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PROJECT REPORT ON “BENCHMARKING OF HR PRACTICES"
Submitted for the partial fulfillment of the requirement Of MASTER OF BUSINESS ADMINISTRATION
PROJECT GUIDE Prof. SHEETAL KHANKA
SUBMITED BY DEVENDRA KUMAR
This project has been made possible through the direct and indirect co-operation of my academic mentor, Prof.Sheetal Khanka, for whom I wish to express my appreciation and gratitude for giving me an opportunity to work on this project. I would like to express my deep gratitude of indebt-ness to my mentor for providing valuable guidance during the project and the completion of the project without which it would have been difficult to achieve. I am also obliged to my mentor without whose guidance it would have been difficult to complete project successfully. My sincere thank to all faculty members of Institute of Technology and Science, Ghaziabad for their co-operation.
1. DEFINITION 2. PURPOSE OF BENCHMARKING 3. NAVIGATING HR BENCHMARKING - BENCHMARKING MODEL -BENCHMARKING PROCESS -STEPS OF A BENCHMARKING PROCESS 4. BENCHMARKING THE 5 HR FUNCTIONS 5. DIFFERENCE BETWEEN BENCHMARKING AND BEST PRACTICES 6. FACTORS ENHANCING THE SUCCESS OF BENCHMARKING PROCESS 7. BENCHMARKING BEST PRACTICES, RECRUITMENT STRATEGIES AVAILABLE ONLINE NOW 8. BENEFITS OF BENCHMARKING HR PRACTICES 11-12 13 10 8-9 1-2 3 4-6 4 4 5-6 7
9. RESEARCH METHODOLOGY - DATA COLLECTION - DATA ANALYSIS - ARTICLES - EXAMPLES OF TOP 10 BENCHMARKING FIRMS - SUMMARY OF THE BENCHMARKING INTERVIEWS 10. FINDINGS 11. CONCLUSION 11. BIBLIOGRAPHY
14-34 15 16 17-27 28-30 31-34 35 36 37
What is Benchmarking?
"Benchmarking is a process for identifying and importing best practices to improve performance." Benchmarking is not a simple comparative study, simply copying practices from other organizations, or simply assessing performance. The International Personnel Management Association and the National Association of State Personnel Executives jointly developed the following definition for benchmarking: A comparison of similar processes across public and private organizations to identify best practices to improve organizational performance. The characteristics and attributes of benchmarking include measuring performance, systematically identifying best practices, learning from leading organizations, and adapting best practices as appropriate. Benchmarking essentially involves learning, sharing information and adopting best practices to bring about changes in performance. To simplify this, it can be stated as: 'Improving ourselves by learning from others' In practice, benchmarking usually encompasses: • • • • • regularly comparing aspects of performance (functions or processes) with best practitioners; identifying gaps in performance; seeking fresh approaches to bring about improvements in performance; following through with implementing improvements; and following up by monitoring progress and reviewing the benefits.
Alan Flower (1997) lists 5 main stages in effective benchmarking: • Selecting aspects of performance that can be improved and defining them in a way that enables relevant comparative data to be obtained - in effect, producing performance indicators that will make sense to other organizations; • • • • Choosing relevant organizations from which to obtain raw or headline data; Studying the data to identify possible opportunities for improvement; Examining the procedures of the best-performing organizations to pick up ideas that can be adopted or adapted to achieve performance improvements; and Implementing new processes.
Organizations usually benchmark performance indicators (e.g. profit margins, return on investment (ROI), cycle times, percentage defects, sales per employee, cost per unit) or business processes (e.g. how it develops a product or service, how it meets customer orders or responds to enquiries, how it produces a product or service). For human resources, three types of benchmarks are particularly appropriate (Matters, 1993). • Broad measures of performance which take an organization-level view of HR management, using broad productivity measures like sales per employee, profit per employee, volume per employee, number of employees per HR specialists, and other relevant "output-over-input" ratios; • • HR practices focusing on how effectively HR programs and practices are implemented, and making comparisons with other organizations; and HR competencies tracking the knowledge, skills and abilities
PURPOSE OF BENCHMARKING
• • • • • • • • • • • • Have an experienced HR Consultant 24/7- just a phone call away. Establish solid HR Systems. Ensure compliance with Federal and State Employment laws. Get difficult, focused HR projects done accurately and quickly. Maintain HR Systems on an ongoing basis. Recommend systems and establish a timeline for project. Establish workers compensation reporting, drug testing procedures, and establish working relationship with company doctor or clinic. Assist with staffing the company as needed. Provide assistance with interviewing, reference checking, and benefits sign-up and initial orientation of new employees. Provide ongoing Human Resource support as needed and requested either on-site or off-site. Train an on-site administrative person to handle day to day Human Resource tasks such as monthly benefits administration, etc. Set up personnel files and recordkeeping systems such as Personnel Action Request Forms, Performance Review systems, job descriptions, etc.
NAVIGATING HR BENCHMARKING
Benchmarking Model Benchmarking is the search for industry best practice which leads to superior performance. The pioneer of competitive benchmarking was the American company, Xerox Corporation. The company demonstrated the usefulness of observing and learning from superior performers by benchmarking their competitor. Through the knowledge they gained they managed to dramatically improve their productivity and significantly reduce their cost of production. Based upon the Xerox experience, Robert Camp has developed a model which can be modified and adapted to suit any functional area, including HR management. The Benchmarking Process
Phase One: Planning Camp has broken the process of benchmarking into 10 steps which progress through 4 phases: Step 1: Identify what functions, products or outputs are essential practices and should be benchmarked. Step 2: Identify external organizations or functions within own organization with superior work practices for comparison. Phase Two: Analysis Step 3: Determine what data sources are to be used. If an organization has up to date personnel/payroll systems it should be able to measure a range of HR practices and outputs relatively easily. Valuable information may also be available through personnel records, surveys or even interviews. Step 4: Determine the current level of performance. This will enable the gap in performance to be identified. Camp emphasizes the importance of a "full understanding of internal business processes before attempting comparison with external organizations." Baseline measurement also provides an objective basis upon which to plan and act. Phase Three: Integration Step 5: Develop a vision for future operation based on the benchmarking findings. Focus should be directed on the quality of best practice procedures/practices and how these can be not just emulated, but improved upon by the organization. Step 6: Report progress to all employees on an ongoing basis. Communication and feedback are crucial components of benchmarking.
Phase Four: Action Step 7: Establish functional goals linked to the overall vision for the organization. Step 8 & 9: Develop action plans and implement the best practice findings. This should be the responsibility of the people who actually perform the work. Periodic measurement and assessment of achievements should be put into place. Step 10: Update knowledge on current work practices. This is, in essence, the crux of continuous quality improvement. The remainder of this paper will focus on how to begin step one, the planning phase, of an HR benchmarking process, i.e. Identifying what to benchmark. The discussion will primarily deal with the quantitative measurement of human resource management. Although qualitative assessment can be a valuable and informative benchmarking tool, the ease with which agencies can define, and in many cases obtain, quantitative information makes it a practical starting point from which to develop a benchmarking process.
Steps of a Benchmarking process:
The basic steps of a benchmarking effort are: 1. Decide what process to benchmark. 2. Study the process in your own organization. 3. Identify benchmarking partners. 4. Analyze the processes of benchmarking partners to identify differences that account for superior performance. 5. Adapt and implement "best practices." 6. Monitor and revise.
BENCHMARKING THE HUMAN RESOURCES FUNCTIONS
The Global best practices HR tool examines 44 performance measures in 5 key areas: 1. Cost and Staffing: Compare a series of cost measures, including the total cost of the human resources department, in addition to a series of staffing measures, including the number of HR staff to total employees. 2. Recruitment: Assess turnover rates. Determine the timeliness and efficiency of the recruitment process. 3. Training and Recognition: Review types of training offered and use of incentive plans. 4. Benefits: Understand methods used to communicate benefits information and the extent to which contributions are made to retirement plans. 5. Technology and Organization: Examine the types of human resource information systems used, as well as methods of effective communication and employee feedback.
DIFFERENCE BETWEEN BENCHMARKING AND BEST PRACTICES Are benchmarking and best practices the same?
No, they are not the same. Benchmarking is the process that allows one to identify potential best practices, i.e. by identifying the best performers; one knows where to look for practices that might improve their own performance. However, there are different types of benchmarking and some organizations engage in benchmarking in order to identify performance targets for their own organizations rather than to look for practices that make other organizations so successful.
What distinguishes a best practice from a better practice or a good idea?
A best practice is not simply a new idea, but rather a Best Practice is one that meets the following seven criteria: 1. Successful over Time: A best practice must have a proven track record. 2. Quantifiable results: The success of a best practice must be quantifiable. 3. Innovative: A program or practice should be recognized by its peers as being creative or innovative. 4. Recognized positive outcome: If quantifiable results are limited, a best practice may be recognized through other positive indicators.
5. Repeatable: A best practice should be replicable with modifications. it should establish a clear road map, describing how the practice evolved and what benefits are likely to accrue to others who adopt the practice. 6. Has local importance: Best practices are salient to the organization searching for improvement. The topic, program, process, or issue does not need to be identical to the importing organization, however. 7. Not linked to unique demographics: A best practice may have evolved as a result of unique demographics, but it should be transferable, with modifications, to organizations where those demographics do not necessarily exist.
FACTORS ENHANCING THE CHANCES OF SUCCESS FOR A BENCHMARKING EFFORT
A well-designed benchmarking process is essential. However, there are some other critical success factors, including: • • • • • Senior Management Support; Benchmarking training for the project team; Useful information technology systems; Cultural practices that encourage learning; and Resources, especially in the form of time, funding, and useful equipment.
BENCHMARKING BEST PRACTICES, RECRUITMENT STRATEGIES AVAILABLE ONLINE NOW
One of the most important services an association can provide its members is the information necessary to improve its performance. One way to do that is by conducting benchmarking surveys and then taking a closer look at best practices—summaries of what individual agencies are doing in areas like workforce planning and healthcare cost management. The IPMA-HR benchmarking committee recently completed work on the Healthcare Benefits Cost Management Survey, and the results are available for free to all IPMA-HR members. How to handle the growing cost of providing health benefits has posed a significant problem for public sector employers who don’t have the option of passing along the costs to customers. In addition, five best practices summaries in the area of workforce planning are now also posted to the IPMA-HR Web site at http://www.ipma-hr.org/. IPMA-HR learned from the original study that many organizations have not begun to tackle the looming Baby Boomer retirement crisis. For agencies that anticipate a workforce shortage in the next five to 10 years, workforce planning is the place to start. Take a few minutes to learn what other agencies are doing by visiting the IPMA-HR Web site.
The benchmarking committee is also looking forward to sharing information on recruitment and selection strategies. This is a topic that garners great interest, with hundreds of members accessing IPMA-HR research products online each month. In late February, the benchmarking committee launched a survey in partnership with NEOGOV on this important topic. Results should be available in late spring. The benchmarking Web site (http://www.ipma-hr.org/index.cfm?navid=128) and best practices Web site (http://www.ipma-hr.org/index.cfm?navid=127) are easily accessible. Do not forget to login to access the members-only material.
BENEFITS OF BENCHMARKING HR PRACTICES
• • • • • • • • • • • • Affirmative Action Plans. HR Policy and Procedures Manuals. Employee Handbooks. Interviewing Guides and Training. Human Resource Department Audits. General on-site and off-site Human Resource Support. Organizational development. Teambuilding. Performance Review Systems. Attitude Surveys. Wage & Salary Surveys. Supervisory Training.
STUDY This research project is a descriptive type of study on the topic“BENCHMARKING OF HR PRACTICES”. Research Design: Research Design is simply the framework or plan for a study, which is used as a guide in collecting and analyzing the data. It is the blueprint that is followed in completing a study. As the objective of the research is descriptive in form, the research design must be made accordingly: • • • • • • Formulating objective of the study. Designing the method of data collection. Selecting the sample size. Collection of data. Analysis. Conclusion.
Descriptive research includes websites, books, magazines, observations and fact-finding enquiry of different kind.
PRIMARY DATA: Primary data helps in validation of the knowledge gathered from secondary data. Primary Data are those, which are collected afresh and for the first time. The methods adopted for it are as under: • • Observation Method Questionnaire
SECONDARY DATA: Secondary data provides the knowledge about the topic of the research and the company in terms of facts and figures. Secondary data are those, which are collected through someone else, and users can obtain from websites, books, magazines, and articles in newspapers.
OBJECTIVE OF THE STUDY: The objectives of the study are as under: • • • • • To study the purpose of benchmarking the HR practices. To study the process and steps of benchmarking. Defining the factors enhancing the success of benchmarking efforts. To know the benefits of benchmarking. To analyze the trends and best practices for using HR for competitive advantage.
METHOD OF DATA COLLECTION: The study is based on the secondary data. The research tools are the magazines, journals and websites.
1. USING HR FOR COMPETITIVE ADVANTAGE- TRENDS AND BEST PRACTICES
Dr Keith Good all, Senior Associate at the Judge Business School, Cambridge University Programme description: This three-day programme focuses on the relationship between Human Resource Management and the leadership and management of successful businesses. The development of the Human Resource function from its early role in ‘Personnel Management’ to the current emphasis on Human Resource as a ‘strategic partner’ will be examined. The course is organised around case studies which detail Human Resource practices in a variety of industries. The teaching methodology includes short lectures, practical readings, group discussions and DVD presentations.
Key focus areas • Analyzing the roles of HR Frameworks developed by Harvard and Michigan to think systematically about how HR connects with business needs, with strategy, and with the environment will be deployed. • Aligning HR with Strategy what is it exactly that makes HR ‘strategic’? An understanding of strategy will be clarified and then the programme examines how HR can be aligned with strategic objectives. Each of the case studies used will give practical examples of the different ways in which HR can support the senior management team and the line. • Winning the ‘war for talent’ and retaining key staff. Starting with the McKinsey guidelines for winning the war to attract and retain key talent, the programmed then looks at a detailed case from the pharmaceutical industry. The assumption is that poor HR practices will always retain staff, but the ones that stay will be the ones you don’t want. • Building commitment. A framework for understanding commitment in a highperformance organization, as opposed to having simple compliance, will be developed. The cases will also illustrate the different ways modern organizations build commitment in the workforce. • Systems thinking. It is important for HR and senior managers to take an overview of the interactions between ‘people’ and the ‘hard’ aspects of the business in a dynamic business environment. The McKinsey/Harvard 7-S model will be used as an example of how systems thinking can be applied to the analysis of organizational effectiveness. • Change management and HR. One of the constant themes of modern management is the need for change. The case of a French cement company in China will be used to examine the relationship between HR and change management.
Who should attend? The course is suitable for practicing HR managers interested in benchmarking their current practices against international trends. It is also suitable for senior managers who want to use their HR function as a source of competitive advantage. By the end of the course participants will: • • • • • • have practical frameworks for analyzing the roles of the HR function understand the relationship between HR and strategy in a high performance organization have analyzed the use of HR in different types of businesses (high-tech; service; manufacturing …) understand HR as part of a ‘systems’ view of business effectiveness be aware of trends and best practice in obtaining, retaining, motivating and developing staff Understand the relationship between HR and change management.
2. HR PRACTICES FOR HIGH PERFORMANCE ORGANIZATIONS ABSTRACT: If Australian organizations are to be competitive, more productive and economically sustainable, they will require highly skilled knowledgeable, innovative workers and a relatively stable workforce. An increasing number of companies in the United States and Europe are implementing management systems and HR practices with greater employee involvement to increase productivity and quality, and to gain the competitive advantage of a workforce strategically aligned with the organization’s goals and objectives. Critical organizational processes such as information sharing, training, decision-making and rewards are now being moved down to the lowest levels in the organization. This approach to HR puts knowledge, power, rewards, and a communication network in place at every level in an organization. If organizations are to be sustainable in the medium to long-term, employees must be motivated to care about the work they do, to acquire knowledge-related skills, and to perform. Greater employee involvement can only be achieved through a carefully managed process that strives for participation by integrating the individual with the organization to achieve high productivity and competitive advantage. This process involves restructuring the work so that it is challenging, interesting, and motivating as possible. Employees at all levels are given power to influence decision-making. However, high quality employees do not assure an organization of having a sustainable competitive advantage or even a short-term advantage. If employees are poorly motivated or if the correct organizational systems are not in place, the employees’ talent may be wasted or lost to competitors.
THE FORCES OF CHANGE: The organizational events of the last ten years – out-sourcing, downsizing, reengineering, reduced organizational levels, acquisitions and joint ventures, high management turnover, broadened spans of managerial control, rapid technological change and globalization – are challenging traditional HR and executive development practices established since the mid-1970s. The impact can be seen in many ways: • • • There are fewer levels and broadened spans of organizational control which means that organizations are finding it harder to retain talented people; Radically changing organizational structures have effectively abolished career paths and middle management in both the private and public sectors; External recruitment of talent has risen dramatically as many HR departments and their organizations have opted for this soft option rather than developing talent from within; • Reduced budgets and more demanding shareholders and other investors have forced companies to focus developmental resources for optimum return in the short-term and invest less.
WHY HR IS NOW BECOMING INCREASINGLY IMPORTANT • • Organizations in Australia have changed significant aspects of their employment policies during the 1990s. The role of trade unions has declined, bargaining about employment conditions and wages has shifted to the enterprise level and increasing numbers of organizations are introducing techniques to communicate directly with their employees. • • There has been a growth in pay for performance schemes, flexible employment practices, training, performance appraisals and broader job structures. The bureaucratic and hierarchical organizational structures have given way to broader and flatter structures where self-managed work teams have become more prevalent and workers.
MAJOR CHALLENGES FACING AUSTRALIAN ORGANIZATIONS. Although there has been a marked decline in the Australian dollar, the ability of Australian organizations to compete with goods and services from overseas competitors may have been impaired due to the poor economic health of many Asia-Pacific economies. Consequently, overseas competitors are able to provide products and services at a lower price to the detriment of the local industry Australian organizations now need to concentrate more on highly value-added products and services produced by a skilled and motivated workforce. This requires that Australian organizations need to take a more "strategic" approach to HR that will enable them to cope with the challenges resulting from rapid changes in technology and globalization.
HR PRACTICES WHICH ARE CRITICAL TO ECONOMIC SUSTAINABILITY • • • • • • • • • Employment security Selective hiring of new personnel Self-managed teams and decentralization of decision-making High compensation contingent on organizational performance Extensive training and development Continuous improvement HR programs Reduced status distinctions and barriers Trust between management and employees at all organizational levels Efficient and effective use of new information technologies
WHAT IS "BEST PRACTICE" IN HR? There is no single best practice to which all organizations should aspire. Rather, the literature shows that each firm has a distinctive HR system that represents a core competencies required for the survival and sustainability for that particular organization. “Best practices" in HR are subjective and transitory. What is best for one company may not be best for another. What was best last month may not be best for today. The concept of "best" is highly subjective and non-specific.
FACTORS WHICH CONSTITUTE BEST PRACTICES IN HR ARE • • • • • • •
Communications Continuous Improvement Culture Consciousness Customer Focus & Partnering Interdependence. Risk Taking Strategy and commitment.
IMPLEMENTING HR PRACTICES AND POLICIES When implementing HR practices and policies, managers should note that HR practices: • • • • • Cannot be "copied" from one organization to another. Must be implemented with regard to the organizational context of a particular firm. Are more effective, and can produce a synergistic effect, if they are complementary to each other. Require significant planning, resources and effort. Necessitate that people who are expected to assist with the implementation of the new HR practices must be consulted and be a part of the planning, development and implementation processes right from the start. There must be an effective management system to support long-term productivity improvements. Policies and training have to be aligned with HR practices. Must be broadly complementary to HR policies linked to "high-involvement work practices" and are thus relevant to explaining the variation in the diffusion of such practices.
KEY FINDINGS AND LESSONS LEARNED The literature refers to some key findings from research and lessons learned. These include: • • • The most striking increases in high-involvement work practices are in the use of on-line work teams and off-line problem-solving groups. Higher levels of managerial tenure had a positive and statistically significant association with greater increases in the use of high-involvement work practices. In newly industrialized countries, investments such as increased training, performance-based pay, the elimination of status barriers, and more selective recruitment and hiring practices were assessed by the corporate parent. • High-involvement work practices may represent "competence-destroying" change, which is difficult to implement, and may lead to worsened performance in the short-term. • Plants that undergo a major disruption in their operations – creating opportunity for various organizational changes - were more likely to adopt high-involvement work practices. Manufacturing technology is necessary but insufficient, without work force commitment to performance. Any competitive advantage will not be sustained without a skilled, motivated, and committed management team and work force. Organizations must enhance work force ability to improve productivity. Technology without a talented work force is an opportunity that has not been utilized enough.
NEW ROLE FOR HR PROFESSIONALS The role of HR departments is being transformed as line managers assume greater responsibility for a number of people management activities and as HR specialists focus more closely on integrating HR and corporate strategy. It will become increasingly important for HR specialists to demonstrate that they can contribute to organizational efficiency and effectiveness in both the short and long term.
HR professionals can now play a more proactive role by: • Demonstrating that they understand these employment changes has an impact on employees and that employee’s experience organizational change in different ways. • Realigning the expectations of managers and other employees within their organizations. HR practitioners are responsible for communicating the need to understand the changing nature of work and the impact of such changes on the organization. • Monitoring how well employees are coping with employment changes where many employees do not feel that they are effectively making the transitions when organizational changes and flexible work practices are introduced. • Providing advice to executive management to adopt a long-term strategic approach to HRM that is more conducive to the development of employment relationships based on mutuality of organizational and individual goals and expectations.
CONCLUSION There is significant evidence in the literature to indicate that a strategic approach to HR policies and practices in Australia has been largely pre-occupied with strategy in its narrowest form. An explanation of this may be that strategic HR practices have been used opportunistically rather than strategically, and the approach by HR specialists and their CEOs has been overridden by the need to survive and grow in an increasingly complex and volatile economic environment. Unlike their financial counterparts, HR specialists are often ignored when strategic business decisions are made. This supports the belief that the material considerations for long-run strategic decisions placing HR as the critical function in corporate strategy do not exist. Organizations that continue to seek solutions to their competitive challenges by downsizing, outsourcing and weakening their organizational culture are now "on borrowed time" and will not be sustainable. Organizations need to match HR policies and practices with long-term business strategies required to compete in the global market place, and generate employee commitment and retention over the long-term. HR practices are required that are incremental and collaborative and provide the opportunity to employees to make decisions affecting their work and to share in the rewards of their creative efforts.
EXAMPLES OF TOP 10 BENCHMARKING FIRMS THE TOP 10 BENCHMARK FIRMS IN RECRUITING AND TALENT MANAGEMENT
The very best companies in recruiting are constantly striving to improve everything they do through continuous learning. One of the best learning tools at their disposal is benchmarking, which often provides learning that can be applied immediately. Unfortunately, unlike many other professions, there is no standard measure as to what makes a recruiting function world class, which might provide a list of which firms are benchmark worthy (for benchmarking to be truly beneficial, all parties involved must be able to learn from each other).
The Top Ten
1. First Merit Bank. Some may find it hard to believe that the most strategic and innovative approach to recruiting isn't found inside one of America's most recognized companies, but rather from this bank headquartered in Ohio. In addition to a great referral program, they are the best in understanding how recruiting can adopt successful approaches such as data mining, customer relationship management, competitive intelligence, and assessment metrics from other business functions. 2. General Electric. Long recognized as "the" benchmark firm when it comes to building a performance culture, GE wins hands down as having the best overall talent management strategy. They prioritize jobs and focus on "game changers." Their
employer-of-choice brand is second to none and they are among the leaders (along with Home Depot) in recruiting from the military.
3. Microsoft. Giving GE a run for their money as best in talent management is Microsoft. They excel at workforce planning, redeployment, utilizing analytics, and leveraging the internet. They are also truly world class when it comes to the effective use of contingent workers. Microsoft was also ranked #57 on Fortune Magazine's 2005 100 Best Companies to Work for in America. 4. Wachovia Corporation. This hands-down leader in diversity recruiting is also well versed in utilizing metrics and running a fee-for-service recruiting model capable of actually generating revenue by selling excess recruiting capacity to other organizations. Their recruiting strategy is world-class in a relatively conservative industry. 5. Starbucks. Given the "less than glamorous" nature of the retail industry, the approach taken by this coffee giant to employment branding and becoming an employer of choice is phenomenal. They also excel at high-volume hiring. Starbucks was ranked #11 on Fortune Magazine's 2005 100 Best Companies to Work for in America. 6. Marriott International. This hotel giant was one of the earliest adopters of employment branding, and one of the few companies to maintain a dedicated focus on the art. While they still excel in employment branding, their diversity recruiting and work with the disadvantaged are world class by any standard. Marriott was ranked #63 on Fortune Magazine's 2005 100 Best Companies to Work for in America. 7. Southwest Airlines. The clear winner for innovation in recruiting, this company not only excels in selection but also scores huge in branding with the launch of its own TV
show (Airline). Every employee periodically receives productivity and financial reports so they can act more like owners.
8. Booz Allen Hamilton. The things that set this professional services firm apart from the competition comprise a laundry list of "must have" programs for professional-level talent. In addition to these programs, they also excel at employment branding. BAH was ranked #75 on Fortune Magazine's 2005 100 Best Companies to Work for in America. 9. Valero Energy. Managing in a place "run by CPAs" requires extraordinary metrics, and Valero comes through with the best metrics in recruiting, bar none. Their use of regression analysis for workforce forecasting is truly best in class. In addition, they have development metrics that demonstrate the relationship between recruiting effectiveness and stock price per share, and they have created a sourcing channel report that demonstrates the ROI in the effectiveness of their best sourcing channels. Valero was ranked #23 on Fortune Magazine's 2005 100 Best Companies to Work for in America. 10. T-Mobile. Excellent work in nearly every aspect of recruiting, T-Mobile is a stand out in both the usage of metrics and online candidate assessment. In 2004, T-Mobile set out to demonstrate the business impact of recruiting and succeeded beyond expectations. With a largely tech-savvy target audience, they also excel at innovation in Internet recruiting.
A SUMMARY OF THE BENCHMARKING INTERVIEWS
The overall trend in the delivery of modern human resource practices is to refocus the traditional orientation of the Personnel Office from conducting transactions alone to combining service delivery and strategic planning. For example, at Genzyme, Human Resources (HR) is 70% a business partner and 30% a service provider. Johnson& Johnson has organized HR into three segments: Thinkco, Touchco and Serveco. Thinkco is a strategic unit providing direction to individual areas; Touchco exists within the business unit to deliver specific human resource practices; Serveco handles human resource transactions across the organization. In the aggregate, three key factors are necessary for high level human resource practices: strong leadership, clear organizational values, and ongoing measurement. Success requires faith in administrative processes, use of technology, and high-level involvement of HR in the overall strategic planning for the organization. Every organization the team interviewed cited the critical importance of high-level leadership to advocate for change and to clarify the focus of future human resource practices. To better define and clarify the values of the institution or corporation, several organizations have specified human resource principles that provide a basis for the development and implementation of new practices. For example, one multi-national organization developed a process to review practices world-wide, after which it issued a statement defining seven principles of leadership and appointed people to guide the subsequent implementation of new human resource practices.
These organizations used employee surveys, exit interviews and cross-functional meetings initiated by HR to measure the success of changes in human resource practices.
Common Themes Certain approaches to human resource practices were fairly common across many of the organizations interviewed. 1. Planning and Appraisal In general, planning and appraisal processes focus on developing the individual; letter grades are not used. Several organizations use a "360" evaluation tool in which subordinates, colleagues, and supervisors contribute to an individual's evaluation. An important outcome of this process is a training plan that links both the needs of the individual and the goals of the organization. Positive, honest feedback is critical. 2. Individual and Team Development The key to individual and team development is training. Characteristics of successful organizations include: budgeting training expenses and releasing individuals to attend training sessions; providing centralized core training appropriate for the job; training managers, coaches, and supervisors in work and family issues; and providing training specifically tailored to the needs of teams. 3. Career Planning Consistently, career planning is described as being the responsibility of individual employees. Several organizations said, "the job belongs to the company; the career path belongs to the individual."
4. Hiring Technology is widely used by central HR for recruiting, hiring, retaining and assessing performance and competencies. Nevertheless, screening, interviewing and final decisions remain the responsibility of the business units. The documentation supporting these transactions is processed and stored electronically. The organizations believe this technologically enhanced hiring process is valuable to both the internal and external candidates. 5. Succession Planning Succession planning is of growing importance to organizations as they come to realize that professionals who have achieved a high level of success within a particular discipline have not necessarily developed all the competencies for leadership. Several organizations have taken specific steps to develop new leadership. For example, Johns Hopkins has established a Leadership Institute that may contribute to succession planning. 6. Job Design Successful job designs offer flexibility; are guided by what needs to be done; and meet the demands of the marketplace. 7. Classification Job classification remains the responsibility of central HR. Problems occur when standards for classification are not applied.
8. Compensation/Recognition/Other Rewards Total compensation and rewards are being desegregated into base salary, discretionary bonuses, and non-financial recognition. For example, AT&T provides cash awards for ideas which lead to cost saving. At Lucent Technologies, bonuses are based on a combination of individual merit, the performance of the business unit, and the performance of the corporation. Together, the experiences of these organizations offer guidance to MIT as it works to expand its human resource practices, to deliver base line services more efficiently and to develop the workforce to meet the strategic needs of the Institute.
There were many findings which were made from the study which are as follows: • • • • • • Benchmarking establishes HR systems. It ensures compliance with Federal and State Employment Laws. It maintains HR systems on an ongoing basis. Steps of benchmarking process are very effective. Areas which are benefited by the benchmarking practices. The Top 10 benchmarking and their strategies for success.
"Benchmarking is a process for identifying and importing best practices to improve performance." Benchmarking is not a simple comparative study, simply copying practices from other organizations, or simply assessing performance. Benchmarking helps in establishing solid HR systems and maintaining HR Systems on an ongoing basis. It also helps in recommending systems and establishing a timeline for project. It also helps in assisting with staffing the company as needed. There are various benefits of benchmarking. It helps in making affirmative action plans and thereby makes HR policies and procedures manuals. It helps in enhancing Teambuilding. The Performance Review Systems are made effective by practicing benchmarking. Wage & Salary Surveys are done to make the existing policies more effective. Hence, Organizations usually benchmark performance indicators (e.g. profit margins, return on investment (ROI), cycle times, percentage defects, sales per employee, cost per unit) or business processes (e.g. how it develops a product or service, how it meets customer orders or responds to enquiries, how it produces a product or service).
www.benchmarkoutsourcing.com www.gibs.co.za.com www.globalbestpractices.com www.osp.state.nc.us www.dpc.wa.gov.au www.qut.edu.au Article Reviews: www.ere.net The Top 25 Benchmarking firms in Recruiting and Talent Management. www.fsed.org HR Practices for High Performance Organizations. Flower, Alan. 1997. How to: Benchmarking? Personnel Management. 12 June.
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