IMPORTANT TOPIC OF HUMAN RESOURCE MANAGEMENT – BENCHMARKING
Employees having JAIIB Certification across the nation can take the CAIIB test, one of IIBF’s premium flagship courses, twice a year. The CAIIB test has been scheduled for May 11th, 2022 by the Indian Institute of Banking and Finance. Bankers who qualify for the CAIIB may receive additional raises in compensation. In November, the CAIIB exam will be given. ABM and BFM are the two required papers, and one optional is also offered. Out of the six possibilities, including retail banking, rural banking, central banking, human resource management, risk management, and information technology, one elective is human resource management. In this article, we are going to discuss one very important topic of Human Resource Management and that is Benchmarking. But before discussing that, let me give you a brief idea about what is Human Resource Management.
The systematic and thorough management of personnel in enterprises is the basic definition of HRM. To complete the operations, this includes staffing (hiring people), retention, compensation and benefit setup and administration, performance management, shift management, and handling departing personnel. This is how human resources management is typically described, and some experts believe it to be a more contemporary job title for the previous personnel management role.
WHAT IS BENCHMARKING?
Comparing similar traits between companies, selecting the most effective procedures, and incorporating them into company policy are all steps in the benchmarking process. HR professionals can more accurately define the benchmark—the target they wish to aim for—after gathering data for comparison.
In order to improve their processes, businesses frequently benchmark against similar rivals in the same size or sector.
Internal and external benchmarking are the two main categories. While benchmarking for HR department processes is the focus of this article, it is utilized in many other corporate fields.
- Benchmarking internally
This is a comparison of two organizational components. A straightforward illustration may be the comparison of two employees’ productivity and performance levels. To determine which department has the highest profit ratio, departments can also be compared to one another.
- Benchmarking external data
The organizations being compared here are rival ones. The benchmarking company can determine its ranking quantitatively by using measurements that are shared by both (or by all). When compared to the top-performing business surveyed, they might, for example, be in the top 25% or possibly slightly below average.
The branches of this procedure are various types of measures and target organizations, with internal and external benchmarking as the trunks.
This kind of benchmarking compares a company’s processes to those of other highly regarded firms by looking at metrics (or statistics) pertaining to one or more of those processes. For instance, in HR departments, it can entail investigating how an employee is onboarded and whether that procedure helps with retention.
- Benchmarking of competitors
The competition benchmark technique analyses the total performance of the participating firms while the process benchmark procedure focuses on one area of an organisation.
- Functional or performance benchmarking
This evaluates how effectively a company is accomplishing its objectives. That could be in terms of profit/loss figures, client satisfaction ratings, or other success indicators. Given that the HR department can be compared to other departments in the company, like quality assurance, this approach for HR departments might be internal or external. However, in terms of things like net promotion ratings for the employer, it may also be compared externally to the HR departments of other firms.
HR benchmarking can deliver some beneficial and quite potent data. Benchmarking comparisons can reveal a lot when examining comparable firms. HR experts might identify any shortcomings in certain processes.
Read Also: CAIIB HRM LATEST SYLLABUS 2022
What can HR executives do to guarantee successful benchmarking?
- HR can: Implement effective benchmarking by:
Define the region of attention. HR executives can work with colleagues to identify the problem that needs to be fixed and create a question that the benchmarking process will try to answer. For instance, a business wanting to hire internal brand marketing designers can inquire about the kind of pay that will both match the company’s needs and budget while also luring top talent.
The measurements should be noted. HR executives can compare certain parts of their business to those of other businesses using different metrics. HR executives can gauge, for example:
- level of hiring
- Rate of change
- Market index for productivity
- The average salary for each employee
- Create a plan to put the changes into action. An executive-backed plan that accomplishes the specified goals can be put into action with the help of HR leaders and colleagues. Employee acceptance of the new changes can be improved by developing a thorough plan that fits with the corporate culture.
- Examine the long-term outcomes. In order to confirm that the new adjustments are producing positive outcomes after a predetermined amount of time, HR professionals should follow up and then give a thorough report to share with partners.
- Examine the gaps. HR leaders should compare internal and external indicators and consider what their company may do to replicate other businesses’ success. HR executives can make adjustments in line with business strategy using the data they acquire. For instance, a business can take pride in its high base salary. Therefore, they choose to increase base pay while cutting back on financing for employee wellness initiatives. In this manner, the employer can remain in line with the high base wage approach while giving designers’ compensation plans a competitive edge.
Why is Benchmarking Important for HR leaders?
Benchmarking can yield useful information for HR professionals. By using benchmarking, they can determine where their company’s methods fall short of those used by more successful businesses. HR directors may identify which procedures and policies are efficient and which require modification by looking at the causes of these disparities. HR executives can stay current on the continuously shifting environment of client demands by researching the business practices of rival companies. Benchmarking can help HR executives:
Recruitment, Engagement, Retention, Training, Budgeting, and Turnover Rate
What changes does benchmarking make to corporate culture?
Benchmarking is a continuous process of business development. Increased employee well-being can result in a more positive workplace culture. Benchmarking can also be used to improve the employee experience, pay, retention, and job satisfaction.
Read Also: CAIIB HRM MOCK TEST 2022
There isn’t a single benchmarking method that is widely used. Benchmarking approaches have emerged as a result of benchmarking’s widespread appeal and adoption. Boxwell’s Benchmarking for Competitive Advantage is a classic (1994). The first benchmarking book was developed and published by Kaiser Associates and is a helpful manual with a seven-step process. A 12-stage methodology for benchmarking was established by Robert Camp, who published one of the first books on the subject in 1989.
The twelve-stage technique entails:
- choose a subject
- Describe the procedure
- Determine prospective partners
- Decide on data sources
- Gather information and choose each partner.
- Identify the gap
- Determine any process discrepancies.
- Future performance goals
- Identify the gap
- Determine any process discrepancies.
- Future performance goals
- Adapt the objective
- Implement, evaluate, and reassess
An illustration of a typical benchmarking process is as follows:
- Identify the following companies as industry leaders: In every field and every nation, look for the greatest. To decide which businesses are deserving of investigation, speak with clients, vendors, financial analysts, trade associations, and magazines.
- Asking businesses about their policies and procedures: Businesses target particular business processes by conducting in-depth analyses of the metrics and procedures used to identify leading businesses and alternative business processes. Neutral associations and consultants frequently mask surveys to preserve sensitive data.
- Determine issue areas: A variety of research methods may be necessary because benchmarking can be applied to any company’s process or function. They include casual discussions with clients, staff, or suppliers; exploratory research methods like focus groups; in-depth marketing research; quantitative research; surveys; process mapping. It is important to understand the function and processes of the company before comparing it to other organizations; baseline performance serves as a benchmark for measuring improvement efforts.
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