How To Quantify Benchmarking And Promote HR Effectiveness

As mentioned in many management books, the first step in management is measurement.

If you do not know your true situation, it is very difficult to manage.

Human resources management of enterprises is even more so, it is necessary for HR managers and even top managers of enterprises to understand.

To measure whether human resources management is effective, we need to grasp the specific quantitative data of enterprises, and also need to understand the situation of external market benchmarks, and know what level they are in comparison with their enterprises, grasp the above data and analyze them accordingly, in order to find out the root of the problem, and combine their own practical experience for many years to form a targeted solution.

Your

So, how to measure the effectiveness of human resource management? What are the benchmarks?

According to Mercer consulting company's research results, there are eight types of benchmarks for measuring the effectiveness of human resource management.

These benchmarks can be used inside the enterprise, and can also be used for comparison with external benchmarks.

For example, why is the ratio of input to output of human resources increased? Why does the company's per capita sales increase and profit per capita decrease this year? What kind of inspiration can we get from it? Why our human resources input output ratio is different from that of other similar enterprises? These different comparisons will help management decisions.

Another example: the benchmarking of human resources function budgets is the biggest challenge faced by human resources managers, and often requires negotiations with headquarters on this issue.

Why do we need to increase or reduce budgets? What is the basis for growth and reduction? When we compare the budget with other data, such as per capita budget, we can provide many enterprises with valuable information.

What is our comparison with the same industry in the market? If we want to expand next year, our budget should be higher than that of the market, or we should maintain the original budget. After such data, the dialogue between HR and business executives and company executives will be more smooth and effective.

Find solutions

By comparing and measuring the internal and external data, we can help us to propose targeted solutions accordingly.

For example, for example, the input and output ratio of human capital, we can sum up the index of "total cash payroll cost effectiveness".

Total cash payroll cost effectiveness = operating income or pre tax profit / total cash cost.

Total cash salary = basic salary + cash allowance + bonus

What this index tells us is that when an enterprise sends a piece of money to the employee's hand, how much does this piece of money bring to the enterprise's income and profits?

This is a typical link between pay and profit data, and it is also a very concerned indicator for business leaders.

But for some

Total pay cost effectiveness = operating income or pre tax profit / total cost of remuneration.

Total remuneration cost = total cash salary + welfare

This index has a wider definition than the previous one. It not only focuses on the situation of cash wages, but also focuses on welfare, including statutory benefits and extra benefits paid by enterprises.

Interpretation of it can understand how much money is paid to employees, and how much income it brings to enterprises.

If we change the denominator from another point of view, we can get the concept of how much money the enterprise needs to earn a dollar, which is very helpful for enterprises.

If the company has a very ambitious goal next year, it will become a very large company, and our revenue will increase by one hundred percent. How much will it cost? This cost can be obtained through market data or historical data from the company. The inspiration for business managers is to talk about the support cost and the relationship between compensation cost and business growth.

If you are an industry company, you can compare your company data with external market data for business leaders and senior leaders.

Make good use of internal benchmarking

If there is no external data, we can make horizontal comparisons between different branches and business units within the company.

For example, what are the sales income of basic salary per person and basic wage per unit? What is the data of the two indicators of the 30 branches of the enterprise? You can find the median value of per capita capital wages and find the median value of total sales revenue / basic wage. Accordingly, they are divided into four types: the first type is the branch that invested more and earn more; the second category is the company whose per capita wage is not very high, but the ratio of input to output is relatively high; the third category is the company that pays less and returns less; the fourth category is the company with high per capita wage but low input output ratio.

By comparing and classifying these two benchmarks, we can read a lot of valuable information so that leaders of each branch can have a good idea.

You can also make a comparison of time series, comparing your data in the year before last year.

For example, if you want to know what the profit will be for the sales team to invest one yuan in the sales cost? What will the future be like if you maintain the current level of cost? And if you predict that the sales revenue will have a bigger increase in the future, how much will it cost to increase the sales cost? The industry and the Manpower Department will do the analysis based on this value and manage it effectively.

Another example is the comparison of employee characteristics.

In the first year, a high year-end bonus has been given to employees. How does this affect the performance improvement in second years? It can also be divided into several types. Some sales representatives get a high year-end bonus, which is stimulating, and second years will be well done and performance improvement is relatively high.

There are also some employees who improve their performance very well, but not because of the year-end bonus, which is the other way in which the company acts.

The third category is that employees have no motivation to give less money, and performance improvement is not obvious.

The fourth category gives more bonuses but not better ones. Other incentives should be adopted for these people.

By comparison, we can see that in the same group, managers do the same work, but the employees' demands are different, leading to their performance improvement.

In view of these situations, managers need to classify different employees.