Posted by: Professionals In Human Resources Association (PIHRA) | February 23, 2011

HR Concepts: Benchmarking

By Mike Deblieux, SPHR-CA

A nineteenth century shoe cobbler measured the shoe size of a customer by drawing an outline of his or her foot on a workbench. The outline was called a benchmark. Today, benchmarks are used in nearly every profession. Surveyors use a benchmark to establish a reference point for the geography they study. Doctors use a benchmark to measure the progress of a patient.

HR professionals use a benchmark to compare one organization to another. Benchmarking is an important HR tool for two reasons. First, it encourages creativity. Collecting data and insights into how another organization operates inspires questions about whether their way is better than your way. Second, when objective data is available, benchmarking provides statistical data to measure the efficiency of a particular function. For example, HR professionals often benchmark against a long accepted standard of one HR professional for every 100 employees to determine if their HR department is properly staffed.

A benchmark provides two insights and comparisons. One measures an accepted numerical, monetary, or financial standard.  Turnover rates are an example; the number of days to close an open requisition is another. A benchmark may also measure a process – the way another organization does something. An HR professional might, for example, visit a colleague in another organization to learn the steps of their recruitment process. True process benchmarking involves more than just walking through another organization on a tour. It involves careful research to understand how and why a process operates in a particular way. It includes the use of flow charts and other tools to assure a thorough analysis.

Benchmarking can be a valuable HR tool. It can also create problems when it is done informally or incorrectly. For example, a few years ago a famous executive espoused the value of forced ranking in his organization. His HR team guided managers through an annual process of listing employees from high performers to low performers in each department. The lowest performers in each department were unceremoniously released. It sounded like a simple, pragmatic practice. When other CEO’s read or heard about this practice, they challenged, directed, or even cajoled their HR Departments to implement it. Many quickly learned that benchmarking requires more than listening to a speech or reading a book.

Collecting data is the relatively easy part of benchmarking. The challenge is in implementing new ideas. No two organizations are the same. What works effortlessly in one, may easily become a nightmare in another. More than one HR professional has learned this lesson through ill-fated attempts to impose standardized work practices from other cultures and countries into a U.S. based workforce.

Benchmarking creates another challenge for HR professionals. It tends to create “average” or “similar” practices. In some cases, that is good. Some things should be done the same way in every organization. For example, every California employer must have a sexual harassment policy. While the actual words may be different from one employer to another, the basic content of the policy is the same.

However, average, or being the same, does not create a strategic advantage. An HR professional must ask if benchmarking inhibits or enhances the strategic goals of the organization. Customers and clients usually do business with an organization because of a few unique and special characteristics, practices or products. Think for a minute about why you go to a certain doctor, dentist, or hair stylist. Most likely you explain your preference in terms of something little thing that is important to you. That “little thing” is a strategic advantage that one organization has over another. Think of it in this way – a computer is a computer until a PC enthusiast gets into a debate with a Mac enthusiast!

Some organizations are reluctant to participate in benchmarking. They do not want to share a strategic advantage that a competitor can emulate. For example, an employer may develop a unique on-boarding process that effectively identifies high and low performers before they complete their initial training program. The program increases revenue by adding top performers to the firm and saves unnecessary costs by separating poor performers at an early stage. That employer would find little benefit in benchmarking with other employers who have less effective programs. It would not want to share its unique formula with other organizations that may use it to compete against it more effectively.

In short, benchmarking can be an effective HR tool when it is used wisely.

By definition, benchmarking creates change. It either results in refining current practices or creates a need to adopt new programs. Experts estimate that nearly 70% of change initiatives fail in the workplace. The most common causes are a poorly conceived initiative, a lack of strong leadership, or a failure to generate sufficient support from affected constituencies. An HR professional must navigate this complex maze of challenges to implement new programs that result from an effective benchmarking study.

Conclusion
Like many tools, benchmarking is effective when it used correctly by an HR professional who takes the time to plan it, and then executes a carefully designed implementation process. One excellent resource on measuring and creating change within HR programs is The HR Scorecard (Becker, Huselid, Ulrich, Harvard Business Press, 2001). Another is Managing Transitions (Bridges, Da Capo Press, 2009).

Mike Deblieux, SPHR-CA, designs and presents on-site seminars and workshops for front-line workplace leaders. He provides coaching support for supervisors and supports HR professionals through special projects to help their organizations achieve strategic goals. Mike writes HR Concepts to help HR professionals better understand and use fundamental HR principles. Share your feedback on this article with Mike at mike@deblieux.com.

 

Copyright 2011 PIHRA

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