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Reach Your Targets with These HR Benchmarking Practices

6 min read

HR Benchmarking is the process of measuring key processes and performance metrics to encourage growth and advancement in an organization. Much like the annual reports published by the CIPD, the regular analysis of people analytics can help companies drive effective decision-making and understand their performance in the context of the wider market. 

The process of benchmarking involves identifying key metrics, assessing where you currently are, determining where you want to be, and creating an action plan to achieve and measure your goals. The term can be applied to a variety of contexts, including engagement, job satisfaction, retention, training, and turnover. 

In this post, we will discuss the benefits of using HR benchmarking to reach your targets. We will also share a few best practices and discuss the benefits of using tools and software to help you reach your goals.

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What is Benchmarking in HRM? 

HR benchmarking is the process of measuring your company’s quality, performance, and growth against a series of targets. It is a continuous procedure in which organizations periodically identify, measure, challenge, and improve their business practices and procedures.

During the process, companies use both quantitative and qualitative people analytics data to make comparisons between and within organizations, sectors, and industries. Feedback can then be used to improve existing processes and procedures. It can also be used to identify gaps, strengths, and weaknesses, as well as develop best practices and strategies to promote growth and keep up with changing market trends. 

HR benchmarking can be used to improve:

Types of Benchmarking 

Generally speaking, benchmarking can be broken down into two categories: internal and external.

With both internal and external benchmarks, metrics need to be quantifiable and comparable. For example, you can’t compare the performance of your sales department with that of your logistics department if you have 20 sales reps but only 3 logistics administrators. To the same effect, if your company only has 20 employees, then you cannot compare your performance with that of a major multinational conglomerate.

Internal Benchmarking

As you can probably imagine, internal HR benchmarking is the process of comparing internal processes and procedures. This involves establishing a series of defined KPIs then regularly tracking these metrics to assess your progress. These KPIs might include retention levels, recruitment metrics, diversity metrics, performance, training and development, absenteeism, and employee engagement levels.

This type of benchmarking for HR relies on the regular analysis of reliable data. This helps companies understand how the various teams and departments are performing and whether there are any gaps and areas for improvement.  

The aim of internal benchmarking is to establish a series of standards – or benchmarks – which give each department within the company something to aim for. The ultimate goal is to establish consistency and continuous improvement at all levels of a company.

External Benchmarking

In contrast, external HR benchmarking involves comparing your processes and procedures with those of other comparable organizations. For example, you might compare your standards and results with those of your competitors and other players in your industry. This helps you understand how your company is performing compared to the wider market and determine which business areas you need to focus on to improve your performance. It also helps you position yourself favorably in the market in which you operate.

These benchmarks can be very useful for establishing annual business strategies. However, it’s not always easy to get hold of reliable data and HR metrics from your competitors which can limit the scope of the exercise. How easy this is will depend on your industry.

For example, for some industries such as government organizations or financial institutions, you can benchmark against publicly available statistics or data that you receive from external sources. However, if you work in an industry with less publicly available data then the metrics you have access to are likely to be limited.
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Benefits of HR Benchmarking 

Let’s take a look at some of the biggest benefits of benchmarking in HR:

  • You can use external benchmarking to understand how your business is performing compared to your competitors. It can also help you understand your strengths and weaknesses compared to the wider market. This can help you improve performance levels and stand out from the crowd.
  • Benchmarking against your competitors can also help you identify market trends and stay on top of industry developments. For example, you might identify that many of your competitors are offering wellness programs. You can then implement your own initiative and boost productivity, employee satisfaction levels, and retention rates.
  • Internal benchmarking can help you improve your existing internal policies and procedures. It provides you with an opportunity to assess all business areas in your company and implement measures to improve efficiency and performance.
  • Internal HR metrics and benchmarking can also help you design and implement attractive recruitment and retention programs. By raising your overall standards and striving for continuous improvement, you will be far more likely to attract top talent and thrive as a business. Plus, any improvements will impact the company culture and raise retention levels. 
  • Benchmarking can help you improve employee engagement rates and motivation levels. This is because focusing on improving workforce analytics has a knock-on effect on the workplace culture. It also helps you identify potential problem areas that could be impacting turnover and employee morale. For example, you might identify issues with management styles in certain departments that have a negative effect on engagement levels. You can then focus on addressing these issues and enhancing the employee experience.
  • Finally, benchmarking can have a positive impact on employee growth and development which is vital for the long-term growth and success of your company.

The Best HR Benchmarking Practices 

Here are a few HR benchmarking best practices to help you get the most from the process.

Identify which metrics you will focus on

The first step is identifying what your objectives are. What do you hope to gain by focusing on HR metrics and benchmarking? Is there a key area where you would like to see an improvement? Make sure you involve all managers and senior executives to see what they believe the company should be prioritizing. You can then use this feedback to decide which metrics you should be tracking.

Establish how you will collect data

Make sure you establish clear methods for collecting relevant data. For external benchmarking in HR, this will usually involve sourcing third-party benchmarking reports with publicly available data. 

For internal benchmarking, you need to establish clear channels for HR reporting so that you have access to the right metrics in real-time. The best way to do this is by using the right tools and software to track all your HR metrics. 

Set goals for improvement

Once you have established a regular schedule for collecting and analyzing your benchmarking metrics, you need to set goals for improvement so that you have something to measure your progress against. You also need to create an action plan to help you get there. Make sure your goals are realistic and achievable. 

Analyze long term results and monitor progress

Regularly track your metrics to see how you are progressing. Create and share regular HR reports so that all managers are aware of how each metric is evolving. A good way to ensure the regular communication of reliable and relevant data is by using an HR dashboard and software reporting features.

Facilitate the HR Benchmarking Process

The only way to gain true value from HR benchmarking is by having access to reliable and up-to-date data. HR metrics and benchmarking go hand in hand. Your data needs to be relevant and specific, and it should be available at the click of a button so that your metrics reflect the true state of the company in real-time. 

Factorial’s HR software includes reports and analytics features so that all your HR metrics are located in one place. This means all your data is summarized and you can manage information at your fingertips, speeding up the process and refining data collection.

Factorial’s human resources reporting and analytics features generate personalized HR reports from data stored on your Factorial account. Our HR and analytics panel creates a customized space to manage all the reports. 

What’s more, our ‘all-in-one’ centralized HR software platform includes a vast array of features to help you push your company to the next level. Our applications include time tracking, time-off management, applicant tracking systems, dashboards for hiring, training, performance and diversity metrics, HR KPI templates, OKR templates, and document management solutions.

Sign up now and start improving your HR management with Factorial! If you’re still not convinced, why not try our 14-day free trial?

Cat Symonds is a freelance writer, editor, and translator. Originally from Wales, she studied Spanish and French at the University of Swansea before moving to Barcelona where she lived and worked for 12 years. She has since relocated back to Wales where she continues to build her business, working with clients in Spain and the UK.  Cat is the founder of The Content CAT: Content And Translation, providing content development and translation services to her clients. She specializes in corporate blogs, articles of interest, ghostwriting, and translation (SP/FR/CA into EN), collaborating with a range of companies from a variety of business sectors. She also offers services to a number of NGOs including Oxfam Intermón, UNICEF, and Corporate Excellence - Centre for Reputation Leadership.  For more information or to contact Cat visit her website ( or send her a message through LinkedIn.

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