As the war for talent rages on, organizations are constantly facing the challenges of acquiring good people while also protecting their own top performers from being poached.
To stay ahead of the competition, it’s essential to have good workforce intelligence and the confidence to act on it. This involves not only knowing what’s going on within the organization, but also in the surrounding market. That’s why many leaders have chosen to benchmark key metrics in their workforce for a comparison that will shield them from costly personnel losses down the road.
Internal Benchmarking
Before looking outside, it is important for an organization to first do its own internal benchmarking. Knowing where employees rank with regard to performance, tenure, demographics and compensation is the first step in assessing the health of the workforce.
Numeric attributes such as salary, tenure and turnover are easy to calculate within most analytics or dashboarding solutions, but the key is being able to easily apply these metrics. For example, after calculating the average salary for a specific job, it’s then necessary to visualize who is above and below that average and break that down by various filters. Are high performers being paid less than average ones; are females and certain ethnic groups less represented in management; is turnover greater in certain departments and with certain managers than others? Remedying these inconsistencies is a key first step toward stabilizing and motivating an employee base.
Analyzing Against Competitors
Once the right measures have been put in place internally, the next step is to view how the workforce is doing versus competitors. External benchmarking is where those organizational internal job metrics are then compared against similar marketplace ones that can be narrowed by industry and location.
This type of information is oftentimes purchased from an outside vendor or provider who specializes in aggregating such data. By importing these metrics and data points into an organization’s human resource (HR) or payroll system, they can be compared very granularly against internal jobs and the employees who do them. Without this type of benchmarking, organizations are blind to what they are competing against for talent. Thus, they will likely be caught by surprise when key high performers — who may, to that point, have been very content — leave for a financial package significantly higher than what they were making. Counter offering at this point meets with very limited success.
It’s important to note that benchmarks are not absolute. Knowing what is out there doesn’t mean an organization can or should always match what the market offers. For starters, it just might not be financially practical for some to provide a certain level of salary for a position. Also, the organization might have other compensating factors, such as ownership equity or higher incentive compensation designed to entice a certain type of employee. Additionally, factors like quality of life, working remotely and career development may contribute to salaries as well. As is common to say, use benchmarks as a tool and not a rule when applying them to workforce decisions.
Ensuring Good Data
Finally, when shopping for a benchmark provider, it’s important to do the research and ensure that you’re getting good data. Get samples of the vendor’s data and compare against those you can search on the web to establish a baseline. Also, make sure the benchmarks can be easily and often imported and applied to the organization’s systems to prevent comparisons to stale and out-of-date data. Then confirm that the benchmarks can be granularized so as not to be comparing generic national averages to a 100-person financial firm in a rural area.
