How to Prepare for the Next Wave of HR Benchmarking

HR benchmarking first hit the scene in 1980, giving organizations a way to assess relative performance for important measures such as turnover.

In this first wave of benchmarking, HR had to leverage surveys and other data that was often self-reported, and therefore subject to bias. The data was also typically 24 months old–which was “good enough” at a time when commercial markets were more predictable and industries evolved more slowly.

But now organizations are operating in a fast-paced environment, where data can lose its relevance more quickly. Vendors have responded by addressing some of the long lag times associated with traditional HR benchmarking, enabling organizations to access more dynamic insights.

Finding the right standards for each organization

The main benefit of benchmarks is that they help organizations determine whether they are lagging behind their industry peers. For example, you may be aware that you have a 13% turnover rate, but is that a problem?

Placing your organization’s performance within a broader context can certainly help you spot trouble and determine where you need to focus your energy. But the analysis shouldn’t stop there.

Consider how Merck KGaA used people analytics to challenge the global span of control benchmark of eight to 10 reports per manager. Merck’s analysis revealed their sales teams perform higher having a smaller team size than the global benchmark.

This approach to HR benchmarks will become more common in the near future. In our HR Trends 2020 report, we predict that people analytics will become even more accessible, making it easier for anyone within the organization to test benchmarks against internal workforce data and find the right standards. 

This is one example of how HR can use benchmarking data strategically. Your data is unique to your organization and should be leveraged to improve overall objectives. By seeking out ways to test external numbers against your own internal data, you can find the right standards for your organization.

Challenging standards is just one way that HR can use people analytics and benchmarking data strategically. As the availability and accessibility of benchmarking data increases, HR will also be expected to:

• Make benchmarks available in real-time. Gone are the days when benchmarks are only available in PDF and refreshed on an annual basis. Instead, this data will keep up to be more reflective of the current work environment, while people analytics technology will aggregate and anonymize this information, making it easily available—in real-time—to everyone who needs it.

• Benchmark everything. More data types mean HR will have the ability to compare and measure the performance of more workforce programs, such as employee skills or diversity and inclusion. Additionally, benchmarks will become more granular. For example, instead of looking at the overall balance of male and female employees, organizations can go deeper into exploring benchmark representation of women in leadership positions.

To improve your HR and business outcomes with HR benchmarking data, follow these tips:

• Integrate real-time benchmarks into your workflows.

  • The businesses that will succeed in the future are those that will react quickly to disruption. By having access to the most current benchmarks possible, you can pivot on plans or proactively make changes.

• Use analytics to test standards.

  • Measure your organization against industry and market data—then, use these findings to see how they stack against your organization’s goals. Strive for continuous improvement by being better than the average, and setting new goals that are informed by data.

• Consider making benchmark data accessible and self-serve.

  • When everyone has the facts and insights to support their decision-making process, you can create a culture of better decisions that contribute to more strategic outcomes. Understanding what is normal and what is not (at a broader level) can shake people out of insular thinking.

This topic appeared as “Trend #10: Benchmarking 3.0 Enters the Flow of Work” in our HR Trends 2020 report. Download the full guide to get more tips related to this trend and learn about 9 other trends that will impact HR and work over the next decade.