12 December 2019

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The Need for Employee Benchmarking

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If we go by layman terms, benchmarking means comparing an entity with similar ones to test the standing and to see whether any change is needed. Elaborating it a bit more and with respect to employees, employee benchmarking is the systematic process of identifying the behavioral capabilities and qualities of those who perform well.

It uses such standards which help in determining the contribution of individual employees to the betterment of the organisation and to raise and maintain high standards of performance. With the help of employee benchmarking tool, the potential of new employees can be assessed and can also differentiate between top and medium performers.

Need for employee benchmarking

Change has been rapid and continuous. Improved competitiveness has made no organisation feel safe or isolated from market pressures. Corporates are being forced to adopt new methods and business practices to work more efficiently and consequently, there has been a phenomenal increase in quality management. To cope up with the tremendous pressure of staying ahead in the competition, employment costs began rising. Inevitably, there had to be reductions in other costs to obtain a balanced cost structure. This requirement gave rise to benchmarking to compare different units, departments and the most important of all, the human workforce or the employees of an organisation. Employee benchmarking in an indirect way expects the employees to deliver more and enable the organisation to keep abreast of the changes taking place, both internally and externally.

Scope of employee benchmarking

Employee benchmarking finds ample scope in the strategic decision making within an organisation and influences many heads and processes, like:

• Helps managers identify who all are the top performers in the organisation, what qualities make them one of the best and why do other employees struggle.

• Recruitment which is a very tedious and a costly affair too, can be improved and standardised with the help of employee benchmarking. Errors in the recruitment and selection process can be minimised by setting benchmarks for job descriptions.

• Achieving a certain level of employee benchmark calls for advancement and encouragement to higher standards, thereby motivating the employees to better their performance in order to excel from their peers.

• Employee benchmarking fosters a spirit of involvement and better understanding between team members since they understand that following and satisfying the set standards is directly related to rewards and recognition.

Implementation of employee benchmarking

Employee benchmarking is usually used to assess the aptitude and abilities of a group involved in or performing a similar job. The actual performance of each and every individual is compared with the set benchmarks for the entire job description and tasks. The areas which are normally covered in employee benchmarking are:

• Achievement of sales budgets
• Achievement of plans
• Ability to deliver effective customer service and care
• Leadership and communication skills

These areas had already some parameters set which are assessed in a period of time and based on the comparison between the set parameters and the actual performance, a rank is provided to every person in the sample group. This rank forms the basis of segregation between top performers and mediocre ones and also between those who have the potential to improve.

Strategic benchmarking target areas

Areas like productivity, costs, number of employees, sales, cash flow, profits, turnover and the like are considered under numerical areas which can be measured and are available for numerical analysis. However, employee benchmarking extends to more than these numerical areas and include some less obvious areas like working culture and the attitudes of employees, the value system, appraisal methods and management approaches.


Summing up, employee benchmarking is an instrument which demands support and optimum resource allocation from all the departments. The rankings and results of employee benchmarking can sometimes lead to process development, team restructuring or even business process reengineering.


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