Benchmarking and metrics


I have taken the liberty of fowarding along this article about the use of benchmarking in the Human Resources field. While not specific to patient recruitment, this article does provide some further, helpful information for your reference. Please take the time to review it.

By Rebecca A. Richards B.Psych, Dipl.Tech (Hons.), CHRP and Tracy D. Gordon Dipl Tech (Hons)
Rebecca Richards, a Human Resource practitioner and author of nine books on Human Resource Management topics, is the director of Core Elements Outsourcing, a Vancouver-based firm. Her company has developed a complete range of Human Resources procedures and products to provide busy managers with practical, no-nonsense guidance on employee matters. Rebecca is the recipient of various academic and achievement awards and takes an active interest in development of the Human Resources discipline. Visit her web site @
Tracy Gordon is Client Service Manager of The Saratoga Institute Canada, Canada s leading benchmark surveying firm. Based in Vancouver, BC, The Saratoga Institute produces an annual benchmarking survey report, which provides organizations with over 85 metrics in all key areas of the Human Resources function. Currently over 180 Canadian organizations participate in the survey. The report has been produced in Canada since 1995.

The Emerging Role of
Benchmarking in Human Resources
As we approach the new millennium, Canadian businesses face some significant business challenges, but also see new opportunities to build sustainable success and competitiveness.

Those challenges and opportunities are being addressed through the people side of the business more than ever before, and thus impact directly on the role, transition and evolution of the human resources function within the organization.
It is critical to the ongoing business success of an organization to improve the return gained from its human assets. This allows the organization to consistently demonstrate the people management function and the value of their people assets.

For human resource managers this means leaner structures; a key focus on adding value, positioning for the future, and consistent benchmarking to ensure relevant and effective service structures and delivery systems.

What is Benchmarking?
One of the most quoted definitions of benchmarking is attributed to the CEO of Xerox,
David Kearns, who defines benchmarking as the continuous process of measuring products, services and practices against the toughest competitors or those companies recognized as industry leaders . It has also been defined as a systematic approach to identifying the benchmark, comparing yourself to the benchmark, and identifying practices that enable you to become the new best-in class .

How does it Work?
Benchmarkers aim to locate organizations that do something exceptionally well. That something becomes the benchmark. The process of benchmarking can be accomplished through various mediums: telephone calls, surveys, questionnaires or site visits to benchmarking partners. Once the data is collected, metrics applied and percentiles established, the investigating organization identifies the gap between its own performance and the benchmark.
In formalized benchmarking reports, data is presented using a range of percentiles. As a result, the investigating organization can chose to look at a market average, or strive higher and find the companies in the top 10 percent of the survey. Take for example, a financial services organization dealing with increasing turnover. They are interested in discovering what other banking organizations face in separation each year. Through benchmarking, they find that the average separation rate in their industry is 13.9%; but they decide they would like to measure themselves against the top 10% of their industry. This takes them to the 90th percentile and a separation rate of 6.7% – a significant difference from the industry average. They can now analyze the gap between their separation rate and the 6.7% benchmark.
Once the gap is discovered, organizations may wish to move to the next step â?” Best Practices. Best Practices is an associated process that identifies the reason that certain organizations are high performing (i.e. they describe the practices of top performing organizations.) It should be noted that while Best Practices reports describe what the top performing organizations do, the question of how to introduce changes in the investigating company to best help them close the performance gap, is left up to the specific organization. Best Practice reports provide benchmark metrics1, values and practices. The organization itself must decide how to adapt the information. Indeed, a key point in any benchmarking project is the idea that each organization has to figure out what to do with the data from the exercise (i.e. how to use it in a way that is most beneficial to their own operation).

Benefits of Benchmarking
Benchmarking can help key executives better understand the challenges ahead, make better decisions, develop stronger positioning and performance of the human resources function and increase the value of and contribution from the human assets, who are after all, the key drivers to future and sustainable success.1 A quantitative measurement or standard of performance on which a company can judge its performance.
Overall, the process can help a company determine its industry direction, trends and standards by forcing people on the inside to look out.
Specific to the Human Resource manager, benchmarking allows her/him to show senior management the human resource s contribution to the organization â?” to show that Human Resources is not only an expense partner â?” but that it actually adds value to the organization. Internal Human Resources benchmarking can aid in improving staff functions such as the hiring process or the exit interview process. It will tell a Human Resource manager when the department is understaffed or overstaffed; when the recruitment process is taking twice as long as their competitors; when the separation rates are rising, and where the problems lie. It is an infinite book of information. Finding internal Human Resources flaws and improving on them can add to the bottom line of the department and the organization. Benchmarking can show the Human Resources manager where to focus their priorities and attention. It can stimulate an objective review of Human Resources processes, practices, and systems and present a common target for improvement.

Key Areas of Benchmarking
There are several key areas of human resources which provide very meaningful and relevant insight into, and evaluation of, the performance and effectiveness of the people management and development within the organization. They include:
1. Organizational Performance & Effectiveness
2. Human Resources Structure & Resources
3. Compensation
4. Benefits
5. Separations
6. Staffing
7. Education, Training & Development
Having available measurement data of these areas helps the Human Resources department focus on where changes or improvements are needed and what action or intervention will provide the best results. They can: provide, assist and evaluate operating results; make relevant comparisons within the related industry group(s) or focus on top performing organizations; and take actions to improve operating performance and the return on investment in the human assets. Key trends in each of the areas of measurement will also indicate the changing and/or improving performance of the company as well as a comparison with the industry standards over the past several years.

Current Canadian Benchmarking Trends
Within the stronger-performing Canadian companies across all industries, overall performance has shown a small but consistent strengthening over the past four years. Revenue and productivity are up slightly (within these groups), while the operating expenses (resources used to achieve the revenue) have been very stable â?” at $302,749 in 1995 and $301,947 in 1998. The investment in the human assets and the return on that investment, both show a reasonable and consistent gain. The human resources function is generally in transition to a more focused, strategically based, client and consulting-oriented and change agent management resource within the organization. Again with leading companies in Canada, this transition is more apparent and the investment in and effectiveness of the Human Resources function has shown consistent increase and improvement over the past three years. We have seen the Human
Resources Expense Percent (the percentage of a company s operating expense that is attributed to the cost of operating an entire Human Resources department) move from 0.79% in 1995 to 0.86% in 1998. We have also seen the number of company employees per Human Resources personnel grow from 93 to 105.
The investment in compensation and benefits and the return on that investment has been very stable over the past four years. This however, has been very positive when related to the small and consistent improvement in productivity and the increase in revenues. Compensation as a percentage of revenue has moved slightly from 22.1% in 1995 to 22.5% in 1998; and the same is true for benefits as a percent of revenue, which we saw move from 6.1% in 1995 to 6.3% in 1998.
Over the past four years, separations have declined slightly on average, on both a voluntary and involuntary basis. Detailed information about where separations occur, by length of service, and when matched to demographic statistics, provide an excellent view of where the real issue is specifically, thus interventions can be very focused and direct. Hirings have closely matched the separations, although on a slightly higher level, thus indicating a very small increase in and a realignment of the work force in some cases. External candidates are approximately two thirds of all hirings, with about one third of job fills being for newly created positions. Hiring costs (the total investment in the recruitment process) have increase marginally, with the more significant adjustment being in supervisory, professional and management groupings.
The hiring cycle time has remained quite constant overall, for the past four years, with the only area of change being a slight increase in external hiring timeframes, especially in more specialized areas of employment.

Note: The above data is very general and may not apply to every industry. It is also derived from several different sources; hence one statement does not necessarily relate to another. It is however, a starting point. Other places you can find current benchmarks on training activities are the Internet and some private suppliers of benchmark information (e.g. the Saratoga Institute Canada).

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