In today’s fast-paced world, businesses and their Human Resource departments are constantly searching for different strategies for improving their business operations. Regardless of industry, each organization ultimately seeks to maximize profits while using the most efficient processes possible. To accomplish this, organizations conduct benchmarking.
This process evaluates a company’s success and compares it to other similar organizations, especially industry leaders, to identify potential gaps in performance. One key aspect of benchmarking involves defining what “success” specifically means for your company. How does your HR department define “success” when reviewing business processes? Or is this concept more related to the quality of your products or services?
The Four Main Types Of Benchmarking
There are several ways to perform benchmarking. Some may be more effective than others in helping HR managers achieve their objectives depending on your organization’s industry. Suppose you are an HR manager at a growing firm that provides health insurance and employee benefits. In that case, you will benefit most by comparing your company to other businesses that provide similar types of benefits (e.g., 401k & retirement plans, wellness plans, PEOs, etc.). Here are the four main types of benchmarking your organization may conduct.
Generic benchmarking broadly compares how core processes or functions are practiced in a similar way without regard to the industry to gain a new perspective and way of thinking. For example, a local hospital may compare how quickly employees adopt well-being programs to its city’s employee rideshare program. Although they’re different industries and programs, HR managers can use generic benchmarking to gain insight into the tools and methods used to encourage program adoption. The advantage of generic benchmarking is the ability to compare your business to almost any other organization in the world.
HR departments will use this type of benchmarking when comparing results across different industries and processes by utilizing similarities in functional capacities. Functional benchmarking serves as a way to provide information on industry trends. For example, a medium-sized law firm could compare the adoption of incentive rewards for its employee benefits to those of nearby fitness centers. Alternatively, a luxury hotel could benchmark its customer service quality to that of an airline company. This information is invaluable in helping to identify performance gaps and maintain steady improvement.
Internal benchmarking refers to a comparison of one business process to another similar procedure inside of your company. For instance, you can evaluate how your organization’s health insurance plans’ price-quality ratio has changed over a given period of time (due to changes in the plans’ costs or the benefits offered). Conducting an internal benchmark is one of the most cost-efficient and simple benchmarks that can perform and it’s recommended that organizations internal benchmark their health insurance plan over time. A common internal benchmarking is employee surveys on the perceived value of health insurance benefits being offered.
This involves directly comparing one of your processes, products, or services with a competitor’s. An example of competitive benchmarking would be to compare the employee benefits or health plans provided by one manufacturing company in California and those offered by other firms in this industry. Gaining this type of insight can be very helpful in implementing strategies designed to attract and retain key employees.
Other Types Of Benchmarking
Aside from the four primary types of benchmarking, HR managers will use three other forms of comparing their business’s offerings to competitors. They are:
Process benchmarking is designed to help HR departments gain a more accurate understanding of how competitors’ processes compare to their organizations. This can help you optimize the efficiency of your business processes.
As its name indicates, this type of benchmarking pertains to your business strategies and how these may help you gain an edge in your field. Regardless of your industry, there are many different tactics you can take to become more competitive.
This is a relatively more difficult type of benchmarking because you need to understand key performance metrics (e.g., number of employees retained in a year) and processes to conduct it. You will likely need to devise a long-term change plan as part of the performance benchmarking process.
Speak To Professional Benefits Consultants About Benchmarking
Reach out to the professionals at New City Insurance in San Diego for more information on the different types of benchmarking consulting and which one may benefit your business the most. Since our founding in 2008, we have been dedicated to helping clients obtain customized, high-quality insurance and employee benefits solutions.
At New City, we invest substantial resources in benchmarking plan designs across a variety of industries. We can provide HR managers with industry-specific plans and average employer contribution amounts so that you may deliver tailored benefits packages to all of your employees. We always survey the market for data as part of this process, which will help you gain more workers and retain them year after year. Simply develop a vision for your business to change and succeed, and we will take care of the rest. Call New City Insurance today at (888) 210-2759 to learn more about our work or contact us online to request a consultation.