Magazine article Workforce

Benchmarking Your Way to Smarter Decisions

Magazine article Workforce

Benchmarking Your Way to Smarter Decisions

Article excerpt

It's an old story of the new economy: Job openings abound, employers are scrounging to fill them, and specialists in almost any area you care to imagine can write their own tickets.

Human resources departments have always looked to others in their respective industries to make sure their offerings are on a par with their peers'. Nothing new there. But, given the ever-strengthening employees' market, the pressure to keep up with the Joneses-or maybe even try to leave them eating your dusthas probably never been greater than it is today. As companies become fiercely competitive in their bids to attract and retain qualified workers, benefits and compensation levels are shooting skyward in almost every sector you'd care to imagine, from the legal profession to the publishing industry to (need we even mention it?) high technology.

"There is a real fear among organizations that all the talented players are already on the floor. They're thinking,'If we're expecting to grow, then we've got to find the talent. And if the talented people are already on the floor, we've got to steal them,'" said Jim Stewart of Watson Wyatt Worldwide, a Wellesley, Mass.-based human resources consulting firm. And, in some instances, this could force employers to take steps they would normally have eschewed during a cooler employment climate, such as automatically plugging in certain benefits packages or increasing salaries to such-andsuch a level simply because a competitor is doing the exact same thing (not the best practice to undertake, Stewart and others agree).

As summer winds down and HR departments hunker down to plan future salaries and benefit levels, they'll likely look at what others in their industry are doing. Experts and analysts of the benchmarking industry say this information is readily available. And as to what employers decide to do with it? That's the clincher.

Benchmarking resources

A plethora of professional organizations, consulting firms and human-resource outsourcing companies, from Watson Wyatt to the Saratoga Institute to the Human Resources Benchmarking Association (HRBA), market studies that allow organizations to determine their standing in relation to other companies. (All these organizations are online, of course: www.watsonwyatt.com, www.saratoga-institute.com, and www.hrba.org).

The Saratoga Institute publishes the annual Human Capital Benchmarking Report, which includes benchmarking information from almost 900 companies. Clients can use the information in Saratoga's studies of such areas as pay structure, return on investment per employee, turnover rates, and cost-per-hire and time-to-fill for key employees. The data represents 25 industry sectors.

The HRBA is a professional organization that provides human resources professionals with networking opportunities and access to data from a number of industries. It sponsors studies and annual meetings, and its Web site allows its members access to benchmarking information from 36 industry sectors, from aerospace to higher education to telecommunications, and data for 40 benchmarking processes, from customer satisfaction to treasury management. The site also has access to information about benchmarking books, training courses, and links to other online associations and resources.

All this being said, a company should not rely solely on external information to ensure that its compensation packages and work environment are adequate to attract and retain choice employees.

"Another means of benchmarking is internal-it's when you start to look at and measure what your turnover is and your average performance rating is for a group or an entire organization. Other things you can look at are the effectiveness of mergers and acquisitions, how many people subscribe to benefits; all those things are the pulse of what's happening in an organization," said Sandy Visser, a chief people officer for Benchmark HR Solutions, a New Hampshirebased recruitment and retention firm that targets high-technology startups. …

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