HR benchmarking is the comparison of one HR function’s performance and practices to those of another. It is a vital tool for keeping HR practices competitive and effectively using HR resources to meet business critical needs.
4 Types of HR Benchmarking
External HR Benchmarking involves comparing your HR function to the HR functions of industry peers or talent competitors.
Internal HR Benchmarking involves comparing different HR functions or units within your enterprise such as those serving different regions or lines of business.
Quantitative HR Benchmarking involves comparing HR function performance and practices from a numerical perspective using measures of cost, efficiency, productivity, cycle time, quality, and frequency.
Qualitative HR Benchmarking involves comparing HR performance and practices using non-numerical information collected in interviews, case studies or open-end survey questions.
6 Reasons Why Forward-Thinking HR Functions Use Benchmarking
- To identify opportunities for HR improvement
- To establish HR performance targets
- To identify methods of HR improvement
- To monitor HR performance
- To build business cases for HR investments
- To demonstrate the ROI on HR initiatives
5 Trends Elevating the Importance of HR Benchmarking
- Data-driven decision making has been embraced by business leaders and this necessitates that HR become equally data-driven.
- Economic uncertainty has business leaders proceeding with caution, placing extra scrutiny on expenditures and requiring a higher level of proof to justify HR budgets.
- Advances in HR technology, data management, and analytics are making it possible for organizations of all sizes to generate quality HR measures.
- HR reporting requirements are being put in place by various regulatory bodies while more and more organizations are adopting voluntary reporting frameworks such as the Global Reporting Initiative (GRI) and the Workforce Disclosure Initiative (WDI).
- Business and workforce changes are growing in volume and coming at greater speed— think the adoption of AI, shifts in policies related to remote and hybrid work, and the rise of Millennials and Generation Z in the workforce. Benchmarks are key for guiding and gauging HR’s adjustments.
Unlock the Potential of HR Benchmarking with APQC’s Expert Resources
APQC offers a wealth of resources to help you benchmark effectively. Discover how to select the right measures, interpret KPIs, and select meaningful paths to improve.
- Introduction to Human Capital Management Measures: Webinar Series
- Human Capital Management Best Practices
- Current State of HR Spending, Structure, and Staffing
- Current State of HR Process, Technology, and Analytics
- Current State of HR Challenges, Strategy, and Performance
Not yet an APQC member? Explore these complimentary resources to kickstart your benchmarking journey: