Human Resources Benchmarking Uses
- Estimate Labor Costs
- Estimate Average Workforce Turnover
- Pinpoint Areas Using Excessive Overtime
- Discover Workforce Trends
- Determine Appropriate Compensation
Benchmarking can significantly help human resource departments in many different ways. One of the most important goals of any business is to improve decision-making processes pertaining to staff members, and HR benchmarking provides the tools and information necessary to reach this goal. There are a number of great ways that benchmarking can benefit HR departments, and the following section describes five of the most valuable benchmarking uses.
1. Estimate Labor Costs
Businesses that are planning expansions or new projects need to know how much labor will cost before beginning their ventures. This can be especially crucial for small businesses or companies that are on tight budgets. Human resource benchmarking can help them compare labor costs associated with similar ventures in other areas locally, nationally, and even globally. This, in turn, can also help them determine the best locations for their projects in terms of cost-effectiveness.
2. Estimate Average Workforce Turnover
An article published in Human Resources Today stated that it can be quite difficult determining what may be causing high employee turnover and whether or not it requires some sort of action. Human resources benchmarking, however, can help businesses evaluate the profiles of various applicants and use the information collected to assess their potential flight risk. This can help to improve HR decisions pertaining to the hiring and development of employees.
3. Pinpoint Areas Using Excessive Overtime
An objective shared by companies both large and small is to limit workforce costs as much as possible. One of the ways they accomplish this is by limiting staff overtime. By evaluating the average payroll of similar workforces locally, nationally, or globally, businesses can reveal whether or not they are paying too much in overtime. By pinpointing areas that use excessive overtime, human resources can improve workforce planning and take action to remedy the situation.
4. Discover Workforce Trends
Another way that HR benchmarking can help human resources staff is by helping them stay abreast of workforce trends. By studying similar roles in other companies, HR can determine how long the average person will most likely stay with their company. Benchmarking can also provide statistics associated with employment longevity and such factors as gender, age, race, culture, and socioeconomic status. This information can be invaluable in determining the best candidates for available positions.
5. Determine Appropriate Compensation
Determining appropriate compensation for employees can be a confusing process, especially when it involves new positions. Even so, compensation is often the main factor that determines whether or not a company can secure top staff members and whether or not they will stay. Benchmarking can help HR compare such things as average pay rates for particular roles, common benefit packages offered to employees holding similar roles, and how compensation relates to employee longevity and motivation.
One of the best ways for large and small businesses today to improve their HR decision-making processes is through the use of benchmarking. There are several ways that HR benchmarking can help human resources teams, and the uses described above are some of the most valuable.