Benchmarking

Benchmarking is the process of comparing similar characteristics between or within a business, identifying the best practices and policies and integrating them into company procedure. With benchmarking, HR professionals can incorporate successful strategies, policies and practices that can elevate their company, helping them meet specific targets within the organization. Benchmarking can only be effective when companies benchmark similar organizations of the same size and in the same industry. 

Benchmarking can occur in an organization on two levels; internal benchmarking and external benchmarking. 

Internal benchmarking is a process that happens within the organization. It is a comparison of departments, teams, groups and units against each other in an organization. With this process, teams can incorporate the best practices of other teams to reach a specific target. 

External benchmarking is a process between one organization and another. It is a comparison done to see where an organization ranks in relation to others and incorporate the best practices that make the organization rank. 

In addition, there are other types of benchmarking that can be done both internally and externally. They include:

• Process Benchmarking: This kind of benchmarking considers the processes and procedures of an organization. It can involve comparison with processes like onboarding, recruitment, performance management, production, etc. The focus of this benchmarking is to understudy and implement the practices of organizations based on their processes. 

• Competitive Benchmarking: In this process, the comparison lies not only in their processes but takes a holistic view of the success of the company. This benchmarking considers the overall performance of the organization including finance, production, marketing, etc. 

• Functional Benchmarking: This benchmarking considers the ability of the organization to achieve its specific goals. Goals such as customer satisfaction, revenue generation, profit and loss are some of the comparisons done. It enables an organization to understand the best policies to help them achieve their goals, based on the performance of similar organizations. 

There are several areas that an organization can benchmark. Some of the areas are:

• Organizational structure

• Salaries and employee bonuses

• Employee engagement and retention

• Career development 

• Work schedule and environment 

Benchmarking has its advantages to organizations that can implement them effectively. The advantages of benchmarking are: 

• It helps an HR professional improve existing company practices. 

• It helps identify where gaps may exist internally in an organization and close them up. 

• It gives insight into a company’s performance and factors which may be affecting it. 

• It helps organizations gain insight into industry trends and development.

Benchmarking empowers HR professionals to enhance their organizations by integrating successful practices from similar entities. It's essential to engage in targeted benchmarking by comparing with organizations of comparable size and industry. With internal and external benchmarking, encompassing process, competitive, and functional aspects, organizations can refine practices across various areas, improving performance and aligning with industry trends.