Benchmarking has a been a key word for human resources since back in the 70′, this paper explores the issue of benchmarking within the human resource function of a company, first it will be define and discuss the concept of benchmarking within an organization, secondly it will be explore how has benchmarking evolve over the years and where does it fit in the day to day operations of a company and finally it will be illustrated how benchmarking is used within the tourism and hospitality industry to improve business performance and its operations.
Benchmarking is a process of comparisons of one company with another, which is suppose to be the standard or benchmark, in human resources, aspects such as wages, sales or production objectives are aspects in which peoples managers are suppose to benchmark against other companies to measure their performance (Bramham 1997, Fowler 1997). They would also want benchmark analysis of recruitment procedures, number of staff employed and employee’s productivity.
So in sum there different areas for benchmarking, some are within the human resource department, others are organization wide and can be numerical or strategic like culture, value systems, development and appraisal, management training and so on. (Bramham1997). Benchmarking should not be just a comparison of statistics of other companies, that can regarded as “Industrial Tourism” (Burn et al Fowler 1997), because that is just taking snapshots of what others are doing, but without penetrating in the real reasons that lie behind those performance gaps within the other companies and truly achieve best practice (Fowler 1997).
To achieve this so called best practice it is necessary for the company to reduce its performance gap, performance gap can be regarded as a the distance that exists between the performance of the competition and other companies (Bramham 1997), Bramham considers this as “Z” Charts and are regarded an instrument to measure performance. Figure 1. A “Z” Chart 1995 1996 1997 2000 Source: Bramham 1997.
According to Fowler (1997) there are 5 steps to make an effective benchmark process, the first one would be to elaborate performance indicators about those organizational aspects that can be improved and establish how to obtain the relevant data, the second one is to select a proper competition company from where to get the data from, the third step is to deeply analyse this data to detect any opportunity for improvement, in fourth place, there is the need to analyse the procedures of the competition and see if they are suitable to implement them in the company, and finally it would be to implement any changes in the processes of the company.
There is little point in collecting data to benchmark and not make improvements over it; some time a common reaction of managers to benchmark data is the justification of the current performance of the company (Fowler 1997). A similar approach is taken by Bramham (1997), for him benchmarking is a cycle similar to the management cycle, the first step is investigating, in here it looks at other companies to undertake comparisons of key areas by obtaining data. After doing this it comes the analysis of this data, preparing Z charts to determine the company’s position and discuss it.
Then it comes the planning part, this means deciding courses of action and predicting consequences: and then comes maybe the most important part ,the implementation of whatever was decided, as it was mentioned before, this is a cycle, which means that this process has to be reviewed constantly to keep it updated, which leads to the investigating part again (Bramham 1997). Figure 2 Benchmarking cycle. Source: Bramham 1997. Bramham (1997) also suggests that there are four types of benchmarking, internal, competitive, parallel and generic.
Internal benchmarking is about making comparisons within the organization; competitive benchmarking refers to comparisons with the competition, parallel benchmarking means comparison with organizations doing the same or very similar tasks and generic benchmarking refers to comparisons of key indicators of a company in a different industry (Bramham 1997). Benchmarking is supposed to get rid of non-productive activities and overhead support services, their overall objectives are to reduce costs, improve the service and develop staff within the organization (Bramham 2002).
Gathering information in practice can be either detailed or general, examples of detailed information can be ratios of human resources staff to company employees on training and development, recruitment and occupational health, or cost related issues like total personnel and human resources costs, training costs, cost of job evaluation and cost of occupational health; in a more general sense we can collect information about career planing, absence control and employee benefit programmes (Bramham 2002).
In the past when a company wanted to see the best way to get things done, it could look at the practices of a few companies that used to be the standard, for example IBM or Ford, but know there are a lot more companies, the best practice is difficult to find because there are best practices everywhere, so the monitoring of the company’s practices has to be constant now in order to keep up to date with the competition (Bramham 1997). From 30 years ago a body of knowledge and techniques has been accumulating to form benchmarking, as we know it today (Bramham 1997).
Bramham (1997) thinks that benchmarking as we know it today began at Xerox in the 70’s, benchmarking along with quality and problem solving are a very important part of a program of theirs called “leadership through quality programme” (p. 29), this shows that benchmarking has its origins in quality related issues. An interesting fact is that Xerox has taken both parallel and generic approaches to benchmarking, comparing itself with companies similar to what they do like Fujitsu and companies in a totally different industry like IBM, Hewlett Packard and Mobil (Anonymous 1995).
Event though benchmarking seems to be a modern business term, according to Patterson (1996), the first ones to do benchmarking where the Egyptians, by creating marks to re-establish property boundaries after the annual flooding. It has always been important to discover the best way to complete a process, but this issue became more important in the time of the industrial revolution and even more important with the mass production efforts of World War II (Patterson 1996).
Although this first points of view where focused on production, know a days benchmarking the human resource function is an important mechanism for a company to improve its efficiency and productivity (Patterson 1996). Benchmarking fits within an organization in its people, values and culture, it is suppose to improve a company’s efficiency (Greengard 1995). Benchmarking cultural issues and attitudes are not easily quantifiable and are more of a qualitative nature (Nazemet as cited in Greengard 1995).
There has to be an alignment between the benchmarking efforts and the corporate strategy, there is also the need to be aware when benchmarking because what works in one organization, does not necessarily works for another (Bent as cited in Greengard 1995). Benchmarking is about copying what other organizations have come up with, but to modify what others have done to adapt it to the company’s own culture, values and strategies (Greengard 1995).
Benchmarking is not meant to be the only solution for the company’s problems, there is no substitute for creativity and innovation; a company should not rely only on what other companies are doing (Greengard 1995). A wide range of activities can be covered by benchmarking at a operational level, these include budget needs, absence levels, training costs, simplifying recruitment process and reducing costs, pay levels, union relations and discipline (Bramham 1997).
By the use of benchmarking, it is more likely for managers and first line employees to consider operational problems (Bramham 1997). Although to solve operational problems does not guarantee may not have the strategic impact needed by the organization, for example an absenteeism problem should not be treated just as an operational problem because maybe the problem exists in deeper issues, like a dysfunctional culture within the organization (Bramham 1997).