Human Resource Management and Benchmarking process

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%.