How HRMS can improve HR benchmarking

Benchmarking has long been a best practice route to better business performance, comparing the organization with competitors’ performance measures in order to develop stretching but relevant targets to aim for. After all, you’re competing - you need to understand what and who you’re competing against. Benchmarking also fits well with more modern tools, such as Six Sigma and its define, measure, analyze, improve and control methodology.

Put simply, benchmarking can be fundamental to continuously improving performance, but in order to conduct a successful benchmarking exercise you need data. Unsurprisingly, your HRMS is a significant contributor…

Your HRMS data can support…

There are two different kinds of benchmarking that can be driven using data from your HRMS.

Performance benchmarking – comparing your people metrics with other, similar organizations is a way of identifying performance gaps, keeping pace (or overtaking) the market, and boosting performance. However, that depends on not only the rigor of the exercise but also what you do with the results. Often performance benchmarking is used to identify the company’s position ‘in the league’ and, if the result is good enough, the idea of using the data to drive change can be forgotten or ‘de-prioritized’.

Best practice benchmarking – if performance benchmarking is about ‘what’, then this is about digging down into the ‘why’ (why is our performance below our benchmarked peers?) and ‘how’ (and how can we improve?). By focusing on specific people processes and comparing your own to those of an acknowledged sector leader, you can fully understand your performance and what needs to happen to improve it.

Let's look at three specific examples of using HRMS for benchmarking.

1. Compensation and reward

If you want to attract the best talent, you need to offer a competitive reward and benefits package. Drawing on external sources such as and Mercer, you can develop a comprehensive picture of salaries and compensation in your industry. This information should be easily compared to the data kept in your HRMS and/or payroll databases to establish your chances of recruiting the best people for the job.

2. Turnover and retention

Similarly, this same data serves to examine turnover and answer the question: in terms of keeping the talent you have, how do you stack up? NB: if your turnover rate is lower than average, don’t pop open the bubbly just yet. First, check that it isn’t just that low performers in your workforce are going unnoticed and unchallenged.

3. Your employer brand

It’s common practice to test and measure your employee engagement, often via staff opinion surveys or some other views-gathering exercise. And it’s also common (and wise) to add your people metrics and other HRMS performance indicators into the mix, to explore how engagement and motivation are (or are not) driving business results. Now benchmark that data in comparison to your competitors and wider industry sector. Now you’re starting to see how your organization might be perceived both internally and externally. 

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Dave Foxall

About the author…

Dave has worked as HR Manager for the Ministry of Justice for a number of years, he now writes on a broad range of topics including jazz music, and, of course, the HRMS software market.

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Dave Foxall

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