When information on HR performance has been gathered, it must be compared to a standard. A standard is a model or measure against which something is compared to determine its performance. For example, it is meaningless to know that organizational turnover rate is 75% if it is not known what the turnover rates at comparable organizations might be.
One approach to assessing HR effectiveness is benchmarking, which compares specific measures of performance against data on those measures in other “best practices” organizations.
Benchmarking = Comparing specific measures of performance against data on those measures in other “best practices” organizations.
HR professionals attempting to benchmark try to locate organizations that do certain activities very well and thus become the “benchmarks.” One means for obtaining benchmarking data is through telephone calls, which then may be followed up with questionnaires and site visits to benchmarking partners. The most commonly benchmarked performance measures in HR management are:
- Total compensation as a percentage
of net income before taxes
- Percent of management positions
filled internally
- Dollar sales per employee
- Benefits as a percentage of payroll cost
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