HR benchmarking is more than cost-cutting

first_imgHR benchmarking is more than cost-cuttingOn 17 Jul 2001 in Personnel Today HR teams that join benchmarking networks seem to be making a desperate, yetfutile, attempt to justify their existence. It is highly ironic, therefore,that the growth in the use of HR benchmarking seems to bear a directcorrelation with the huge losses in HR jobs through outsourcing. The mainreason for this is that benchmarking is using the wrong type of measures forthe wrong reasons. HR databases suffer from two fundamental flaws. Most of the data comprisesmeaningless activity measures (for example, number of training days per employee),which is usually of no great interest to anyone outside the HR department. Yet,when more business-focused measures are used (profitability per employee, forinstance), the database can show no causal connection to HR activity. One particular metric that I regard as the worst possible piece of data thatan HR department can collect is the “full-time equivalents per HRdepartment FTE” ratio. What is better, 100:1 or 50:1? Surely it dependsentirely on what the “1” HR person is actually doing. Would anyoneever try to gauge how effective a football team may or may not be on the basisof the players-to-manager ratio? No doubt accountants are interested in this metric because they regard HRcosts as an overhead, and overheads are usually a one-way street. So even ifyour FTE/HR ratio is the best on the database (although I’m still not surewhether “best” means lowest or highest), there will always bepressure to reduce HR’s cost. HR teams that have signed up to these databases seem to have missed the wholepoint about benchmarking. It is meant to be a continuous improvement technique,not just a cost-reduction tool. Improvements can and will come from increasingresources as well as reducing them. The only possible good I can see coming from such databases is that ifinefficient and ineffective personnel administrators want to act like turkeysvoting for Christmas, then they get what they deserve. This should free upprecious resources for those HR people involved in more important work. I would go further and argue that an organisation can never have too many HRpeople if they all actually add lots of value – an argument that any boarddirector can understand and accept as long as they see some convincingevidence. I would not say the same for accountants, however. The sooner we publishtheir FTE ratio, the better. Let’s see how they like it. By Paul Kearns, senior partner, Personnel Works Previous Article Next Article Comments are closed. Related posts:No related photos.last_img