BENCHMARKING OF HR PRACTICES

INTRODUCTION 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;

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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;

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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

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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.

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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 offsite.

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.

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. in essence.Step 4: Determine the current level of performance. Phase Three: Integration Step 5: Develop a vision for future operation based on the benchmarking findings. ." Baseline measurement also provides an objective basis upon which to plan and act. Focus should be directed on the quality of best practice procedures/practices and how these can be not just emulated. This is. Step 6: Report progress to all employees on an ongoing basis. This should be the responsibility of the people who actually perform the work. Camp emphasizes the importance of a "full understanding of internal business processes before attempting comparison with external organizations. the crux of continuous quality improvement. Step 10: Update knowledge on current work practices. Communication and feedback are crucial components of benchmarking. Periodic measurement and assessment of achievements should be put into place. but improved upon by the organization. This will enable the gap in performance to be identified.

The discussion will primarily deal with the quantitative measurement of human resource management. Steps of a Benchmarking process: The basic steps of a benchmarking effort are: 1. i. Identifying what to benchmark. Identify benchmarking partners.e. of an HR benchmarking process. 3. Decide what process to benchmark. . the ease with which agencies can define. 4. Analyze the processes of benchmarking partners to identify differences that account for superior performance. the planning phase. Study the process in your own organization. 2. quantitative information makes it a practical starting point from which to develop a benchmarking process. and in many cases obtain. Although qualitative assessment can be a valuable and informative benchmarking tool.The remainder of this paper will focus on how to begin step one.

3." 6. Recruitment: Assess turnover rates. Cost and Staffing: Compare a series of cost measures. Determine the timeliness and efficiency of the recruitment process. 5. Benefits: Understand methods used to communicate benefits information and the extent to which contributions are made to retirement plans. 2. BENCHMARKING THE HUMAN RESOURCES FUNCTIONS The Global best practices HR tool examines 44 performance measures in 5 key areas: 1. including the number of HR staff to total employees. as well as methods of effective communication and employee feedback. in addition to a series of staffing measures. including the total cost of the human resources department. Monitor and revise. 4. . Adapt and implement "best practices. Training and Recognition: Review types of training offered and use of incentive plans. Technology and Organization: Examine the types of human resource information systems used.5.

e. Recognized positive outcome: If quantifiable results are limited. Repeatable: A best practice should be replicable with modifications. it should establish a clear road map. a best practice may be recognized through other positive indicators. 4. What distinguishes a best practice from a better practice or a good idea? A best practice is not simply a new idea. Innovative: A program or practice should be recognized by its peers as being creative or innovative. However. . Benchmarking is the process that allows one to identify potential best practices. Quantifiable results: The success of a best practice must be quantifiable. 3. they are not the same. 2. 5. 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. Successful over Time: A best practice must have a proven track record. one knows where to look for practices that might improve their own performance. by identifying the best performers. describing how the practice evolved and what benefits are likely to accrue to others who adopt the practice.DIFFERENCE BETWEEN BENCHMARKING AND BEST PRACTICES Are benchmarking and best practices the same? No. i. but rather a Best Practice is one that meets the following seven criteria: 1.

6. Has local importance: Best practices are salient to the organization searching for improvement. with modifications. 7. however. there are some other critical success factors. Not linked to unique demographics: A best practice may have evolved as a result of unique demographics. to organizations where those demographics do not necessarily exist. The topic. including: . FACTORS ENHANCING THE CHANCES OF SUCCESS FOR A BENCHMARKING EFFORT A well-designed benchmarking process is essential. However. or issue does not need to be identical to the importing organization. process. program. but it should be transferable.

     Senior Management Support. and useful equipment. Employee Handbooks. Interviewing Guides and Training. especially in the form of time. and Resources. Benchmarking training for the project team. funding. HR Policy and Procedures Manuals. Useful information technology systems. Cultural practices that encourage learning. Performance Review Systems. Teambuilding. Supervisory Training. Organizational development. Wage & Salary Surveys. General on-site and off-site Human Resource Support. BENEFITS OF BENCHMARKING HR PRACTICES             Affirmative Action Plans. Human Resource Department Audits. Attitude Surveys. .

etc) to develop HR initiatives to address the problem. is the basis on which it determines what it does and does not do. etc). people issues are fundamental inputs into developing the . poor induction. To support the articulation of strategic HR priorities for an organization it is important to determine performance indicators to measure the impact of our HR strategy. which is most interesting about the HR function. we do not analyze the reasons for labor turnover (poor selection techniques. developing a customer responsive culture) as well as generic priorities for the HR function. organizational unit and tenure. To what extent do we. which will impact most on organizational performance? Or do we become involved in operational issues. which will impact on subsequent activities.Does HR Benchmarking Have a Real Role to Play? The question. The HR strategy is likely to include both people management priorities for the organization (eg. as a function. quality of management support. We are so busy on the treadmill of selection that we don‟t have time to understand what necessitated the selection exercise. We are so busy with urgent work that we don‟t have time to deal with important issues. the business priorities of the organization. This process is becoming more interactive because increasingly. An example is when we become involved in detailed selection activities. The methodology by which we determine what we do and don‟t do in managing the HR function is called HR strategy. It is important for the HR strategy to have this dual focus on people and HR function priorities as well as ensuring that the HR/people management priorities are aligned to. which have little lasting value added impact on the success of the organization. but don‟t have time to understand in detail our level of labour turnover (how it varies by occupational group. mismatched expectations. lack of career options. and driven by. Consequently. systematically assess those initiatives.

and broader measures. The historical performance of the organization is useful. say in the Finance Industry. The benchmarking program is able to provide competitive yet realistic targets for our strategic HR key performance indicators. rather than something.0%. The formulation of HR/People related performance indicators becomes a focus for ensuring the organization is driven by the HR strategy.business plan of an organization. The first requirement is to assess our existing performance in each of the key HR/people performance indicators. which should drive our performance. has identified that combining cost reduction with a stronger customer focus culture is core to its business strategy. it is then essential to set a target performance as part of the HR strategic planning process. The existence of HR/people performance indicator categories is only the first step in ensuring that we have a “driven” culture within the HR function. It is my belief that it is illogical for an organization to set targets for its strategic HR/people If an organization. but not sufficient as a basis to establish a target. If the organization then determines that its absence rate over the past twelve months for the total organization has been 4. We may also want to compare the results of other industries to assess the possibility . It is impossible to set a target performance on the strategic Key Performance Indicators without reference to some benchmark norms. Without a focus on five to ten key performance indicators we are more likely to regard the HR strategic plan as a general guide to our daily activities. the next stage is to set a target performance for the organization. and ratio of internal to external recruits . These key performance indicators may consist of both specific indicators such as the ratio of transfers to promotions. then it may identify that its absence rate is a key performance indicator. absence rates or revenue per employee. This information will typically come from our HRIS with some information likely to come from our finance and production systems. such as labour turnover rates. Once an organization knows its performance on the selected performance indicators.

When investigating the desired benchmark standards. Benchmarking plays a critical role in providing achievable but demanding targets for these HR/people key performance indicators. If their performance is outside the desired range. the . This is particularly critical in international industries if we assess that our performance of 4% absence is a long way from our targeted performance. We are not involved in best practice investigations in areas not strategic to us. include other industry sectors. which record optimum performance levels within the benchmark area. which have been identified as supporting their HR strategy. A key point is that the best practice investigation must be in an area where we have established a KPI to support our HR strategic plan. the best practice investigation will include talking to organizations.3% as a long-term target (which we can update on a continual basis to ensure a competitive target is maintained). The best practice investigation may be within our own industry. or preferably. By restricting our investigation to these two criteria. In addition to setting targets for the key HR/people indicators. It is my belief that organizations must know their performance on the HR/people KPIs. we minimize the prospect of engaging in industrial tourism under the guise of best practice. In this case. HR benchmarking can also play an important role in allowing organizations to monitor their performance on a wider range of benchmark measures.of setting more challenging (but achievable) targets. Then they must set targets for these KPIs. we may need to look at international benchmarking standards for our industry. and then we may wish to investigate best practice initiatives to assist in reaching the desired target. nor are we investigating best practice unless there is a significant performance gap between our results and the benchmark target. Organisations should continue to monitor their performance on a wide range of organizational and HR indicators. We may set the Manufacturing 10th percentile of 1.

organization should then assess how critical this is and whether this should be the catalyst to initiate any action. The most common form of HR benchmarking is only restricted to salary surveys principally because of two essential reasons. 1) The difficulty of finding standard and acceptable performance indicators 2) The reluctance of companies to divulge sensitive information about their employees retention. As a result. . This does not however involve the „industrial tourism‟ of current industrial mythology. This involves starting with something simple and showing early gains. Making Benchmarking Effective If benchmarking is to make a difference in performance it has to move beyond a narrow focus on comparing figures to looking at the processes used by successful organizations. employee costs and so on 3) The fundamental belief that a personnel is a mysterious and complex art. In particular much more attention has to be paid to cultural issues such as getting people to accept that there are better ways of doing things and see the need for change. or improve efficiency by changing working practices. or if it is appropriate/acceptable to have performance out of range with best practice. it is a more informed decision than that which would be make with no HR benchmark reference. Employers can introduce initiatives to improve staff‟s quality of working life. Whichever decision is made. only those who perform it can judge the full value of the work 4) Measuring the effectiveness of Human Resource Management is inappropriate as HRM is devoted to stimulating and supporting human happiness and development.

which can be affected by individuals who will be subject to the measurement system. The least desirable course of action is to install monitoring activities that cannot be influenced by the persons involved. of the topmost management. At a minimum. c) The measures that are or will be linked to these HR policies or practices. 3) The performance management‟s measurement systems should be robust.Prescriptions for Action HR managers should consider carefully the following factors when establishing a system for determining the effectiveness of their activities or departments: 1) It is important to recognize that the underlying purpose of a performance management system is change and organizational change of any type requires the active support. It is therefore advantageous to focus initial efforts on those HR practices. By this token. HR managers should have a) A clear understanding of what the company‟s principal strategic objectives are b) Which proposed or actual HR policies and practices contribute to their achievement.e. the use of multiple measures to bring a target issue or event under control also permits managers to gain a broader sense of the HR practices that contribute to company‟s . The principle of triangulation i. preferably involvement. corporate training and development should not allocate costs to divisional managers if these individuals have no control over training and development activities in their units. 2) Change programs require clarity of purpose and a good measure of initial momentum in order to achieve success.

For HR managers to have real impact in the organization. with a proactive attitude. Current . The dialogue can be enforced through the use of a cross-functional team. at a rate compatible with their impact on decision-making. An open questioning. and draw appropriate conclusions by comparing the key performance indicators over time. dialogue about the meaning and relevance of programs. The measurement trap springs shut when HR managers are busily occupied monitoring sundry measures. 4) HR managers can avoid the measurement trap by monitoring key performance indicators. the purpose of specifics to performance management system to all involved employees.goals. HR managers should be prepared to regularly communicate. since the likelihood is greater that one measure among the set will relate effectively to their issues and concern. and/or against predetermined targets. even dissenting work culture should be encouraged which challenges the last best idea set forth. which monitors the system and ensures that relevant measures are being used and understood. 5) Line managers need to be actively involved when developing and monitoring and HR performance measurement system. and only key performance indicators. activities and measures must remain open. One of the great pitfalls of HR performance measurement system is opened when HR managers begin argue that their HR actions are undiscussable so long as their performance targets are met. and be prepared to clarify repeatedly the measures in use 7) Analyze the data regularly. which have little impact in the organization. 6) Communication is the sine qua non of effective change efforts. These comparisons may be made between business units.

The discipline needed to discontinue irrelevant performance measures should not be underestimated. or against units and organizations that are considered best in class. and perhaps in the longitudinal evaluation of the impact anticipated by the HR practice. the measurement should be flexible if a particular indicator fails to achieve business goals.benchmarking efforts assess the HR performance of business units against comparable units within the same industry. 8) Finally. . The benefit of keeping the same measures for a period of time lies in the historical comparability thus afforded. or if the costs of collecting and analyzing data exceed the potential benefits of their use.

and occupies a prominent place. This paper. (3) Scrutiny of outcome of publications. besides providing a review of literature on benchmarking. Decision makers are constantly on the lookout for techniques to enable quality improvement. Considering the growth of publications.LITERATURE REVIEW. Quite often. (2) Classification of literature. Benchmarking is one such technique that has become popular in the recent times. the benchmarking concept is understood to be an act of imitating or copying. . as stated by Thompson and Cox (1997). covers the following objectives: (1) Arranging the publications in an orderly manner to enable easy and quick search. and (4) Identifying gaps and providing hints for further research. It is essential that the present attempt is different from the earlier reviews and more broad based in coverage. But in reality this proves to be a concept that helps in innovation rather than imitation. some attempts have been made in the past to review the literature. Though benchmarking is not new. Many authors have contributed to the literature on benchmarking resulting in more than 350 publications as of June 2002. it has now found more subscribers. helping quality upgradation.

The different reviews in chronological order are: (1) “Roadmap to current benchmarking literature”. Productivity. (2) “A review of key publications on benchmarking: part I”. Vol. Benchmarking for Quality Management and Technology. for example Camp (1989a. Robert R. Vol. Benchmarking for Quality Management and Technology Vol. Mohamed Zairi and Mohamed A. (3) “Benchmarking: a select bibliography”. b. a new methodology for classifying the literature is suggested. Swart. etc. 1996. 1. 3. Readers are suggested to look into the cited literature. Andrew E. 1995. “A review of key publications on benchmarking: part II”. it is not the intention here to provide any overview or summary of benchmarking technique. October/December. Earlier reviews of literature on benchmarking It was found out during the current research that at least six literature reviews have been made in the past and all but one were studied by the authors. 6572. Youssef. 1992. S. c. 1993). Fuld (1989). pp. . 1995. Jackson. 607.N. Journal of Management in Engineering. e. This paper first provides a comparison among the earlier reviews on benchmarking and highlights the outcome in each case. pp. d. Next. 1994.. 1. Mohamed Zairi and Mohamed A. November/December. for learning about the basics of benchmarking. 36 No. The growth and categorisation of publications are presented in a graphical form for easy understanding. 3 No. Youssef. 1990. 2 No. The papers have been closely examined and scope for further work has been identified. Safford and William W. Vig. 45-9.pp.However.

and Darsch. pp. pp. 2/3. (5) “A framework for benchmarking in the public sector literature review and directions for future research”. namely “A review of benchmarking literature” by Czuchry et al. Yasin. 10 No. 91-115. A.(4) “A review of benchmarking literature”. International Journal of Product Technology. 3. J.J. (6) “Theory and practice of benchmarking: then and now”. Vol..J. 11 No. Czuchry. 2002. Yasin. Out of the six publications cited here. 9 No. 1/2. 1995. the fourth one. (1995) was not available to the authors at the time of preparation of this article and hence the authors could not use the valuable information of this publication for a comparative study. Jeffrey J. 1998. Yasin. Further. 27-45. a comparison among the earlier attempts to review literature on benchmarking is made using certain attributes. Mahmoud M. Dorsch and Mahmoud M. . The attributes considered for comparisons are: Focus and objectives: this refers to a brief coverage of the publications in terms of the content and the applicability. International Journal of Public Sector Management. 217-43.. pp. Vol. M. Vol.M. Benchmarking: An International Journal.

Number and type of publications covered: the number of publications listed and whether they are text books. . and (2) One of the author pursuing doctoral studies in the field of quality management. The course of action included the following steps: (1) Updating the database to ensure that literature is as current as possible. Two main reasons are: (1) Interactions with industries with focus on quality management. The collection of literature has been reviewed till June 2002. As a part of the research it was decided to classify and analyse the literature in detail. journal papers. conference proceedings or periodicals. Review methodology: this looks at the way in which the literature has been reviewed and classified. Over the last five years. the authors had several opportunities to collect and study literature pertaining to benchmarking.

both hard copy search in established libraries in . Those respondents who have been active in the business quality improvement initiative or have attended benchmarking training had the more positive attitudes.(2) For literature search. respectively. First a bibliographical list of all publications was developed and a file was created in Excel spreadsheet. (4) Keeping these observations in mind the authors decided to approach the review process in a different way. were obtained and to 18 staff and four managers in purchasing with nine (50 per cent) and three (75 per cent) responses obtained. These findings were mirrored when the respondents took a longer-term view. as illustrated in the next part of the paper BENCHMARKING: LITERATURE REVIEW OF ATTITUDES Once the policies and practices on plant maintenance spares had been obtained. from which 98 (27 per cent) and four (22 per cent) responses. The survey was sent to 360 staff and 18 managers in plant maintenance. Only 5 per cent thought that benchmarking would harm both themselves and the business. The respondents were positive (79 per cent) in their attitude to benchmarking. except that their view tended to harden. It is interesting to note that the .India and electronic search in World Wide Web were made. (3) Developing a classification scheme was the next step. with respondents either becoming more positive or more cynical. with a further 16 per cent believing that benchmarking would benefit the business but not themselves. respectively. a simple questionnaire survey to assess the attitudes to benchmarking was conducted.

In summary. in general. further efforts will need to be made to ensure that the minority of employees who currently hold negative views on benchmarking are exposed to relevant information. The critical factors appear to be the relevance of the material to them and the processes for which they are responsible. In general. either internal or external. with staff being prepared and willing to make the concept work. The people expressing the more positive views are managers and staff working within the purchasing function. In addition. neutral. on the subject. However.participation in a benchmarking exercise appears to have been of little influence in affecting the perception of employees. Even among the minority of respondents (5 per cent) who expressed a negative attitude towards benchmarking. Hence. THE BENCHMARKING PROCESS PLANNING: CLARIFICATION OF GOALS AND OBJECTIVES . 75 per cent wanted to know more about the subject. Care will need to be taken to ensure that the expectations of staff are met by timely feedback of relevant information. the actual numbers who have actively participated in the benchmarking process are still relatively small and their attitudes are. there is a positive attitude towards benchmarking. there is a need to sustain and build on the goodwill which is currently present. staff who had access to information on benchmarking and continuous improvement were more positive and wanted to know more.

For example. While there was a broad measure of agreement. and the plant maintenance and purchasing departments. with no linkage between the requirements of the ultimate customer (operations). and • critical success factors.The company‟s approach to benchmarking follows the ten-step process. It was eventually agreed that objective data rather than subjective opinion would be required if the team were to reach any rational conclusion. Consequently. sought to establish consensus on: • the organization‟s goal for the benchmarking study. A comparison of how the procurement processes should operate with how they actually work in practice were discussed at length. Following the examination of the spares procurement process the formalized benchmarking process commenced with the formation of the benchmarking team. • customers‟ requirements. in addition to agreeing its working methods. although it was agreed that formalized customer requirements should be laid out within the existing SLAs. described by Camp (1989). While it had been assumed that obtaining agreement on these matters would be straightforward. An examination of these agreements revealed a lack of clear and relevant performance criteria. it was decided that the measurement of . it quickly became apparent that there was a wide diversity of opinion between the team members. there was no agreement as to what the actual customer requirements were. some of the more critical observations sparked controversy between team members. • current processes. The first meeting of the team.

had to be abandoned due to the high cost of implementation. Previous attempts to tackle the problem of procuring and distributing spare parts to plant maintenance had come to nothing. He sought a solution which would improve availability. As the benchmarking study proceeded it became apparent that a more detailed specification would have highlighted the differing perceptions and made its goals and objectives much clearer. but the actual benchmarking was to be carried out in plant maintenance. the complexity of which had prevented earlier attempts to put all stock management out to contract. The purchasing manager hoped that the benchmarking study would help to define what the problem was and “to provide a baseline” from which he could work. The differing perceptions as to the true nature of the problem were: • The head of purchasing was aware of a stock management problem within plant maintenance.procurement cycle time and an audit of stock holdings within plant maintenance should be undertaken. A further complication came from the fact that the original impetus for the project had come from purchasing. Second. Notwithstanding the problems of defining . the outsourcing of the stock management to a third party deliberately excluded plant maintenance stocks because of the bewildering range of possible spares requirements. • The plant maintenance manager was acutely aware that spares‟ availability was a major problem and frustration for his staff. but also accepted that there was scope for improvement in the way staff managed the stock situation. The result was a unique situation where the impetus for process improvement comes not from the customer but from the supplier. the findings of an internal plant maintenance study aimed at improving availability by identifying and stocking critical spares. First.

where there may be competing goals and objectives. the team members were all agreed that they faced two problems. it was agreed that the projects should be divided into two. in the longer term. 1996). had the potential to save money through smaller stock holdings and improve availability through the sharing of resources. seek to improve its stock management with the critical success factor being increased stock turnover. there is no guidance as to how this might be translated into practical guidance for a functional department such as plant maintenance. Second. Hence. this second factor was considered to be the more important of the two. the available advice on selecting benchmarking targets is not good (Lincoln and Price. plant maintenance should. if managed in a more effective manner. there was the existing spares holding which. and in the longer term. in the short term. At this point. such as saving money . it was also agreed that if procurement cycle times could be both shortened and made more reliable. Camp (1989) does suggest that the benchmarking team should start with an examination of the company‟s mission statement and within a large company such as the utility in question. First. this may indeed be a suitable starting point for a strategic benchmarking exercise. but that some low value/high turnover parts would need to be retained as stocked items. First. The assumption was made that the principal aim was to eliminate stock holdings by developing an effective just-in time supply system. However. purchasing should seek to reduce the order cycle times. the need for most forms of stock holding could be eliminated.the goal and requirements of the benchmarking study. The project selection and specification problems encountered with the benchmarking study are not unique and have been aired in a number of texts on benchmarking. However. However. Following the measurement exercise on the procurement cycle it was further agreed that it was the order fulfilment element which was most likely to cause problems and delays.

PLANNING: IDENTIFICATION OF BENCHMARKING PARTNERS FOR STOCK MANAGEMENT The most basic and readily available comparative information related to the management of stores holdings in the utility. were about twice the utility average and four times the “best-in-class” level. However. In addition. The contention by Micklewright (1993) that in large companies strategic benchmarking projects cascade down to form functional benchmarking projects is not supported by the research reported in this paper. The only significant difference being the relative sizes of the various businesses. comparable figures can be obtained by expressing the stock holdings as being a percentage of turnover. Alternatively. there appears to be no literature dealing with the need to translate strategic benchmarking goals and objectives into process-related benchmarking projects. however. While stock did . relative to its turnover. but again this is beyond the scope of functional managers in a utility of the size which is the focus of this study. The assumption being that the utilities being compared have broadly similar business practices and are reporting to common accounting standards. are the stock holdings that are reported in the annual reports and accounts of similar utilities.versus improving service. Karlöf and Östblom (1993) suggest an examination of the broad issues before refining the benchmarking project to more specific issues. the fallacy of this approach became evident with the detailed examination of the host utility‟s plant maintenance stock holdings. Data were available to carry out this analysis for the last five years and by this means it was hoped to identify “best-in-class” performance. Using published sources it showed that the host utility‟s stock holdings.

the analysis gives no indication as to why certain maintenance units perform better than others.000 to £666. Using the criteria used in these accounts. Owing to the lack . the solution to this problem does not appear to lie within the plant maintenance function. Comparative data were collected on the plant maintenance stock holdings to facilitate an internal benchmarking exercise. This internal benchmarking of plant maintenance stock holdings revealed a wide disparity in the level relative to turnover. which if closed would see stock holdings decline by some 82 per cent to 96 per cent (£568.000). although the measurement of the procurement cycle time has shown that there are problems with the implementation of a (just-in-time) JIT supply system. However. there is no direct link to any problems that might exist with the supply of spare parts to plant maintenance. The data collected were crude. none was held on account and did not form part of the data that had gone into the company‟s annual report and accounts. in theory at least. which in turn highlighted the potential savings which are possible if “best-in-class” levels of performance could be achieved across the whole of plant maintenance. However. taking no account of the type or age of the plant which is supported and had to be made on the assumption that there was a broad similarity between the different maintenance units. Hence the need was clearly identified to benchmark a stock management system for low value stock and to benchmark procurement systems which will significantly reduce procurement cycle times.exist. Although the utility may well have problems with the wider issue of stock control. represented the perfect system. this internal benchmarking exercise does little more than establish a crude form of performance gap. Nor does it explain why disparities in “just-in-case” holdings of high value stock exhibit such a wide range of values. Given the ad hoc nature of the current stock management systems and the lack of reliable data. plant maintenance‟s nil stock.

using simple stock cards.000 this additional expenditure on manpower could not be justified. known as “expense stores”. Hence. despite its imperfections. and extra resources for the employment of fulltime storekeeping staff was unlikely. In addition. It was therefore recommended that the current system. It was decided to benchmark the military accounting system. be retained. It was assumed that: the vast majority of stock. to be fully effective the management system required some form of standardized stock code system.of formalized stock management procedures and data it was necessary to make a number of assumptions when considering potential external benchmarking partners. it was decided to benchmark a stores‟ management which is unsophisticated. both in barracks and on operations. inexpensive and simple for allgrades of staff to operate with the minimum of training. It was also suggested that it may be cost effective to employ a technical expert who could advise managers and provide liaison between the plant maintenance and purchasing functions. would be of low value. where individual maintenance units stocks appeared to be abnormally high it was recommended that a process of educating staff be undertaken.000 per maintenance unit to justify this additional manpower. . It was estimated that the expense stores would need to be reduced by about £206. the stores would have to be geographically close to the point of consumption and hence would be widely dispersed around the region. The main findings of this exercise were that the military stock management system was a simple and robust system that could be introduced into the utility without too much difficulty but that in order to manage the accounts properly a full-time storeman would be required. Used in all army units and sub-units. by line item heading. per store. In addition. As average stock holdings were only £20. this stock management system is normally operated by soldiers from a non-stores background.

The criteria used being an organization that was required to support a wide diversity of non-standard plant which was crucial to the operation of the business.PLANNING: IDENTIFICATION OF BENCHMARKING PARTNERS – PURCHASING As was the case with stock management. a service normally completed within 24 hours. all of which were basic procurement functions. it was decided to benchmark organizations which were perceived to face similar procurement problems rather than attempting to benchmark more conventional and routine procurement problems. For example. monitoring of procurement performance criteria and vendor rating. the . It was also confirmed that no form of vendor rating was operated or planned and that the purchasing department in the main reacted only to customer complaints. Potential benchmarking partners were discussed by the benchmarking team and it was agreed that the operations of electricity generation and nuclear waste reprocessing face problems similar to those experienced by the host utility. However. this revealed long delays on routine services such as electrical motor rewinds. In an interview with the head of purchasing it was agreed that this analysis showed that either the data were highly inaccurate or that there were serious supplier failings in the fulfilment of their contracts. Given that there was a need for more reliable data. enquiries made to assess the willingness of companies in these types of businesses to get involved in this benchmarking study coincided with the detailed examination of the extended times that existed within the procurement cycle.

. It was jointly agreed by the team members that the benchmarking exercise should be postponed until purchasing had improved some of its basic processes.step changes in performance which an external benchmarking exercise would identify was considered to be premature.

books.RESEARCH METHODOLOGY STUDY This research project is a descriptive type of study on the topic “BENCHMARKING OF HR PRACTICES”. Conclusion. Designing the method of data collection. which is used as a guide in collecting and analyzing the data. observations and fact-finding enquiry of different kind. RESEARCH DESIGN: Research Design is simply the framework or plan for a study. . Descriptive research includes websites. the research design must be made accordingly:       Formulating objective of the study. Analysis. As the objective of the research is descriptive in form. magazines. Selecting the sample size. It is the blueprint that is followed in completing a study. Collection of data.

Secondary data are those. books. which are collected afresh and for the first time. In our study we collected primary data or information from the ten manufacturing units.DATA COLLECTION PRIMARY DATA: Primary data helps in validation of the knowledge gathered from secondary data. magazines. and users can obtain from websites. and articles in newspapers. Primary Data are those. which are collected through someone else. 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. .

To know the benefits of benchmarking. journals and websites.DATA ANALYSIS OBJECTIVE OF THE STUDY: The objectives of the study are as under:      To study the purpose of benchmarking the HR practices. To analyze the trends and best practices for using HR for competitive advantage. The research tools are the magazines. Defining the factors enhancing the success of benchmarking efforts. METHOD OF DATA COLLECTION: The study is based on the secondary data. . To study the process and steps of benchmarking.

and may lead to worsened performance in the short-term. .  In newly industrialized countries.  High-involvement work practices may represent "competence-destroying" change. the elimination of status barriers. which is difficult to implement. performancebased pay.  Higher levels of managerial tenure had a positive and statistically significant association with greater increases in the use of high-involvement work practices. 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.RESULTS & DISCUSSIONS The literature refers to some key findings from research and lessons learned. investments such as increased training. and more selective recruitment and hiring practices were assessed by the corporate parent.

 Plants that undergo a major disruption in their operations – creating opportunity for various organizational changes .were more likely to adopt high-involvement work practices. . motivated. 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. Manufacturing technology is necessary but insufficient. 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. and committed management team and work force. 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. Organizations must enhance work force ability to improve productivity. Any competitive advantage will not be sustained without a skilled. Technology without a talented work force is an opportunity that has not been utilized enough. without work force commitment to performance.

Even the cost of implementing the findings from the external functional benchmarking of the military stock management system could not be calculated until the value of the plant maintenance stock holdings could be assessed.  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. if plant maintenance stocks had been included in the annual report and accounts. 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. reported stocks would have been boosted by 3 per cent. In addition to this problem it was clear that some of the maintenance units‟ spend profiles were being massaged. For example. Only two of Camp‟s (1989) ten steps were completed and of these it was theidentification of what was to be benchmarked which was the most problematic.Even after the benchmarking team had agreed a framework for the project theirdiscussions were hampered by the lack of objective non-fiscal data on which they could take decisions. This lack of reliable data. it did precipitate the internal audit and benchmarking of the plant maintenance stock holdings. 1989). However. . necessitated the abandoning of the competitive benchmarking exercise using published sources of data and meant that the external functional benchmarking of the purchasing function had to be postponed. This supports the views of Dick Homes (Rank Xerox European manufacturing director) in the need to get a fundamental data-gathering system in place if improvement processes are to succeed (Coyne.

as well as highlighting areas for improvement within the existing processes which were being examined. force a full and detailed review of the spares‟ procurement process and the logic which underpinned it. Within the procurement cycle the critical success factor. it can be regarded as a success. This. however. As a result. there are still potential problems with implementing the findings.Camp‟s (1989) benchmarking model was time-consuming and resource intensive. The benchmarking process did. the nature of the benchmarking process ensured that only those elements which were seen to be viable proceeded beyond the initial planning stage. with benchmarking study used only as an adjunct. the lack of reliable data and scope for simple improvements to the existing process. be it a direct or opportunity cost. this was due to the methodical nature of the process as well as the need to access. When the scope of the benchmarking was more limited. This supports Tucker‟s (1993) contention that the value of the benchmarking process is “from results”. collect and analyse data for which there were no established retrieval procedures. meant that it was difficult to determine where the real problems lay. Hence. however. in turn. however. which when multiplied by the 18 maintenance units could be considerable. If Harrington‟s (1991) approach of applying business process improvement to procurement‟s problems had been applied. Care will also have to be taken when selecting these resources. It did. led to the postponement of a benchmarking exercise on this function and a recommendation that its basic processes be simplified and improved. the potential savings derived from the benchmarking of the plant maintenance stock management system could easily be absorbed in . eventually produce the desired results. nugatory effort would have been avoided. as the system will only work if it is applied in a disciplined and consistent manner. Any new stock management system will have to be developed from scratch. the benchmarking of purchasing is still a viable option for the future. a considerable amount of nugatory effort was probably saved in the latter stages of the study. Although a failure in the short term. but because there is no current management input into the project. These additional human resources have a cost. as in the examination of the plant maintenance stock management system. it will require additional human resources. In addition.

could be planned and allocated in a logical and coherent manner. It would also ensure that benchmarking projects cascade down through the organization. Whether the benchmarking project is judged to have succeeded or failed in bringing about improvements to the plant maintenance spares procurement process.establishing and maintaining the system. but only within the wider context of a complex business environment. no practical or tangible solutions were implemented within the company as a result of the benchmarking project. When the potential stock savings that would accrue from a more efficient procurement system are also considered. to be a commercial failure in that the system would cost far more to implement and maintain than it would save. During the five months or so in which the research was conducted. but also guide other managers. but using the various benchmarking techniques to add focus. there can be no doubt that it has focused managers‟ attention on the problem. The benchmarking literature holds possible solutions to this type of situation. In each case the benchmarking process would not be a substitute for effective management but used sparingly it can help to identify and quantify the means of making breakthrough improvement. on the other hand. Such an approach would also mean that scarce resources. The three primary reasons for this lack of progress lay with difficulties experienced in gaining . such as information technology. on the one hand. Hence. each supporting the findings and implementation of the benchmarking project on the strata above. be judged a technical success in that the military stock management system was far superior to that currently operated by plant maintenance. The key is the conventional planning model. It is also clear that benchmarking in all its various forms has a role to play. Micklewright (1993) suggests that this concept is already applied in some large companies. With hindsight it is clear that the benchmarking project would have benefited from improved targeting of resources. This would not only help the managers directly involved in the process. the business case for implementing a stock management system within plant maintenance looks increasingly unsound. but. the challenge is to ensure that it is applied to all benchmarking projects. the benchmarking of the plant maintenance stock management system can. clarity and measurable performance targets at each level.

• The procurement cycle. with one exception. having lived and worked with their internal customers for years. the time from a spares requirement being identified to the time when the spares requirement has been satisfied) was judged to be the critical success factor. these have yet to address the key customer requirements. . This same principle applies down the supply chain with purchasing benchmarking the performance of their suppliers and this will be dependent on the quality. the procurement cycle (i. which are directly attributable to non-availability of spares.reliable and objective data. The use and application of SLAs has started to rectify this weakness.e. the lack of clear business objectives and poorly-defined customer requirements within the supply chain. however. it will not be possible to benchmark the service provided by plant maintenance to operations or to assess whether the existing spares procurement service provided by purchasing is satisfactory. In the case of plant maintenance this translates into: what level of plant availability is required? and how rapidly must repairs be effected? Until these fundamental questions are addressed. application of the benchmarking process methodology forced a systematic reappraisal and review of all these issues and of the procurement cycle as a whole and many lessons were learned. price and speed of delivery demanded of them by plant maintenance. Nevertheless. believed that they understood what their customers‟ requirements were but when challenged on this were unable to translate these requirements into any form of objective or coherent requirement that could be applied to the whole of the plant maintenance function. the main ones of which are indicated below: • Customer requirements. This was because a significant reduction in the time taken actually to deliver the spare parts and services required by plant maintenance would address two of the key problems: non-availability of spares when they were required and the holding of excessive stocks. Managers. As a result of the analysis and discussions that took place during the project planning phase.

The introduction of framework agreements and innovative developments such as the planned introduction of smart charge cards that can be used by the FSEs. which is peripheral to the main procurement cycle. An explanation of this may be that strategic HR practices have been used opportunistically rather than strategically. While these various problems will undoubtedly benefit from the management focus that benchmarking has brought to them. Unlike their financial counterparts.• PURCHASING. In this case the benefit was derived from the management focus rather than the application of the benchmarking methodology. This is not to say that the managers within purchasing have failed to seek and achieve meaningful improvements in the service they provide. means that the procurement function has become dependent on customer complaints as the sole method of measuring the effectiveness of the contracts it places. This is clearly inadequate as the feedback is neither objective nor uniform and relies on the FSEs having full access to and understanding of the contractual implications of the order that has been placed. it is probable that similar results would have been achieved had any quality management tool or technique been applied. 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. However. 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. the reliance on performance measure such as the order placement time. means that many purchases will be both faster and cheaper. The identification of the purchasing function as being the critical success factor and the failure to benchmark it highlights the need for managers to have a clear understanding of their business processes before they attempt to undertake a formal benchmarking activity. HR .

specialists are often ignored when strategic business decisions are made. Organizations that continue to seek solutions to their competitive challenges by downsizing. are mostly in the form of lessons for the future. and • The need to understand and improve current processes. Looking back on the research. • A need for clear customer requirements with objective measures. 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. and generate employee commitment and retention over the long-term. the project has proved to be an extremely useful tool in enabling the plant maintenance and purchasing functions to come together and focus on where they need to improve. where they have been accrued. However. 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. . outsourcing and weakening their organizational culture are now "on borrowed time" and will not be sustainable. If these points had been taken into account it would have avoided the false start in the benchmarking of the procurement cycle and lack of benefits so far derived from the benchmarking of the plant maintenance stock management system. It has also helped to motivate purchasing staff to action those areas identified as needing improvement. before attempting to benchmark them. The benefits. Organizations need to match HR policies and practices with long-term business strategies required to compete in the global market place. it is clear that there are few tangible gains for the effort expended on the benchmarking project. These being: • A need for clear business goals for the benchmarking project.

Resources should only be devoted to those parts of the business most suited to benchmarking and which will afford the most benefit. the rationale for plant maintenance and the levels of service it provides to operations would have been more clearly defined. which in turn may highlight problems with the supply of spare parts. It also creates problems in maintaining a high degree of rigour and integrity when applying the initial steps of the benchmarking process. it often does not result in a successful benchmarking exercise. From this perspective the benchmarking study was a case of the “cart coming before the horse” with the result that some of the effort was probably nugatory. Despite a belief that these goals. there was a broad consensus as to . The benchmarking process started with the formation of a cross-functional team. and a sound foundation for the step change that the benchmarking process offers. Similarly. He considers it useful to capitalize on the good name which benchmarking has. Having completed this basic process of improvement. The business quality manager of the utility believes that it is legitimate to use a benchmarking methodology to smoke out improvement opportunities which are then acted on outside of the benchmarking process. managers would have a far better understanding of their business processes. the repair process needs to be subjected to close analysis in order to determine if and why it is failing to meet the expected performance levels.Had there been a greater clarity and a better understanding of the underlying processes. this benchmarking study would probably not have been undertaken. Rather. objectives and requirements were clear. as with the case of this project. This approach has been used with considerable success across the utility but. it soon became apparent that this could not be translated into a clearly-defined unity of purpose. Its first major task was to establish what the goals and objectives of the utility were in relation to the project and how they related to the internal customers‟ needs. In turn. a pool of accurate data on these processes. in theory. This process of improvement could then be extended to the procurement cycle which needs to identify why there appears to be a problem with overdue orders. In this context. the benchmarking process should be subjected to the same rigour as is applied to other business processes.

benchmarking can and does work. employment or department. regardless of position. When challenged on subjects which could be perceived as being detrimental to their own performance or that of their department. both for themselves and for others. but perceptions as to how it worked in practice differed. as revealed in this literature review. when pressed on these weaknesses they usually conceded scope for improvement. Considering the gamut of publications it can be said that the benchmarking technique has seen a steady growth and appears to be heading towards maturity level. Almost without exception. There is. some naturally became defensive. for example. the benchmarking process is capable of identifying and promoting measurable improvements in business efficiency is to be made of the considerable management effort that is expended. There was also agreement that a critical success factor was to improve the management of the plant maintenance stores. There is a proliferation of literature on the topic of benchmarking in the last 15 years. The team all concurred that more objective data were required if there was to be a rational examination of the spares procurement process and agreement on methods of improving it.how the spares procurement process should work. Most staff expressed a belief that the benchmarking process would benefit both themselves and the business. individuals were genuinely open and helpful. The research also shows that unless a benchmarking study is put into the wider business context its efforts can prove nugatory. This showed that when applied to specific processes such as stock management. A scrutiny of the publications . but that the methodology during the preparatory stage can be very time-consuming. It was possible to examine some of Camp‟s (1989) “Ten-steps benchmarking model”. no point in expending time and effort improving the management of stock within plant maintenance if improvements within purchasing will deliver a genuine JIT supply system and so eliminate the need for plant maintenance to hold any stock. However. It demonstrates that when focused on specific issues. This finding was reflected in discussions and interviews with individuals. but in turn this would be dependent on improving procurement cycle times to produce a JIT supply situation. The attitude survey of all staff within both purchasing and plant maintenance shows a general acceptance of the benchmarking concept and a desire to know more.

Further it would allow to estimate the return on investment. Thus academicians. While a precise model is difficult. an approximate method would be quite useful. say in terms of cost models or cost equations. This would enable the decision makers to decide upon financial commitment before embarking on the benchmarking exercise. has identified certain issues which have not been satisfactorily addressed or not been addressed at all. have been covered in sufficient detail. practitioners and researchers have a good number of sources in the form of more than 300 articles. to study. because of variability of factors involved.show that several aspects of benchmarking along with many interesting and diversified applications. The overall cost incurred in carrying out a benchmarking exercise needs to be established. and to convince the top management. discuss and debate over many aspects of benchmarking. These publications can serve a great deal towards quality improvement. carried out as a part of on-going research. The issues identified are as follows: COST ASPECTS OF BENCHMARKING. . These issues can be regarded as inadequacies and they offer scope for further research and exploration. The present review of literature on benchmarking. DURATION OF BENCHMARKING EXERCISE.

and responsibility sharing among benchmarking teams. the superior performer as recognised in terms of market leadership or achievements/success rate. success rate may also significantly differ across organisations. No doubt. Selection of partner or superior performer. These organisations which are normally tight on budget cannot afford to venture investing sizeable resources. their duties and responsibilities. identification of tasks of benchmarking teams.Guidelines regarding setting up of a time frame for conducting benchmarking are not available. The resource requirement for full-scale benchmarking exercise needs to be carefully established particularly for small and medium enterprises. benchmarking is a wonderful tool for quality improvement. may not be willing to disclose the business practices. Rationale behind formation of cross-functional benchmarking teams. The human role in benchmarking activities needs to be clarified in complete depth to ensure better teamwork in a benchmarking project. If a method can be described to decide upon the total time involved in benchmarking exercise. HUMAN RESOURCES IN BENCHMARKING ACTIVITIES. Therefore. assuring success as proved by the rich literature cited in this . it would prove very helpful in setting targets and deadlines. legal and business aspects are to be further elaborated. Further best practices followed in a certain successful organisation may not necessarily be the best when adopted by other organisations. Eventually. This could be a major deterrent in the benchmarking process. Sometimes. have not been discussed in sufficient detail. any commitment towards benchmarking has to be justified in terms of assured returns. These issues need to be resolved to make benchmarking a preferred technique in the quality improvement efforts. SELECTING BENCHMARKING PARTNER.

benchmarking tool can be further sharpened. It is hoped that this paper has thrown light on certain dark areas of benchmarking thereby demanding further exploration on the topic. to make it more useful and a versatile tool in the quality toolbox.paper. . Applying the rule of continuous improvement.

us www. Alan. (1984) How to measure Human Resource Management.za. 12 June. R.nc.gov.com www.net www. (1989) Benchmarking: The Search for Industry Best Practices That Lead to Superior Performance.co.gibs. 131 – 137 Fitz – Enz. . R.osp.qut.dpc. Flower.fsed. J.ere. 1997. Harvard Business Review.wa.BIBLIOGRAPHY: Camp. New York: McGraw Hill www.com www.benchmarkoutsourcing.au www. January – February.com www. Milwaukee: ASQC Quality Press Eccles.state.org HR Practices for High Performance Organizations.globalbestpractices.edu. How to: Benchmarking? Personnel Management.au Article Reviews: www. (1991) “The Performance Measurement Manifesto”.

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