This time of year can mean many different things to many different people, the start of the winter here in North America juxtaposed against the curious image on greeting cards in Australia of Santa on a surfboard. Whatever region of the world you are in or holiday you may be celebrating a little room should be left to consider the virtues of benchmarking. I say come one come all as benchmarking doesn’t discriminate and indeed revels in participation of organizations from all walks of life.
The first question posed to me by organizations evaluating benchmarking is, “What is the value of benchmarking and why organizations should participate?” The answer I give will often surprise, for as much as shout the virtues of benchmarks from the top of tall buildings, even in Winter, the final goal should be in the formation of targets for the Human Capital Metrics that define your business. The reluctance of setting targets is something that leaves me perplexed. I ask, “Would you ever see the Sales or Finance functions not evaluating nor creating their targets at this time of year?” I defer to the results from the Aberdeen Group, “Intelligent Human Capital Management: Workforce Analytics Drives Profit and Performance”, September 2009 that showed an 11% year on year increase in employee engagement and 4% in profit for organizations that were using workforce analytics and reporting.
To achieve a set of targets that the business partners will understand, accept and manage towards involves more than just benchmarking. I propose five key areas that should be considered when creating targets:
- External Benchmarks: How has our performance compared to that of our peers or companies considered best in class? Different measures will often require different benchmark cuts to ensure relevance. The examples I will often pose is where measuring diversity it will likely be more appropriate to use benchmarks based on organizations in your location rather than just industry. By using different benchmark slices to keep abreast of organization performance this should assist in pointing the way toward areas where an opportunity exists for improvement.
- Internal Benchmarks: Since it’s benchmark season we should never limit ourselves to solely comparing ourselves externally for it’s just as important to consider how have the various workforce populations performed differently. This I have assisted many organizations in the past with considering the most appropriate approach that should be taken as this will vary at the industry and even organization level. The goal I strive for is to ensure that this remains an apples-to-apples approach for the divisions, departments, regions to be benchmarked.
- Past Performance: This will impact the reasonableness of a set target and how quickly we can move to transition to reaching the desired end target over time.
- Forecasts: What do we expect our future context to be? Past performance, internal and external, must be considered in light of expectations for the future to determine desired performance.
- Executive Mandated Goals: What goals have been passed down to us? Mandated goals related to performance on this or other metrics may influence desired results.
Just as seasonal holiday parties will likely have some guidelines for success so too does the start of the benchmarking season. To make sure the season starts suitably there are a few areas that we can prepare for as we await for the finalization of the end of year results.
- Dust off the KPI set and ask is this still what matters to the business?
- Maybe leading business partners under the mistletoe is a little too much but inviting them to the party table to be involved in the target setting process is appreciative gesture.
- Take the opportunity to sit under the lights of a well lit tree to look internally at the industry standards for definitions of metrics and the calculation of these
Benchmarking truly is the season to be jolly.
Tags: Benchmarking, benchmarks, HR Benchmarking, targets