5 Benefits of Benchmarking People Metrics

People Analytics has emerged as a key priority for most (71 percent) companies, according to a survey from Deloitte, but only a slim 8 percent say they have usable data.

A regular practice of benchmarking your People Data is a lot like competing at an athletic event. 

If you don’t know your opponents’ scores, how will you know if you are winning?

By benchmarking People Metrics, organizations gain context for understanding already available data, transforming facts into informative and comprehensive stories that inspire change.

Here are 5 benefits you’ll realize when you benchmark your people metrics:

1. An understanding of how you stack up against your peers.

There is much industry-level data available for HR leaders. For example, source compensation data is available from multiple providers like salary.com, Mercer and others. This type of benchmarking provides detailed levels of salary and total package by industry and job position. Without this comparative data, organizations are flying blind when determining compensation packages for key positions.

Finding the right peer group is also important for accurate benchmarking. Shebani Patel, Partner for People Analytics & HR Consulting at PWC, recommends that organizations establish groups that make sense for each specific metric. For example, turnover may benefit more from a geographical comparison whereas compensation might be more dependent on education and experience.

2. Ability to attract high quality candidates.

Benchmarking can move an organization’s recruiting from reactive to proactive, by helping define and attract a bench of the best potential hires. Knowing what high- caliber candidates are looking for is essential in writing the most compelling and successful job posts. Is it compensation, career growth, work flexibility, or a combination that will result in the most successful and high-performing employees?

Also, to measure the success of your recruiting processes, a clear understanding of key comparative metrics, like number of applications per job and time to fill from posting, provide context to judge how effective job postings are. As Business Insider highlights, a slew of applications isn’t always a sign that an open position is in high demand. Instead, it may mean the job description is missing the mark and attracting the wrong candidates. For example, if the industry standard is 65 applications per job, but a posting received 300 applications, the surplus may signal a need to hone the recruiting approach. Benchmarking this metric could signal a red flag, and you may recommend altering the approach or job description to ensure it reaches the best candidates.

3. A clear view of the health of your turnover rates.

Your organization’s turnover rates say a lot about the employee experience.

Benchmarking against industry standards can help distinguish between an organizational issue and an industry-wide norm. High turnover may signal issues with employee engagement, and a loss of key employees may indicate poor management or inferior professional development programs. Also, being able to align events and drilldown by sub-group can help isolate challenges. For example, if the turnover rate among new hires spikes alongside the rollout of a new training program, it could mean the program needs revision. Or, if a specific department has a high turnover rate, departmental leadership may be under-performing.

High turnover rates aren’t the only sign of trouble.

Low turnover rates could mean low performers are slipping past unchecked, which can be costly in productivity and demotivating for other employees. According to Workstride, a healthy turnover rate is typically about 10%, though of course, that rate can vary by industry.

4. A strong bench of succession candidates. 

In addition to bringing in new employees, it is also important to groom and queue up the next generation of leadership. Identifying your next line of leaders in advance both insulates your organization in instances of management turnover, as well as ensures timely fulfillment of new management opportunities where the organization experiences growth. Benchmarking can provide data on how long succession candidates might wait for the next opportunity and how long it might take to prepare them.

If leadership changes are not well planned, they can wreak havoc on an organization. In a recent study of the 2,500 largest companies across the globe, it was revealed that an average of $1.8 billion in shareholder value was lost when companies struggled to effectively fill CEO slots. One can only imagine that cost would increase exponentially if the same calculation was applied to the many VP and lower management positions in an organization.

5. A superior company brand.

Ultimately, three types of companies compete in an industry: Pacesetters who lead the way with above-average pay or benefits, middle-of-the-road companies that offer average pay but aspire to be pacesetters, and up-and-coming companies that tend to offset lower pay with equity, career opportunities, and other non-direct forms of compensation.

Which one is your organization? And, how do you want to be perceived as a brand?

Benchmarking your People Metrics allows you to not only to answer the first question, but also to establish a plan for driving the desired outcome to the second question.

Having a solution that can provide key people metrics and analytics for your organization is paramount to success in any field.

 

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