Human Resource Management and Benchmarking process
Benchmarking in simple word
is to evaluate (something) by comparison with a standard (oxford dictionary
meaning).
Benchmarking is the
practice of comparing business processes and performance metrics to industry
bests and best practices from other companies. Dimensions typically measured
are quality, time and cost (wiki meaning).
Evident from the above two meaning of
Benchmarking, it essentially involves studying or learning the best HRM practices adopted/followed by
other more successful/competing organizations. Further, evaluating own
practices with those thus collected.
Additionally, benchmarking empowers managers to learn & adopt effective HR strategies followed by other firms. Besides,
benchmarking identifies what an organization
supposed to do to develop or improve comparative to the HR strategy in excellent companies. It can also assist in creating an initiative for change.
There are seven sequential steps in the process of benchmarking such as -
1. Identification of HR practices to be benchmarked. A typical exercise
is to identify practices which are critical in nature from the organizational perspective.
2. Constitution
of a core project team to handle the benchmarking process.
3. Identification
of Benchmarking Partners – whether an organization from the same industry,
competitor or non-competitors or international firms – who all are known for
their best practices successfully.
4. Collection
of data from each of the partners ( e.g., firm X, Y and Z)
5. Analysis and
interpretation of the data collected from each partner.
6. Preparation
of a comprehensive report based on the data analysis & interpretation.
7. Develop
& implement action plans for improving HR strategy and practices.
Benchmarking can be used for less critical
practices too, however, stating with harder and more objective aspects of
business such as technology, systems and financial ratios are regarded as more
profitable initiatives.
Few industry examples are Xerox, who benchmarked the
order fulfilment techniques of L.L. Bean and learnt strategies to reduce
warehouse cost by 10%.
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