace, leverage technology for productivity, and add value to their knowledge base.

Techfunnel Author

Techfunnel Author | TechFunnel.com is an ambitious publication dedicated to the evolving landscape of marketing and technology in business and in life. We are dedicate...

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