Benchmarking of Hr Practices IT SECTOR

CONTENTS TOPICS PAGES 1. Introduction 1-2 2. IT SECTOR 8-13 Objective 14 Definitions 15-16 BENCHMARKING 3. Introduction 17-20 4. History of benchmarking 21-33 5. PURPOSE OF BENCHMARKING 34 6. NAVIGATING HR BENCHMARKING 35-44 - BENCHMARKING MODEL -BENCHMARKING PROCESS -STEPS OF A BENCHMARKING PROCESS 7. BENCHMARKING THE 5 HR FUNCTIONS 45 8. DIFFERENCE BETWEEN BENCHMARKING AND BEST PRACTICES 46-47 9. COMPANY ANALYSIS 48-49 FACTORS ENHANCING THE SUCCESS OF BENCHMARKING PROCESS BENCHMARKING BEST PRACTICES, RECRUITMENT STRATEGIES AVAILABLE ONLINE NOW 10. RETENTION 50-57 11. BENEFITS OF BENCHMARKING HR PRACTICES 58 12. RESEARCH METHODOLOGY 60 - DATA COLLECTION 61 - DATA ANALYSIS 62 - ARTICLES 63-68 - EXAMPLES OF TOP 10 BENCHMARKING FIRMS 69 - SUMMARY OF THE BENCHMARKING INTERVIEWS 70 13. FINDINGS 71-72 14. CONCLUSION 73-79 11. BIBLIOGRAPHY 81 15. SYNOPSIS 82-93 INTRODUCTION The current scenario in the IT sector India has the largest pool of manpower, second only to the US. According to a study conducted by the National Association of Software and Services Companies (NASSCOM)-quantity of skilled knowledge workers in India seems to be a non-issue, and it would be so atleast for another couple of years. The arithmetic out of 1.22lakh engineering graduates qualifying every year in India, about 73,000 are software engineers from IITs and other RECs. Thus, around 73,000 fresh software engineers are expected to be available annually. Total demand for software professionals during the next couple of years is estimated at 1.40 lakh. Against this, India is expected to have a pool of 1.46 lakh software engineers. Besides, quite a few Indian universities have started courses leading to Masters in computer Applications and there are private Training Institutes which offer high level software engineering courses. According to an AIMA survey, 60% of the IT Companies have a written job description of all levels of employees. The rest 40% either have a partly written job description or they donot have anything written at all making it difficult for both the employee and the employer. Most CEOs site lack of skilled professionals as one of the major hindrances to growth in the Indian Software Industry. Reputed software companies might get people at the base level but getting somebody with an experience of more than 4-6 yrs is a problem. The problem of retention was more prevalent in the telecom, IT and the Services sector than manufacturing and traditional sector. When asked about employee retention, the majority among HR professionals of IT felt that it was all about retaining good people in the company and creating such situations for the non-performing employees that they quit on their own. It was felt that employee retention was a collective responsibility of the HR department, top management and individual departments in an ascending order with the HR Department having the maximum and individual department having minimum accountability. Data shows that in companies with more than 1000 employees, the HR Department was strong whereas in mid-sized companies, the individual department was responsible along with the top management. Large companies with growth rate higher than 10% did not face serious retention problems, but large companies with lower growth rates had acute problems in retaining their employees. In all industry segments, the employee attrition rates at the junior level were on the higher side compared to that at the top management level. Studied over the last two years, retention levels have either increased or remained same due to better compensation, healthy competitive environment, higher profitability of the company, and good working conditions. But the case is not so with the IT sector, where the key motivator is the lure of U.S market. The IT industry has so far witnessed three major changes. Each changeover has been marked by emergence of technologies that have dramatically increased the number of it users and applications riding a new wave of growth. Elements of the previous period remained, but new technology was the driving force in the growth of it industry in the new period. The first period marked the beginning of mainframes and ushered in computer technology but usage was limited. In the second period mini computers led the IT growth and helped automate several business processes. The third period which began some 20 years ago, belonged to the pcs and client server technologies. Of applications and it industry revenues. This fueled an’ order-of- magnitude’ growth in the number of users, the number of applications and it industry revenues. Much of this was achieved by making it products available at cheaper rates, which enabled manufacturers to widen and deepen the market. The fourth period, which is in its early stages, is the internet era or the wired market era. The wide and instantaneous reach of internet, displays its potential to fuel another order-of-magnitude growth in the IT industry. This would obviously require selling at still lower price points and revamping current distribution strategies and marketing approaches. The internet era provides another opportunity to grab leadership positions- not only in the IT sector but several other industries as well. Companies, which are quick to react and take the initial lead, will grow faster than those who fail to do so. Already the corporate are using the internet to deliver product information, establish corporate identity, provide customer service, advertise etc. Internet also provides a cost to effective communication medium. Apart from e-mail, it can used to make inexpensive phone calls, videoconferencing, real- time interaction etc IT and the changing role of HR In today's competitive business environment, company workforces are in a continual state of flux – skill sets and job requirements as well as the regulatory environment change at such a rapid pace that the staff needs of tomorrow are very different to those of today HR has therefore become a huge investment for medium and large companies across industries, with people-related costs averaging over 60 percent of total corporate expenditures. The leading firms have been taking steps to ensure that they extract maximum value from their HR investments, introducing models that go beyond basic HR functionality to embrace new ways of improving the quality, efficiency and productivity of their workforces. These businesses recognize that, to be fully effective, HR programs require new processes, supported by leading technologies. For these companies, the silted HR department, focusing predominantly on basic administrative, record-keeping and transactional duties, is a thing of the past. Businesses now realize that a strong foundation of information about individuals is a highly valuable organizational resource that can be used to drive efficiencies throughout the business. Of course, "People are our greatest asset" is a mantra that companies have been chanting for years. Yet it is only relatively recently that businesses have started putting HR systems in place that support this philosophy. As a result, the information that sits inside the HR department is being made available for effective use throughout the wider organization, helping companies align their workforces with long-term business objectives. The backdrop to the introduction of these new systems is the uncertain business conditions that followed the economic downturn. This situation has resulted in a relentless drive for cost control, which affects the HR department as much as any other. HR now has to demonstrate that it can develop and deliver programs as efficiently as possible, providing greater value at a lower cost. The current economic environment has also forced firms to become more nimble. The time to evaluate before taking action has decreased dramatically; organizations now have months or quarters instead of years to modify and execute business plans to take advantage of opportunities. As a result, increasing workforce flexibility and responsiveness is a key objective for HR departments in leading companies. These competitive conditions have led stakeholders throughout enterprises to demand an end to the siloed nature of employee data and quicker, more frequent access to information that can help all levels of leadership make better business decisions. According to the Chartered Management Institute, 80 percent of a company's worth is tied to the value of its employees, yet there has traditionally been limited access to such workforce data outside the HR department. Managers have lacked visibility into even the most basic characteristics of their workforces, yet alone been able to answer more detailed questions about areas such as staff certification and training levels. Yet with increased access to information on their employees, organizations can incorporate processes for leveraging worker skills across the enterprise, which in turn allows them to be more flexible. Firms with an in-depth view of employee competencies across regions or markets can immediately locate "best-fit" candidates, identify and resolve skill shortages, and re-allocate resources in response to changing conditions. In doing so, they often avoid expensive layoff/rehire cycles that sap morale, productivity, and profits.Take Trintech, a provider of transaction management and payment infrastructure solutions to financial institutions, payment processors, enterprise retailers and network operators. The company found itself unable to optimize its human assets as its rapid growth and business acquisitions had resulted in a number of disparate human resources packages being used across global sites. From the central HR system at its headquarters in Dublin, Ireland, Trintech had no direct access to personnel information from its regional offices. Data had to be transferred manually between the different systems, a costly and time consuming operation. A few years ago, the company decided to replace its legacy HR systems with the Oracle Human Resources Management System (HRMS), a single, Web-enabled solution accessible by all its global human resources departments. Oracle HRMS has provided Trintech with vastly enhanced reporting capabilities and business intelligence, while improving the accuracy of information and reducing duplication. The system has eliminated the silos of information that existed across the group, thus enabling seamless collaboration across business units. The company's managers can view relevant data about teams from any location and therefore make faster, more informed decisions. As a result, HR staff have time for valuable strategic activities such as ensuring the company has the necessary skills to meet its future needs. Once companies have this kind of in-depth, accurate view of their workforce, they may find that they are less dependent on "quick-fix" solutions to solve problems relating to employee or skill shortages. In recent years, businesses have become dependent on non-permanent staff to cope with short term staffing short-falls. Yet finding, hiring and managing temporary workers, who can constitute up to 40 percent of a company's employees, requires significant organizational resources. A contingent workforce is the number one commodity spend for many companies - as a result, the perceived cost savings behind deploying temporary labor in the first place are often cancelled out. With access to detailed, timely information about their current workforce capabilities, a company looking to fill a role might discover that there is already someone with the necessary skills within the organization, or an employee who requires minimal training to fulfill the role.Access to centralized workforce data through a core HRMS system not only enables companies to measure and leverage their workforce capabilities, it also allow them to manage risk by monitoring and recording compliance with statutory, regulatory, and industry requirements relating to their employees. A myriad of government regulations must be addressed by today's businesses, and many include severe penalties for non-compliance. Statutes vary dramatically by country; some examples include EEO/Affirmative Action and Worker's Compensation in the US, Statutory Sick Pay in the UK, Minimum Training Hours in France, and Working Time Directives in the European Union. While managing compliance has become an additional responsibility of the modern HR department, technology has ensured that the traditional administrative and transactional elements of HR have been minimized. Progressive organizations have introduced automated workforce management processes to reduce the cost and cycle time of HR processes, with the additional aim of improving user satisfaction. One example of this is Employee Self-Service (ESS), which has been rapidly climbing up the corporate agenda over the last few years. The concept of pushing access to HR information and transactions out to workers has actually been around since the mid-1980s with the deployment of interactive voice response (IVR) systems. It progressed to the delivery of initial Web-based ESS modules in 1996 and 1997, and ESS is now a mature product offering for most core HRMS applications. Automating HR transactions and giving employees online access to central systems offers companies the opportunity to achieve two often-conflicting goals - improving HR service levels while cutting costs. Previously, even something as straightforward as changing an employee's home address was done through a paper form or e-mail, requiring information to be re-entered into a central system by an HR administrator. More complex transactions, such as transferring an individual from one office or region to another, would involve extensive paperwork, management resource and support. By automating these processes and allowing employees to serve themselves, much of this overhead can be eradicated. The efficiency benefits of ESS are well documented; for example, The Cedar Group's "Workforce Technologies Survey" indicates an average 43 percent reduction in transaction cycle time in 2003 and 2004. Adoption is steadily increasing, spreading from the Global 2000 (e.g., $1 billion revenues and above) to mid-sized companies. While ESS activity was initially focused on providing access to HR policies and procedures, sophisticated self-service transactions are now commonplace. For example, according to META Group, the most popular ESS application is benefits enrollment, utilized by 65 percent of respondents. Increasing the depth and breadth of ESS functionality remains a primary goal for many firms. Participants in the META Group study listed ESS as the area of strongest interest for investment over the next three years, particularly medium and large-sized organizations. Another key area for workforce automation is Manager Self-Service (MSS) described by the META study as the "next frontier" for many organizations. MSS includes multiple components, which are often deployed in phases. Typical phase one deployments include access to reports and the ability to view subordinate worker data and organizational hierarchy information. Later MSS phases may include online compensation planning and performance reviews (sometimes including guidance on how to accurately and consistently describe levels of performance). Organizations are now using MSS to enable the manager to perform work events online (e.g., signing off holidays, transfers, promotions, hires, terminations). According to The Cedar Group survey, use of MSS is positively linked to business results. One of the critical enabling technologies of this HR process automation is workflow, which removes the need for traditional paper-based approvals by replacing paper forms with electronic notification, reminders, routing, and approval. Robust workflow serves as the foundation for HR process improvement, as it delivers substantial cycle-time reduction and enables the linking together of multiple applications into a cohesive set of capabilities. Trintech, for example, receives automated email alerts using Oracle Workflow technology when an employee's contract is due for renewal or a probation period expires. The automated notification typically includes a direct link to the item requiring attention, so the manager does not have to spend time locating the application, signing in, or searching for the relevant record. As with any technology implementation, companies may encounter cultural resistance in implementing employee and manager self-service. Some industry commentators have argued that the industry hasn't done itself any favors by creating the term "employee self-service", since it implies that employees are taking on work that was previously someone else's responsibility. Additional concerns include HR administrators fearing that self-service will make their roles redundant, or managers worrying about losing control over approval processes.Winning buy-in by highlighting the benefits to employees above corporate cost saving is therefore crucial. Some employees are persuaded by speed - the ability to book holiday time online, for example, or the fact that expenses are paid more quickly because the approval process is automated. Others will welcome the convenience of being able to browse benefit information from home. Self-service functionality also empowers employees to take more control over their own career paths, by providing them with the ability to enroll in training courses or update performance goals online. There are indications that employees' support for self-service is largely positive; The Cedar Group survey indicates 50 percent improvement in employee satisfaction. Better decision-making, significant employee benefits, increased efficiencies and reduced costs all create a compelling argument for implementing HRMS systems. For the HR department, these technologies provide the potential to break away from its administrative quagmire to become a front-line function embracing more strategic responsibilities that positively impact the success of the enterprise. Once time-intensive processes are streamlined, HR professionals are freed up to focus on achieving full workforce optimization, a key source of competitive advantage and, ultimately, profitability, as it means resources can be aligned with the company's business goals and used strategically. OBJECTIVE The boom in the information technology revolution has been rising during the recent past and is expected to go on for many years to come. Attracting the best professionals is never easy, no matter what industry segment we consider. This is especially true in the case of the IT industry where the attrition rate has been the highest. Attracting and retaining talent has become a Herculean task in this sector. The objective of this project has been to find out the major causes of employee turnover in the IT companies. It also looks at how this brain drain can be reduced and what methods can be adopted to retain the knowledge worker in the company. The project focuses on: The importance of retentior in the IT companies. Most effective methods to find the cause of turnover. Factors favoring retention. Innovative methods adopted by companies to retain people. Constraints faced by the organization in implementation of retention strategies. Effectiveness of the methods used to retain people. DEFINITION What is Benchmarking? "Benchmarking is a process for identifying and importing best practices to improve performance."  Benchmarking is not a simple comparative study, simply copying practices from other organizations, or simply assessing performance. The International Personnel Management Association and the National Association of State Personnel Executives jointly developed the following definition for benchmarking: A comparison of similar processes across public and private organizations to identify best practices to improve organizational performance. The characteristics and attributes of benchmarking include measuring performance, systematically identifying best practices, learning from leading organizations, and adapting best practices as appropriate. Benchmarking essentially involves learning, sharing information and adopting best practices to bring about changes in performance. To simplify this, it can be stated as: 'Improving ourselves by learning from others' In practice, benchmarking usually encompasses: regularly comparing aspects of performance (functions or processes) with best practitioners; identifying gaps in performance; seeking fresh approaches to bring about improvements in performance; following through with implementing improvements; and following up by monitoring progress and reviewing the benefits. Alan Flower (1997) lists 5 main stages in effective benchmarking: Selecting aspects of performance that can be improved and defining them in a way that enables relevant comparative data to be obtained - in effect, producing performance indicators that will make sense to other organizations; Choosing relevant organizations from which to obtain raw or headline data; Studying the data to identify possible opportunities for improvement; Examining the procedures of the best-performing organizations to pick up ideas that can be adopted or adapted to achieve performance improvements; and Implementing new processes. Organizations usually benchmark performance indicators (e.g. profit margins, return on investment (ROI), cycle times, percentage defects, sales per employee, cost per unit) or business processes (e.g. how it develops a product or service, how it meets customer orders or responds to enquiries, how it produces a product or service). For human resources, three types of benchmarks are particularly appropriate (Matters, 1993). Broad measures of performance which take an organization-level view of HR management, using broad productivity measures like sales per employee, profit per employee, volume per employee, number of employees per HR specialists, and other relevant "output-over-input" ratios; HR practices focusing on how effectively HR programs and practices are implemented, and making comparisons with other organizations; and HR competencies tracking the knowledge, skills and abilities Benchmarking: Introduction The process of benchmarking was developed in the late 1970’s by Xerox Corporation as it needed to rapidly learn how to combat the ongoing commercial attack by Japanese industry and preserve its survival in the copier business. In this process Xerox learned that evaluating competitors and copying what others are doing, while this may be a time-honored characteristic of human behavior from the earliest of times, it is not a necessary and sufficient condition to ensure that an organization remains competitive. This fact raises an important question: What has characterized the development in this process of benchmarking and what have we learned over the past thirty years it has been practiced? Perhaps even more important is the question: What is the role that benchmarking fulfills in a modern quality management system whose foundation is built upon the principles and methods that are characterized as "Six Sigma" methods for quality management? This paper describes how the method of benchmarking is being blended into the analysis methods for process improvement approach using Six Sigma, Lean Enterprise solutions, and Decision Workouts to stimulate change management. Process benchmarking acts as the critical methodology for generating a portfolio of improvement projects which can systematically increase organization performance effectiveness, efficiency, and economy as it continues in its journey toward performance excellence. Introduction Ever since 1990 when Roger Milliken declared that "benchmarking is the art of stealing shamelessly" the definition benchmarking has evolved into a "quick fix" for making quick business performance improvement. Benchmarking is a systematic and scientific methodology for comparing performance between organizations to evaluate the relative excellence of their alternative business practices based on the measured achievements of analytical benchmarks. But, benchmarking is not a quick fix, it is a rigorous process that requires both sweat equity, learning about one's own processes and coordinating logistics of study mission to other organizations, and analytical integrity, measurement and analysis of sustained work process performance through the detailed mapping of processes and head-to-head evaluation of performance differences. In a typical benchmarking study the analytical information contained in a benchmark or a comparative measure of process or results performance is used to establish which organization is candidate for a "best practice" for a particular business process. Then the business process must be specified in detail to understand how the benchmark result was achieved and to determine which specific activities enabled the successful performance. Finally, learning must be customized to apply new knowledge to organizations that have not attained the level of "best of the best." A benchmarking study must be analytically as well as culturally successful. The methodology should heed the warning of Dr. W. Edwards Deming who said (Deming, 1982): "It is hazard to copy. One must understand the theory of what one wishes to do." Cultural and business model adaptation is necessary to assure that the lessons observed in one organization can be successfully transferred to another organization whichoperates in a different cultural framework. As Dr. Deming further cautioned (Deming, 1982): "Adapt, don't adopt. It is error to copy." In the development of Total Quality Management (TQM), benchmarking has a unique place as both a tool to stimulate improvement and a management technique that aids in strategic positioning of an organization. Benchmarking provides opportunities for full organizational participation in business process improvement by engaging the management team in the architecture of change and choice of focus areas for study; involving the middle managers in self-assessment of the work processes that they own and in adapting the lessons learned from other organizations; and relying on the study of related processes by the organization's front-line process experts who are charged with discovery of the significant differences that lead to performance gaps. The objective of benchmarking is to accelerate the strategic change leading to both breakthrough and continuous improvement in products, services, and processes, thereby resulting in enhanced customer satisfaction, lower operating costs, and improved competitive advantage by adapting best practices and business process improvements of those organizations that are recognized for superior performance. Benchmarking is a method that forces organizations to look outside them selves in order to avoid myopic illusions of grandeur that come from reflecting on internal experience without external validation. Benchmarking is not just a checklist or set of numbers that are used to make management feel better about their current performance. Benchmarking really should make management uncomfortable due to the identification of gaps in business performance. Benchmarking should challenge management due to the discovery of performance enablers that could help them to improve. Perhaps the following juxtapositions can help describe this situation Benchmarking is: Benchmarking is not: A discovery process A fixed, rigorous cookbook process An improvement methodology A panacea for developing all problem solutions A source of breakthrough innovation Supporting continuation of "business as usual" An opportunity to gain profound knowledge A management fad or "tool of the day" An objective analysis of working processes Based on a subjective "gut feeling" or opinion A process-based learning approach Just a measurement of performance results A way to generate ideas for creative imitation Merely a set of quantitative comparisons A way to capture tacit process knowledge Limited to within industry/competitor analysis Table : Benchmarking Application Scope Analysis It is important to observe that the logic of the benchmarking process does not fail the test that was issued by Dr. Deming in the early 1980s, when he cautioned executives against deadly diseases in the management of business that were derived from setting arbitrary goals based solely on visible performance measures, without understanding the depth of profound (process-related) knowledge that lay underneath most high level performance measures. For instance, Deming would call "arbitrary" the use of benchmarking using the logic that is described in the first column of Table 2 where change is made based on superficial observations or anecdotal evidence. The logic of benchmarking is much more process-oriented and requires the development of the type of profound knowledge advocated by Dr. Deming - knowledge of how the process achieves statistically significant results based on the operational definition of work process activities which have been meticulously specified in order to understand those specific differences that could then be properly called the "root cause" of the performance distinctions that have been observed. This logic is based on statistically sound observations of process performance in order to discover the drivers of exceptional results as shown in the second column of Table Traditional Logic: Benchmarking Logic: The price of our competitor's product is 15% lower than our costs; therefore, we must reduce our costs by 15%. The leading companies have very similar operations that are consistently 20% more effective and efficient that our operations. The reasons that there operations are more effective and efficient is because they have implemented these specific enablers. The specific practices used to improve this work and produce this outcome include a limited set of performance drivers. The following enhancements in our way of working would be appropriate for our own business model and culture and should be able to lead us to improved performance. The estimate of performance improvement that could be gained from implementing a program of process enhancements would be able to attain this theoretical gain. Table : Comparison of Traditional Logic with Benchmarking Logic The ability to apply this logic to learn about and understand the root cause of process improvement at the benchmark organization thus encourages translation of these lessons into appropriate change for the investigating organizations. By this process of conscientious learning and cautious adaptation, a company can learn the lessons needed to transition it to a level of World Class performance. Lee Raymond, CEO of ExxonMobil, remarked in a meeting that I attended: "Benchmarking has been the most important practice for the continuous improvement of our corporation." History of Benchmarking Benchmarking is a management process developed in the 20th century. It has transitioned through four generations of development and now is in a fifth generation of maturity. This chapter expands on previous writings and clarifies the relationships in the transition of benchmarking that has brought it to its current level of global benchmarking through the ubiquitous access to data and information that is offered through the Internet (Watson, 1992, 1993, and 2007). Tracing the historical context of benchmarking allows an improved understanding of how it can contribute to performance improvement today. Let's begin this historical journey by gaining the perspective from the close of the 19th century to understand how the industrial revolution and its approach to interchangeable parts fostered the idea of interchangeable business processes and the application of the scientific method to study business became extended into the use of business measurements to define best practices. The maturing of benchmarking could be viewed as a series of generations or stages in development... This taxonomy of benchmarking is messy as the stages overlap and some have no clear beginning or ending. But, perhaps by putting them in writing, along with the logic that defines their boundary conditions, this will help managers to clarify what exactly it is they are doing when they seek information to improve their business. However, in this paper we will observe that there have been about five generations of development for this methodology. Moreover, we can observe, just like Sir Isaac Newton, that benchmarking enables us to say: "If I have seen further, it is because I have stood on the shoulders of giants." We see more clearly and make better decisions because we are not replicating the mistakes of the past, but using the analysis of the past to sharpen our focus on the future! Discovering profound knowledge from history can help you to see the future with more perfect vision! The Dawn before Benchmarking Science In the late 1800's the management science work of Frederick Taylor encouraged comparison of work processes through the application of the scientific method. Taylor's concept was that there was "one best way" to do work and that it could be discovered through the scientific study of the way that work was performed. When the best way was discovered then this should be applied as the standard for work performance until a better way was discovered. These technical studies of work practices were conducted by industrial psychologists and industrial engineers. During the Second World War, this practice of making comparisons extended so that it became commonplace for companies to 'check' with other companies in order to develop standards for pay, working hours, safety regulations and related business hygiene factors. First Generation — Competitive Product Analysis and Reverse Engineering This first generation of benchmarking could also be labeled 'natural curiosity and its natural extension.' Even when production was done by craftsmen forming individual works with their own hands - artisans who saw each piece for its uniqueness, there was a tendency to compare your own work with that of others to determine which was the 'best of the best' in your field. This concept of 'best of the best' is described by the Japanese word 'dantotsu' which was the term Fuji Xerox used to describe the object of the search for best practice. Today, this practice is observed through the engineering teardown analysis used in reverse engineering to understand how competitive products have been designed, what materials have been used, and what technologies were employed in their production. Another focus is the competitive product analysis which can take one of two forms: marketing-based comparing features or functional performance to customer perception and technology-focused comparing degree of performance that is delivered against a standard (e.g., computer run speed for a benchmark software program). This form of 'benchmarking' will probably continue ad infmitum. Perhaps the most interesting insight in this period leading up to the development of benchmarking comes from comments describing how comparative product analysis and reverse engineering were applied in Japanese industry. In his book describing the development of the Toyota Production System, Taiichi Ohno, former vice president of manufacturing and co-architect of this system with industrial engineer colleague Shigeo Shingo, described the visit that opened their eyes to the possibility of 'lean manufacturing' as he talks about the observation of the stock replenishment system that allowed fruits and vegetables to be sold while fresh and reducing waste from spoilage. As he admits: "from the supermarket we got the idea of viewing the earlier process in the production process as a kind of a store." He further observed (Ohno, 1990) that the Japanese adopted many of these practices because of their innate "curiosity and fondness for imitation." Indeed during the period of 1950-1975 many American businessmen felt that Japan was merely a Sopycat' and therefore it did not present a serious business threat since it did not invent any new technologies. At the macro-economic level this may be true, but what the Japanese did invent was the ability to produce products with minimum waste because they did not have a resource-rich environment that could tolerate the loss to society that came from indiscriminate use of its scarce materials or poor productivity practices. Indeed, during this time many Americans joked about the stereo-type Japanese industrial tour where engineering visitors came gawking at the magnitude of American industry taking many photographs to illustrate its greatness. These pundits missed the point of the tours - to identify ideas that could be transitioned to Japanese industry and improved to assure congruence with their developing manufacturing practices that focused on lean operations. At the same time that its engineers toured American plants, others stripped down the products and looked for ways to deliver the same functions at lower prices - effectively value engineering the products by eliminating waste from the design and its production process simultaneously. Second Generation - Informal Visits and Process Touring In a paradoxical way the second generation of benchmarking is once again more art than science in benchmarking. There is a syndrome among managers to seek the popular, adopting what is new, and worshiping what is popular without making a critical assessment of its validity or applicability. These are weaknesses that are inherent in many 'art-like' benchmarking processes. Taking a walk in a factory does not constitute a benchmarking site-visit - this is industrial tourism. Brief conversations with colleagues at a conference are not benchmarking - these are chats. Benchmarking must include three elements: definition of an object of study, performance measurement of the object and comparison to other similar objects in order to determine which alternative has achieved the best capability and why. While these forms of 'benchmarking' will probably also continue ad infinitum, they should be strongly discouraged, as they cannot produce profound knowledge of the process that allows your organization to drive improvement. During this same period, American industry tended to internalize its efforts rather than look toward external influences as if they would somehow poison the miracle of the post-war industrial might that was transforming American into the world's greatest economy. In its arrogance, many leaders in American industry believed that Yankee ingenuity' was the solution to everything and that they had no need to look elsewhere for creative ideas in either product or process technology. Given this internal focus, it is not surprising that in the 1950's business leaders like Hewlett-Packard's Bill Hewlett and Dave Packard encouraged their engineers to develop "next bench syndrome" - the practice of checking with engineering colleagues to define those functions and designs to be developed and implemented. This commercial arrogance was prevalent in American products -engineering push of features into the marketplace without consulting customers about needs or desires. This lead to a systemic vulnerability that could be exploited by Japanese companies if they could discover what it was that customers wanted and deliver it first. And they did exploit this vulnerability. Throughout this first seventy-five years of the last century, methods related to benchmarking could be best described as an art rather than a science. The development of benchmarking into a science was the contribution of the Xerox Corporation as it sought to fight an onslaught of Japanese businesses that were taking advantage of a court ruling that stripped Xerox of its patent protection for its copier business due to its monopolistic business practices. The largest beneficiary of this ruling were the Japanese firms that developed disruptive technology at the low-end of the copier business and caused Xerox to lose market share drastically in the period from 1976 to 1979 - with a subsequent drop in return on net assets from 25% to under 5%. How did Xerox respond to this crisis? Third Generation — Competitive Benchmarking (1976-present) This phase of the benchmarking evolution was marked by the use of a scientific approach to benchmarking commenced by competitive benchmarking as an extension of competitive intelligence and market research. Competitive benchmarking seeks to discover the specific actions that are being taken by competitors to gain advantage in the market place through their strategic choices and capital investments in products and processes. Since competition is the defining ingredient in a free market, this type of benchmarking is an essential ingredient in every informed company's portfolio of tools in their strategic business planning process. After Xerox was forced to put its patents into the public domain in 1975, a steady stream of foreignCompetitors entered its markets - lead by Canon of Japan and Savin from France. The manner in which they chose to enter into competition caused little concern among Xerox managers because the competitors were only producing personal copiers - low throughput devices that fit onto a manager's desktop or file cabinet and were only capable of reproducing a single page at a time and very slowly, compared to the large, big-speed copiers that Xerox sold for use in central copying locations. However, it became clear over a number of years that these small machines were taking work away from the larger machines and the Xerox business model leased the machines but sold individual copies that they produced. Thus, Xerox was losing its business one page at a time! The Xerox benchmarking of mail-order giant L. L. Bean is a classic tale in modern business history. However, one lesson has been lost in this history - what was the catalyst for doing this study and how did it get exposed? The Xerox management team learned about their performance gap to their new competitors in Japan from their Japanese subsidiary - Fuji Xerox, a joint venture firm that had been established between Xerox and Fuji Photo Film. Yotoro "Tony" Kobyashi was the CEO of Fuji Xerox at the time and it was his people who evaluated their Japanese competitors to allow a three-way comparison to be accomplished. By comparing scarce open source knowledge of the Japanese competitors to the detailed knowledge of a fierce, but captive competitor (Fuji Xerox), Xerox Corporation was able to 'triangulate' (which means to estimate performance of a third party using two known variables) and determine their standing against the competition. This is what Bob Camp would call 'Step Zero' in a benchmarking study - a strategic discovery process that I call strategic benchmarking (Camp, 1995 and Watson, 1993). Without this step and discovery, Xerox would not have the insight about what or where it must focus its benchmarking lessons to learn about what must change in its operations in order to make improvement endure. Xerox CEO David Kearns turned to his Fuji-Xerox Japanese joint venture lead by Kobyashi to discover what could be done to stem the tide of lost sales and profitability. The Xerox benchmarking method was borne out of the business requirement to estimate their competitor's strength by triangulating from two known sets of performance results (Xerox USA and Fuji Xerox) to learn about the unknown capability of their Japanese competitors (Hillkirk,1986; Camp, 1989, and Palermo and Watson, 1994). This created a real wakeup call for the Xerox business leaders - not only were Xerox new products twice as long in development, but their manufacturing cost was equal to the sales price of the competing products. Thus, there was no way that Xerox could compete head-to-head on these disruptive technologies.1 This provided the first indication that there was real trouble at Xerox -performance indicators that demonstrated that there was a gap in performance, but it didn't tell what the gap was, why it existed, or what to do about it! Competitive benchmarking proved its value by delivering this wake-up call, but it wasn't capable of providing a change agenda that would return Xerox to profitability. For this, Xerox had to learn from business leaders in each of the performance areas where they suffered from shortfalls against the competition, so they put together a team to create a process for learning which they called benchmarking. While the lessons learned from competitive benchmarking told what was wrong and estimated how far Xerox lagged behind the competition, it was the benchmarking of industry best practice that gave sparks to fuel the creative imitation of leading processes that brought Xerox out of its crisis. Xerox turned to companies with successful practices in those areas where they had observed their own 1 Harvard Professor Michael Porter in is early book Competitive Strategy (New York: The Free Press, 1985) describes the competitive dynamic for a market entrant where the barrier to competition has been removed (patent protection) and the entrant has cost-differentiated itself from the market leader. Harvard Professor Clayton M. Christenson in his insightful books, The Innovator's Dilemma (New York: Harper Business, 2003) and The Innovator's Solution (with Michael E. Raynor (Boston Harvard Business School Pres, 2003)), calls this approach to a competition 'disruptive innovation' in which new market entrants fundamentally change the game of the competition by seeking a lower-profit, vulnerable market from which to attack the mainstream market. In this environment, the new market entrant is given freedom to operate in this market because it costs too much in terms of lost gross profit margin for the entrenched leader to defend a poor profit market. Over time the market entrant earns the right to compete for the mainstream market. This is precisely what Canon and its Japanese competitive cohort did to Xerox. shortcomings - the retailer Sears provided insights into inventory management, while the mail order firm L. L. Bean contributed learning of warehouse operations. Learning was incorporated at a furious rate and Xerox converted itself into a new company with the result that by 1985 Xerox had increased its return on net assets to over 10%. However, benchmarking was restricted at this time to the few companies that Xerox studied and was largely held as an internal practice within the Xerox Benchmarking Network - about 100 middle managers who conducted these studies. It was only after Xerox put these methods into the public domain by opening sharing the practice after they won the Malcolm Baldrige National Quality Award in 1989 that the interest in benchmarking expanded Afterwards Corporate Partnerships and Sharing Flourished In 1981, a second event stimulated interest in business improvement. Dr. W. Edwards Deming was featured in the NBC television White Paper titled "If Japan Can, Why Can't We?" A challenge was issued to American management - they could improve their business and survive or allow it to grow stagnate in the face of the Japanese competition and die! At this time many American industries were under attack by Japanese firms - Xerox was not alone; however, the influence of Deming was just to focus management on the need to improve. Deming was not a big fan of benchmarking (Deming, 1982): "I think that the people here [in America] expect miracles. American management thinks that they can just copy from Japan. But they don't know what to copy." However, Dr. Joseph M. Juran was the quality consultant who most influenced Xerox and it is unclear if Dr. Deming ever really understood how the Xerox benchmarking methodology worked. Deming talked as if he felt that benchmarking was more an art than the science it had become under the coaching of Kobyashi at Xerox! But, Deming always asked the question: "How do you know?" It is this question that is central to any effort at benchmarking and is the point where Deming's philosophy and benchmarking merge. The Diffusion of Benchmarking as a Practice Another significant event that accelerated the spread of benchmarking as a recognized business best practice was the presentation of the Malcolm Baldrige National Quality Award to Xerox which put a public spotlight on benchmarking as a practice that made a difference at Xerox. David Kearns, the Xerox CEO who lead the company throughout its turnaround effort, decided to put all of its quality practices into the public domain (these included the benchmarking process, problem solving process and quality improvement process) and Xerox also followed the practice of Baldrige Award Winners of offering seminars to explain what they did and how it was accomplished. Bob Camp's successful book reported on the work of "Team Xerox" to develop and deploy a common method for benchmarking throughout the company. Following these efforts, benchmarking gained more public attention as a number of books that were published in the 1992-3 period that facilitated the diffusion of learning about the benchmarking process.2 Fourth Generation — Process Benchmarking (1992-present): Process benchmarking can be either strategic or operational in its focus depending on where it is focused. The importance of the subject and the breadth of its application distinguish between these types of studies. It is this type of benchmarking that forms the core of scientific studies. Process benchmarking will be the continuing focus of serious business investigations and will provide insights into the way businesses achieve flawless execution of their processes to achieve excellence in the perspective of their customers. Institutionalization of the Practice of Benchmarking However, it wasn't until the Houston-based American Productivity & Quality Center (APQC) established The Benchmarking Clearinghouse (IBC) in 1992 that a common methodology and approach for benchmarking was spread into a consortium of companies who purposefully gather to share and study their internal practices in common interest groups. The IBC was the brainchild of Dr. C. Jackson Gray son, the founder of the APQC and one of the drivers behind establishment of the Malcolm Baldrige National Quality Award. Grayson believed that benchmarking was not just a fad but it was an essential business practice. Grayson had been a dean of two graduate schools of business and administrator of the wage and price controls process put in place to control runaway inflation in the early 1970s under the Nixon administration. An endorsement about the business value of benchmarking coming from him was indeed high praise, but to have him actively engage in a process to broaden the scope of benchmarking through developing a forum that facilitated cross-company learning was truly indicative that benchmarking had transitioned from a company-specific quality improvement tool to an essential ingredient of management best practice.3 Mainstreaming Benchmarking into Business By 1994 the IBC had directly reached over 1,000 companies in promulgating benchmarking; the Malcolm Baldrige Award criteria had been ordered by over 100,000 companies and the combined sales of benchmarking books had surpassed 200,000 copies. Over the past ten years (1994-2004), a number of channels have come available for diffusing the practice of benchmarking even further. Two channels for benchmarking are worthy of particular attention: the Internet and the Global Benchmarking Network (GBN). It is clear that the advent of the Internet has changed many aspects of life by creating 'instant access' to both information and people. These are critical enablers of benchmarking and thus allowing a much broader search for information and contact possibility than was previously obtainable through personal contacts and cross-organizational affiliations. The advent of the World-Wide Web as a global communication resource strengths the ability to gain access to data, but it also complicates the interpretation of information because there are no standards for analysis and thus the web is inundated with a plethora of "Theory Opinion" that must be sorted and sifted to discover truth. In my opinion, the full impact of the Internet on benchmarking practices has yet to be felt. So, what is benchmarking? In order to understand this methodology we must first define some key terms. There are three sets of definitions which will be presented. The first terms that must be defined are those that identify the different ways to apply benchmarking studies: Process Benchmarking Process benchmarking is a method for comparing performance between two unique or distinct implementations of the same fundamental process. The method includes internal inspection of an organization's own performance as well as the external study of organizations recognized for achieving superior performance as evidenced by objective standards by comparative analysis (the performance level is observed is called a benchmark). The objective of a study for process benchmarking is not to calculate the quantitative gaps in performance, but to identify best practices that may be adapted for improvement of organizational performance. There are four types of process benchmarking studies: strategic, operational, performance and perceptual benchmarking. Strategic Benchmarking The process benchmarking of organizational strategy or key business process performance in order to determine breakthrough opportunities for profitability and productivity improvement is called strategic benchmarking. This type of study focuses on those critical business areas that must change to attain or maintain the competitive advantage of a business. Strategic benchmarking studies focus on critical business assumptions, primary competence areas, core business processes, technology inflection points, or business fundamentals that define organizational purpose. The purpose of strategic benchmarking studies is to challenge the management to move from a current state to a desired state of the whole business. Examples of strategic benchmarking studies include: evaluation of options for the design of an organization's governance structure; assessment of approaches used to implement advanced technology (e.g., enterprise management software or paperless document handling); or strategic business issues that are faced by the organization (e.g., creating a web-based business capability; managing the technology transition across generations of advancement; or managing the routine work of the organization through management methods such as balanced scorecard, performance management and business excellence assessments). Operational Benchmarking The process benchmarking of work processes or practices in order to discover opportunities that will provide productivity improvement in the areas of effectiveness, efficiency, or economy of the routine business operations is called operational benchmarking. This type of study focuses on specific work activities that need to be improved and seeks to identify the work procedures, production equipment, skills or competence training, or analytical methods that result in sustained performance improvement as indicated by objective measures of process productivity (Process throughput, cost per unit, defect opportunities, cycle time, etc.)- Examples of operational benchmarking studies include: analysis of invoicing procedures to determine the most productive process; evaluation of production methods to determine the highest throughput methods that deliver lowest cost and least defects; and study of logistics distribution methods that result in both high delivery service performance and low levels of finished goods inventory. Performance benchmarking The process benchmarking of product or service results using a standard comparison or test under known operating conditions is called performance benchmarking. This type of study seeks to answer the question: which product or service is better based upon rigorous assessment using objective performance criteria. Examples of performance benchmarking studies include: consumer product analysis that evaluates products on a "head-to-head" basis using a fixed set of criteria for performance; evaluate of product performance using a standard test, such as operating time to run a specific application; or endurance tests that identify the ability of product to perform over a fixed period of time under comparable operating conditions. Perceptual Benchmarking The process benchmarking feelings or attitudes about process, product, or service performance by the recipient of the process output is called perceptual benchmarking. This type of study seeks to answer questions like: how do you perceive the delivery of service, performance of product, or execution of process by the people who are recipients of these outputs? Perceptual benchmarking uses attribute or categorical data to quantify subjective feelings and establish relative ranking of performance based on such criteria as timeliness of performance, goodness of knowledge transfer, soundness of information, courtesy of delivery agents, etc. Examples of perceptual benchmarking include: surveys of training satisfaction at the completion of a course; employee satisfaction surveys to assess work climate or structural issues about compensation and benefits; or customer satisfaction with the product or service delivery to the market.A second set of definitions identify sources of data used in conducting a specific benchmarking study. These terms categorize benchmarking practices according to the relative utility of information from the information sources. Competitive Benchmarking An approach to benchmarking that targets specific product designs, process capabilities, or administrative methods used by one's direct competitors. For example, in order to stimulate business model change Compaq made a detailed study of the study of the performance in the laptop computer industry to determine business model features that should consider as it initially determined how to enter into this market. Here they studied the performance of the business models of those companies that would become its competitors. Industry Benchmarking An approach to benchmarking that seeks information from the same functional area in a particular application or industry (e.g., benchmarking the purchasing function to determine the most successful approach for managing a supplier base). Internal Benchmarking An approach to benchmarking where organizations learn from "sister" companies, divisions, or operating units that are part of the same operating group or company (e.g., the study of internal research and development groups to determine best practices that reduce time-to-market for the new product introduction process). Generic Benchmarking An approach to benchmarking that seeks process performance information that is from outside one's own industry. Enablers are translated from one organization to another through the interpretation of their analogous relationship (e.g., learning about reducing cycle time in production operations by the study of inventory management methods used in stocking fresh vegetable in grocery stores). PURPOSE OF BENCHMARKING Have an experienced HR Consultant 24/7- just a phone call away. Establish solid HR Systems. Ensure compliance with Federal and State Employment laws. Get difficult, focused HR projects done accurately and quickly. Maintain HR Systems on an ongoing basis. Recommend systems and establish a timeline for project. Establish workers compensation reporting, drug testing procedures, and establish working relationship with company doctor or clinic. Assist with staffing the company as needed. Provide assistance with interviewing, reference checking, and benefits sign-up and initial orientation of new employees. Provide ongoing Human Resource support as needed and requested either on-site or off-site. Train an on-site administrative person to handle day to day Human Resource tasks such as monthly benefits administration, etc. Set up personnel files and recordkeeping systems such as Personnel Action Request Forms, Performance Review systems, job descriptions, etc. NAVIGATING HR BENCHMARKING Benchmarking Model Benchmarking is the search for industry best practice which leads to superior performance. The pioneer of competitive benchmarking was the American company, Xerox Corporation. The company demonstrated the usefulness of observing and learning from superior performers by benchmarking their competitor. Through the knowledge they gained they managed to dramatically improve their productivity and significantly reduce their cost of production. Based upon the Xerox experience, Robert Camp has developed a model which can be modified and adapted to suit any functional area, including HR management. The Benchmarking Process Phase One: Planning Camp has broken the process of benchmarking into 10 steps which progress through 4 phases: Step 1: Identify what functions, products or outputs are essential practices and should be benchmarked. Step 2: Identify external organizations or functions within own organization with superior work practices for comparison. Phase Two: Analysis Step 3: Determine what data sources are to be used. If an organization has up to date personnel/payroll systems it should be able to measure a range of HR practices and outputs relatively easily. Valuable information may also be available through personnel records, surveys or even interviews. Step 4: Determine the current level of performance. This will enable the gap in performance to be identified. Camp emphasizes the importance of a "full understanding of internal business processes before attempting comparison with external organizations." Baseline measurement also provides an objective basis upon which to plan and act. Phase Three: Integration Step 5: Develop a vision for future operation based on the benchmarking findings. Focus should be directed on the quality of best practice procedures/practices and how these can be not just emulated, but improved upon by the organization. Step 6: Report progress to all employees on an ongoing basis. Communication and feedback are crucial components of benchmarking. Phase Four: Action Step 7: Establish functional goals linked to the overall vision for the organization. Step 8 & 9: Develop action plans and implement the best practice findings. This should be the responsibility of the people who actually perform the work. Periodic measurement and assessment of achievements should be put into place. Step 10: Update knowledge on current work practices. This is, in essence, the crux of continuous quality improvement. The remainder of this paper will focus on how to begin step one, the planning phase, of an HR benchmarking process, i.e. Identifying what to benchmark. The discussion will primarily deal with the quantitative measurement of human resource management. Although qualitative assessment can be a valuable and informative benchmarking tool, the ease with which agencies can define, and in many cases obtain, quantitative information makes it a practical starting point from which to develop a benchmarking process. The Benchmarking Process The generic four-phases that these steps cover roughly follow a Plan-Do-Check-Act (PDCA) process that is called the Deming Cycle and which is generic in all process improvement models for process management and improvement. The PDCA approach to process benchmarking . Plan - Do - Check - Act: Deming Cycle of Process Benchmarking However, the process that I favor has seven steps which highlight the work that must be done in a benchmarking study and which follow the four-phase. The seven activities in a benchmarking process include: Identify Subject - choose what to benchmark Plan Study - identify your partners and plan your data collection Collect Information - actively collect the data and visit partners Analyze Data - analyze the data for performance trends and consistency over time Compare Performance - compare results and test differences for statistical significance Adapt Applications - prepare the lessons learned for transition to your own culture Improve Performance - implement projects to improve your processes Each phase of the PDCA benchmarking process can be described using a set of questions that identify items to address in these four phases of a study. Please note that many of these questions are the same as the basic questions that one asks during any TQM improvement project. Benchmarking Step 1: Choosing the Benchmarking Topic and Planning the Study Questions that must be answered in order to plan a benchmarking study include: What process should we benchmark? What is our process and how does it work? How do we measure it? How well is it performing today? Who are the customers of our process? What products and services do we deliver to our customers? What do our customers expect from our process? What are the critical success factors for this process? What is our process performance goal? How did we establish that goal? What data should we collect for comparisons? Benchmarking Step 2: Identifying Partners, Collecting Data, and Answering Questions Questions that must be answered during this during the data collection phase of a benchmarking study include: What companies perform this process better? Which company is best at performing this process? What can we learn from that company? Who should we contact to participate as our partners? What is their process? How representative is the process across different areas of their organization? How do they measure process performance? What is their performance goal and how was it set? How well does their process perform over time? Is there any difference in performance at different locations or based on seasonal change? What business practices, methods, or tasks contribute to the process performance? Benchmarking Step 3: Analyzing Performance and Comparing Processes Questions to be answered during this analyze phase of a benchmarking study include What is the basis for comparing our process measurements? How does their process performance compare with our process performance? What is the magnitude of the performance gap? What is the nature or root cause of the performance gap? How much will their process continue to improve? What characteristics distinguish their process as superior? What activities within our process are candidates for improvement? Benchmarking Step 4: Implementing Recommended Change to Improve the Process Questions to be answered during this improve phase of a benchmarking study include: How does our knowledge of their process help us to improve our process? How should we forecast the future effectiveness of their process performance? Should we redesign our process or reset our performance goal based on this benchmark? What activities in their process need to be modified to adapt it into our business model? What have we learned during this study that will allow us to improve on "best" practice? What goals should we set for our own process improvement? How can we implement the changes in our process? How will other companies continue to improve this process? Note that many of the questions addressed above are the same as would be addressed in managing implementation in any project improvement process. Method Definition When to Use Advantages Disadvantages Existing Data Review Analysis of Before A large number Measurements data that conducting of sources may may lack integrity already exists original research be available from and not all of the in-house or in in order to fix information important factors the public the performance Systems. will be recorded Domain. Baseline. to conduct a root Cause analysis. Mailed Questionnaire Written survey When you need Permits extensive Response rates provided to the to gather data or data gathering are low; answers benchmarking information over time, can be may be subjective Organizations. from a large analyzed using and creative ideas It may contain number of computer rarely surface as any type of different sources software and the there is no dialog, question: true Or organizations. data is easy to and it is difficult and false, Compile. to use a written multiple choice, form to probe forced choice, into difficult scaled choice, "how to" types of Or open-ended. Questions. Telephone Survey A written script If information is Can cover a large Locating the right of questions needed quickly group of person to answer, used to solicit or you need to respondents logistics of data over the screen potential quickly and getting the person telephone in sources for more people are likely on-line, and there anticipation of in-depth follow to be more is only a small engaging in a Up later. candid over the opportunity to Specific dialog. Telephone. Exchange ideas. Method Definition When to Use Advantages Disadvantages Face-to-Face Interview A meeting with When you need Encourages good The interview a benchmarking one-on-one interaction, in- process takes partner using interaction to depth discussion, time to coordinate questions that probe and drive and open-ended and execute and are prepared data collection questions - when interviewees may and distributed to a specific using a flexible be reluctant to In advance. objective or style unexpected discuss sensitive Level of detail. information can issues, concerns, Be revealed. Or performance. Focus Group An open-form When you want Direct sharing of Logistics must be panel or group to gather data or data and internal Carefully discussion with information best practices Managed. If there a third-party from more than among partners is no openness, a facilitator one source at the as a working "lowest common coordinating same time or group that can denominator" The dialog. when there are discuss topics on may be found as diverse opinions a mutually set opposed to any or ways to move Agenda. Best practices. toward an issue Or problem. Site Visit An on-premise When you need Can observe the Requires careful meeting at a to observe actual practices, advanced plans facility to the specific work or verify process And preparations. follow-up to an Practices. When performance and For example, who interview, focus interpersonal its asks what group or survey observation is characteristics, as question of and combines necessary to well as assess Whom? data analysis evaluate "human enablers and the with direct aspects" of the measurement work process process Systems. Observation. Performance. Table Comparison of Alternative Data Collection Methods Used in Benchmarking Methods of Data Collection In conducting a benchmarking study, there are several different approaches to data collection that can be pursued by a benchmarking team. Table describes the approach, as well as the advantages and disadvantages, associated with each of the most popular methods used in benchmarking studies. Presenting Benchmarking Study Results Some final points should be made about the process of benchmarking relative to the analysis and presentation of benchmarking data. Care must be taken in the data analysis efforts to assure that benchmarks are representative of real-world performance. Specific cautions include the following statistical problems in benchmarking: Single data point measurements or observations that are passed off as a "benchmark" Measurement systems not validated for sensitivity of observation or calibration Averages used to represent performance benchmarks Missing variation data in process characterization Components of variance not identified according to their source Comparative charts not indicating both mean and variance Process changes not correlated with performance shifts Interactions not identified among the different process variables Clearly, there can be many issues that create problems in the measurement and analysis of results from benchmarking studies. Careful planning and solid data collection and analysis efforts can achieve the elimination of these opportunities for error introduction into a benchmarking study. Whenever possible, analysts conducting benchmarking projects should have the same education as Six Sigma Black Belts in statistical analysis to assure the analytical soundness of study results. Perhaps it will help to consider some examples in order to understand benchmarking studies a little better. Consider the following four examples of benchmarking studies and the factors that caused management to initiate each study. Triangulation Warning: Benefits and Pitfalls of Benchmarking Benchmarking is a business process that encourages managed change. It encourages an organization to take an objective, external perspective in evaluating its performance. The benefit of benchmarking comes from three specific actions: The gap between internal and external practices creates the need for change. Understanding the benchmarked best practices identifies what must change. Externally benchmarked practices provide a picture of the potential result from change. However, no business improvement methodology is a stand-alone solution to all problems. Lest process benchmarking appear to be a panacea for problem-resolution, the following set of potential pitfalls in conducting benchmarking studies must also be disclosed: Selecting benchmarking partners that do not convince management (not-respected) Choosing benchmarking partners to meet popularity tests with no performance substance Accepting public relations claims as process performance benchmarks. Assuming that measurements are the same in different organizations (without checking) Identifying process measures that are not traceable from strategic to operational levels Conducting statistical analyses that represent surface observations not root causality Failure to validate performance with on-site inspection to verify benchmark claims Enforcing implementation of a benchmarking lesson across a cultural barrier Use of "benchmarks" for management decisions without recalibration over time These pitfalls in benchmarking applications can be avoided by taking a professional approach to the conduct of a study and using trained employees to facilitate improvement projects that will use this methodology to seek ideas for improvement. The improvement through "creative imitation" as the study team seeks innovative ways to apply the lessons it has learned through the study. Comparative Analysis and Competitive Advantage What does an organization gain in the way of competitive advantage from benchmarking? In the long run competitive advantage comes from out-thinking and out-performing competition. When an organization uses benchmarking effectively, they are able to think ahead of their industry and to act efficiently by adapting lessons learned from cross-industry studies to permit them to creatively imitate the best performing processes in the world. Over the long-haul this can establish them as the thought-leader within their own industry. In the final analysis, it is not out-thinking or prior knowledge that results in competitive advantage, it is in the excellence of execution of such new knowledge and the creative application of breakthrough insights that wins in the long-term. To achieve a dominant position in a market, a company must both know and do better than its most aggressive competitors. Benchmarking can help develop the competence to achieve this position, but it must be supplemented by management will and knowledge in order to make success happen. BENCHMARKING THE HUMAN RESOURCES FUNCTIONS The Global best practices HR tool examines 44 performance measures in 5 key areas: 1. Cost and Staffing: Compare a series of cost measures, including the total cost of the human resources department, in addition to a series of staffing measures, including the number of HR staff to total employees. 2. Recruitment: Assess turnover rates. Determine the timeliness and efficiency of the recruitment process. 3. Training and Recognition: Review types of training offered and use of incentive plans. 4. Benefits: Understand methods used to communicate benefits information and the extent to which contributions are made to retirement plans. 5. Technology and Organization: Examine the types of human resource information systems used, as well as methods of effective communication and employee feedback. DIFFERENCE BETWEEN BENCHMARKING AND BEST PRACTICES Are benchmarking and best practices the same? No, they are not the same.  Benchmarking is the process that allows one to identify potential best practices, i.e. by identifying the best performers; one knows where to look for practices that might improve their own performance.  However, there are different types of benchmarking and some organizations engage in benchmarking in order to identify performance targets for their own organizations rather than to look for practices that make other organizations so successful. What distinguishes a best practice from a better practice or a good idea? A best practice is not simply a new idea, but rather a Best Practice is one that meets the following seven criteria: 1. Successful over Time:  A best practice must have a proven track record. 2. Quantifiable results:  The success of a best practice must be quantifiable. 3. Innovative: A program or practice should be recognized by its peers as being creative or innovative. 4. Recognized positive outcome: If quantifiable results are limited, a best practice may be recognized through other positive indicators. 5. Repeatable:  A best practice should be replicable with modifications.  it should establish a clear road map, describing how the practice evolved and what benefits are likely to accrue to others who adopt the practice. 6. Has local importance:  Best practices are salient to the organization searching for improvement.  The topic, program, process, or issue does not need to be identical to the importing organization, however. 7. Not linked to unique demographics:  A best practice may have evolved as a result of unique demographics, but it should be transferable, with modifications, to organizations where those demographics do not necessarily exist FACTORS ENHANCING THE CHANCES OF SUCCESS FOR A BENCHMARKING EFFORT A well-designed benchmarking process is essential.  However, there are some other critical success factors, including: Senior Management Support; Benchmarking training for the project team; Useful information technology systems; Cultural practices that encourage learning; and Resources, especially in the form of time, funding, and useful equipment. COMPANY ANALYSIS ONWARD TECHNOLOGIES LTD Onward, provides system integration services mainly in the area of banking, CAD/CAM services and customized software development for both domestic and international markets. The company was traditionally involved in hardware, software development, system integration, networking etc. mainly aimed at the domestic market. However, during the FY 98, the company closed down it’s underperforming businesses, which were typically labour-intensive and carries low margins. The company downsized its its employee strength and has written off its bad debts. Onward, which made a loss during FY 99, has turned around its operations to register a PAT of Rs. 9.3Mn for the current year. The company has now restructured its operations to concentrate more on the export markets which was ignored by the company so far. Onward is well placed to capitalize on the domain knowledge acquired over the years. The company’s days of low growth and mounting losses are over and it is now entering the growth trajectory. Revenues are expected to grow more or less in line with the industry. Growth in revenues will be driven mainly by exports division. Operations of the company’s US subsidiary have stabilized and has been able to market itself well. Profits and margins, on the other hand, are expected to witness exponential growth rates. MASTEK LTD. Mastek, is one of the oldest Indian software companies with exposure to software services as well as products. The company’s ERP product MAMIS failed to create any impact on the market and has been largely unsuccessful. Despite being one of the oldest players in the country, the company has not been able to establish itself amongst the top players. The company’s poor performance in the past can be attributed to its loss making domestic and South East Asian operations. The company has increased its focus from products to software services and the move has paid rich dividends. Mastek is one of the leaders in Customer Relationship Management (CRM)an extended ERP application. CRM is expected to account for 25% of the total income. The company is one of the pioneers in the CRM area, which is one of the fastest growing segments in ERP today. Also, margins are relatively higher. ATOS ORIGIN Formerly known as Origin Information Technology Ltd. Atos Origin’s core business is to provide value to its clients by helping solve their business problems with enabling technologies. With over 27000 internationally experienced business technologists to serve clients in over 30 countries, Atos Origin helps transform enterprises into communities. It has world-class experience in e-business, Consulting and Systems Integration, Outsourcing and Online Services. Atos Origin is a proven end-to-end front to back office business solutions enabler. It’s leading B2B, B2C e-Solutions portfolio is backed by an innovative relationship model which drives value creation for its clients. The company’s excellent industry sector expertise-Manufacturing & Process, Retail & CPG, Banking & Finance, Hi-Tech & Telcos, and Automotive-gives the company a deep understanding of client’s business. This understanding allows it to focus on tuning clients vision into value driven results, quickly and effectively. RETENTION STRATEGIES Retaining skilled manpower is a major challenge before Indian software companies. Quite often, software companies end up poaching professionals from each other as they compete to attract the same pool of talent. The retention can be improved if the company focuses on career counseling, sharing of vision, providing training for skill-building, opening up new positions within, building a coheasive orgainstion culture, leadership workshops, joint decision making and others. 1) TRAINING Companies are now spending a huge amount of money in training to keep the employee morale high so that they donot change loyalties. Some of the factors responsible for influencing the employee retention are the mergence of new competing industries and increase in competition from various multinationals. In the telecom and IT Industry, the IT department had the maximum attrition rate. Today, companies are outlining special training budgets to prevent employee attrition. The companies with less than 5% growth rate keep a training budget of upto 0.5% of its turnover. The companies having growth rate between 25-50% earmark between 3-5% and companies within growth rate higher than 50% spend as much as 7.5% on training. Upgrading skills-It is not only the quantity, but quality of software professionals is also important “human capital is definitely a growing concern”. In a bid to tide over the problem, companies such as Silverline Technologies are hiring software professionals from overseas. Such requirements are primarily to ring in project management skills in segment and technology. Both technology and segment expertise are needed in good combination. In India, there is a shortage of people with a combination of both these skills. At lower levels, technical skills are more needed and business skills are necessary at higher levels. University courses do provide some exposure to these technical and business skills, but in most cases, they fall short of requirement. That is why, candidates invariably undergo further training and acquire hands-on experience before being assigned to live projects. That is why, companies such as Sonata Software, have in-house institutes where freshers are trained for six months to an year. As business skills are also important, many Indian software companies are opting for non-computer professionalsand offering them three to six months training. 2) COMPENSATION In a dot com world, the blink of an eye matters more than anything else and today, speed counts for business like never before. In such a scenario, pay is becoming the accelerator paddle for change initiatives worldwide. But bnot without some strings attatched. Salaries are hitting the roof but so are organizational demands from employees. Performance based pay- Nobody can deny the role of rewards and recognition in attracting and retaining talent. Naturally then, benchmarking for compensation is a sure shot topper on the to-do list for most HR professionals. But while window shopping for best practices in reward system, we miss the point that there is more to benchmarking than coping interesting practices. Specially, when we fail to reap the same success that our competitors seem to enjoy. The secret of attaining best practices in a reward system lies in aligning it with business goal, performance criteria and company culture. So, stir up your own recipe, but keep it within the norms. Professional appraisal systems and performance-linked awards are also important. These are important ingredients for employee satisfaction. The compensation package has increased by 10-25% for the telecom and IT Industry whereas the industry average stands at 5-10%. The links of pay and performance are becoming more pronounced. Most companies have some element of compensation, linked to performance. But some organizations step further by relying solely on performance delivery to structure executive compensation. At IBM, performance incentives have been implemented worldwide for all employees. At GE, performance is a major factor in pay management. Many smart employers are moving towards an annual incentive system. This works for middle and upper management positions and even for teams and individuals lower down the hierarchy. The popular technique is to use annual incentive bonuses linked directly to goal achievement. Substantial increases like this truly perk up energy level of employees. Study competitors trends- Making waves in the field of compensation is the variable-pay module. Most variable pay awards are paid in cash on an annual or semi-annual or quarterly basis. The award is determined by company and individual performance gaianst pre-established targets. Variable pay works best when the company performance is equal to or better than the industry average. You will find a wide assortment, slaes commission plane, individual incentive/bonus plans, team awards, gain-sharing and even performance sharing plans. Bonus and incentive plans-Earlier restricted to the small pockets of employees, are now spreading to other levels as well. Profit sharing plans-Are funded by the organizations profits based on a specified formula. The profit sharing pool is then allocated to employee’s by some means, usually as a percentage of their base salary. Spot bonuses- Provides recognition for an individual’s work accomplishments. These are paid immediately after a significant job performance event. Gain-sharing plans-Allow employees to share in productivity gains in accordance ith a pre-determined formula. Normally the plans are established with participant involvement and are typically designed for specific workgroups, but company-wide programs also exist. Fair and competitive pay is a starting point but don’t let be the end of the road. A workplace should be created where employees feel important, where they belong, where their ideas are valued, where their work is appreciated, where they can trust each other, enjoy working late sometimes, look forward to Monday mornings, build a living, human organization, don’t just pay for performance. ESOPs-Very much popular with the IT sector. The most common type of plan is the Stock option plan, where the employee is offered shares which he can buy in the future. The price at which employee can buy the stock is equal to the market price at the time the stock option was granted. The employee’s gain is equal to market value of the stock at the time it is exercised, less the grant price. The assumption is that the recipient of stock options are motivated to help the company perform well, so, in turn stocks will appreciate in value. 3) COMPANY AS A PROVIDER-Employee satisfaction is the bottom line. Tomorrow, (for it is not today), one can safely expect most companies to accord a high priority to work-life issues. A beginning has been made. A few companies like Hughes Software, GE and Hewlett Packard making an arrangement with a third party Concierge Services Co. to help employees core management. Companies are encouraging non-monetary packages like LIC Policy, foreign trips, credit cards, stock options, career development Plans, etc. to keep their staff happy. Companies need to give their employees salary compensation with the needed infrastructure, technology, stock options and other perks. Whatever the company does should be shared and transparent. There are considerate touches. One of the companies, everytime it sends its employees abroad for work, it distributes free telephone coupons to the family members, thereby helping them keeping in touch. The softer events are driven around the company organising leisure for its employees. The idea is hardly a new one (office picnics span various work ages and will continue to do so) but has been given a make-over in order to promote the idea of having fun. Some companies have initiated the concept of an evening at a Pub once a month. Flexi-time-Often part-timing or Flexi-timing is put forward as a solution for women and men who will increasingly share the challenge of managing family and work time. A solution which helped individuals work at a pace and place decided by them. At the same time, this helps companies save money by reducing fixed employee cost. More and more companies are spending time and thought on the idea of adopting the role of a leisure-provider. This is an issue full of potential and one that is still under-developed. As Indian software companies discover the role of recreation and stress relief in employee development and retention, more companies are beginning to offer recreational facilities to their employees. 4) ORGANISATION CULTURE-An open and friendly organization culture is important for employee retention. Companies must realize that during recession, it is more crucial to retain good employees as they can chart a sharper strategy for the company growth. Open communication, transparency, level of delegation commensurate with accountability and responsibility, increase in level of professionalism and competitive compensation packages. 5) CAREER GROWTH-Organisations sometimes neglect individual aspirations and goals. This might lead to an employee looking out for greener pastures. So it is very crucial for any organization to take interest in individual development also. Some of the methods used by the Onward Technologies to retain Human Resource are :- Industry standard compensation ESOPs Training on new Technologies Proper career planning Performance-based compensation and rewards Good work environment Open communication and transparency. Mastek, apart from being one of the first companies in India to provide ESOPs has been a pioneer in offering a stimulating and broad employee growth plan. Methods used by Mastek Ltd: Congenial atmosphere Excellent emoluments and employee benefits Pioneer in Technology Wide range of career streams Global opportunities As a company, Mastek is one of the few that have a Corporate Objective of Employee Satisfaction on equal footing with the objectives of profitability and revenues. Mastek has some stated values, which they practice more than preach. The first and most revered value being “Open Atmosphere”-Openness extends beyond calling everyone by first names and not having cabins in the office. What they mean by openness is the fact that they encourage, and even demand that, Mastekeers question what they do; they push their assumed boundries, and they raise their disagreements and hold differing views on everything. That is where, creativity is derived in the organistaion. Freedom at work is the freedom to change the way things are, but never at the cost of the result. Mastek encourages people to “Just Go Do It”-which means an excuse-free approach, to deliver results at all costs and nothing is more challenging and motivating to a software professional than seeing himself achieve results, in spite of different schedules, day after day. Excellent emoluments and Employee benefits Mastek is an employee-driven company with a human-face and approach, and its emolument packages are already best in the industry, besides offering a string of Fringe Benefits to the employee. Mastek is the first IT Company to introduce ESOPs for its employees and is the only Company that has the concept of ‘Runtime’, where the entire staff of Mastek, from the CMD to the peon, alongwith their families, board a train and head for a three-day holiday. All employees and their families are booked in 5-Star hotels with all expenses borne by the company. This is just one of the many ways in which they demonstrate that ‘Mastekeers’are a part of one-big family where everyone is respected for their contributions. Many other small gestures by the company which go a long way in retaining people are: Sending home bouquets on Anniversaries and Birthdays Taking care of few expenses during marriage Different types of allowances Global opportunities Mastek’s network is spread throughout the Globe, with operations in the USA, UK, Germany, Malaysia, Singapore, Japan, Switzerland and Belgium. Most of Mastek’s projects are for Fortune 500 Companies worldwide. Rave technologies provided its employees with: A higher compensation as compared to the industry ESOPs Rewards and Recognition Other individual as well as team-based rewards spread across the year (Monthly, Quarterly, Half yearly, Yearly): Movie tickets to employees every two months Valentine Day Allowance etc. Various other recognition programs To minimize attrition, companies are focusing on employee benefits where employee welfare is given extra importance. In Telecom and IT industries, a number of measures are adopted to create an internal environment which leads to higher employee retention. Companies are also promoting from within, thereby, opening growth opportunities in inter as well as intra division within the Company. All too often, a resignation is accepted not with regret but with a bit of spice. This is especially true with the IT industry. An employee resigns from an organization for better prospects or fulfillment of his career aspirations. The lure could be increased technical work opportunities, higher responsibilities, a more attractive compensation package or a chance to venture out on one’s own. Today IT companies are facing a shortage of knowledge workers because the rate at which they loose employees is almost double the rate at which they hire employees. HR efforts can play an important role to reverse this dangerous trend in the IT industry. There are times when an employee resigns to join another company but after some time, he decides to return to his previous job. The reasons may be many. The new job may not be upto his expectations or he may be more comfortable with his previous team. But employees who leave donot always come back. They take with them some positive and some negative experiences and an image of the company, which they share with the outside world. Employees whether working with a company or separated are ambassadors, who spread the word around. And while neglecting the process of employee exit, many of us discount this fact completely. So the Indian software industry should formulate a result-oriented manpower framework to get over the labour pains faster. BENEFITS OF BENCHMARKING HR PRACTICES Affirmative Action Plans. HR Policy and Procedures Manuals. Employee Handbooks. Interviewing Guides and Training. Human Resource Department Audits. General on-site and off-site Human Resource Support. Organizational development. Teambuilding. Performance Review Systems. Attitude Surveys. Wage & Salary Surveys. Supervisory Training. It provides the means to review both the effectiveness and efficiency of the HR team and its processes. It supports the monitoring and review of HR objectives. It highlights the relative strengths and weaknesses of current HR practices, in relation to perceived 'good practice' RESEARCH METHODOLOGY STUDY This research project is a descriptive type of study on the topic- “BENCHMARKING OF HR PRACTICES”. Research Design: Research Design is simply the framework or plan for a study, which is used as a guide in collecting and analyzing the data. It is the blueprint that is followed in completing a study. As the objective of the research is descriptive in form, the research design must be made accordingly: Formulating objective of the study. Designing the method of data collection. Selecting the sample size. Collection of data. Analysis. Conclusion. Descriptive research includes websites, books, magazines, observations and fact-finding enquiry of different kind. DATA COLLECTION PRIMARY DATA: Primary data helps in validation of the knowledge gathered from secondary data. Primary Data are those, which are collected afresh and for the first time. The methods adopted for it are as under: Observation Method SECONDARY DATA: Secondary data provides the knowledge about the topic of the research and the company in terms of facts and figures. Secondary data are those, which are collected through someone else, and users can obtain from websites, books, magazines, and articles in newspapers. DATA ANALYSIS OBJECTIVE OF THE STUDY: The objectives of the study are as under: To study the purpose of benchmarking the HR practices. To study the process and steps of benchmarking. Defining the factors enhancing the success of benchmarking efforts. To know the benefits of benchmarking. To analyze the trends and best practices for using HR for competitive advantage. METHOD OF DATA COLLECTION: The study is based on the secondary data. The research tools are the magazines, journals and websites. LIMITATIONS OF STUDY Considering the fact that nothing is perfect in this world. Every individual is bound to make mistake at some point or the other. The information is collected only from Institutes and by questionnaire form. Information collection took 25 days. The respondent may be based or influence by some other factor. The minor concept and technique at the marketing management are used significant in the project concern. Some time respondents were not in reply with full confidence and sometime they reply without thinking over the matter. ARTICLES 1. USING HR FOR COMPETITIVE ADVANTAGE- TRENDS AND BEST PRACTICES Dr Keith Good all, Senior Associate at the Judge Business School, Cambridge University  Programme description: This three-day programme focuses on the relationship between Human Resource Management and the leadership and management of successful businesses.  The development of the Human Resource function from its early role in ‘Personnel Management’ to the current emphasis on Human Resource as a ‘strategic partner’ will be examined. The course is organised around case studies which detail Human Resource practices in a variety of industries.  The teaching methodology includes short lectures, practical readings, group discussions and DVD presentations. Key focus areas Analyzing the roles of HR Frameworks developed by Harvard and Michigan to think systematically about how HR connects with business needs, with strategy, and with the environment will be deployed.  Aligning HR with Strategy what is it exactly that makes HR ‘strategic’?  An understanding of strategy will be clarified and then the programme examines how HR can be aligned with strategic objectives. Each of the case studies used will give practical examples of the different ways in which HR can support the senior management team and the line. Winning the ‘war for talent’ and retaining key staff. Starting with the McKinsey guidelines for winning the war to attract and retain key talent, the programmed then looks at a detailed case from the pharmaceutical industry.  The assumption is that poor HR practices will always retain staff, but the ones that stay will be the ones you don’t want. Building commitment. A framework for understanding commitment in a high-performance organization, as opposed to having simple compliance, will be developed.  The cases will also illustrate the different ways modern organizations build commitment in the workforce. Systems thinking. It is important for HR and senior managers to take an overview of the interactions between ‘people’ and the ‘hard’ aspects of the business in a dynamic business environment.  The McKinsey/Harvard 7-S model will be used as an example of how systems thinking can be applied to the analysis of organizational effectiveness. Change management and HR. One of the constant themes of modern management is the need for change.  The case of a French cement company in China will be used to examine the relationship between HR and change management. Who should attend? The course is suitable for practicing HR managers interested in benchmarking their current practices against international trends.  It is also suitable for senior managers who want to use their HR function as a source of competitive advantage.   By the end of the course participants will: have practical frameworks for analyzing the roles of the HR function understand the relationship between HR and strategy in a high performance organization have analyzed the use of HR in different types of businesses (high-tech; service; manufacturing …) understand HR as part of a ‘systems’ view of business effectiveness be aware of trends and best practice in obtaining, retaining, motivating and developing staff Understand the relationship between HR and change management. 2. HR PRACTICES FOR HIGH PERFORMANCE ORGANIZATIONS ABSTRACT: If Australian organizations are to be competitive, more productive and economically sustainable, they will require highly skilled knowledgeable, innovative workers and a relatively stable workforce. An increasing number of companies in the United States and Europe are implementing management systems and HR practices with greater employee involvement to increase productivity and quality, and to gain the competitive advantage of a workforce strategically aligned with the organization’s goals and objectives. Critical organizational processes such as information sharing, training, decision-making and rewards are now being moved down to the lowest levels in the organization. This approach to HR puts knowledge, power, rewards, and a communication network in place at every level in an organization. If organizations are to be sustainable in the medium to long-term, employees must be motivated to care about the work they do, to acquire knowledge-related skills, and to perform. Greater employee involvement can only be achieved through a carefully managed process that strives for participation by integrating the individual with the organization to achieve high productivity and competitive advantage. This process involves restructuring the work so that it is challenging, interesting, and motivating as possible. Employees at all levels are given power to influence decision-making. However, high quality employees do not assure an organization of having a sustainable competitive advantage or even a short-term advantage. If employees are poorly motivated or if the correct organizational systems are not in place, the employees’ talent may be wasted or lost to competitors. THE FORCES OF CHANGE: The organizational events of the last ten years – out-sourcing, downsizing, re-engineering, reduced organizational levels, acquisitions and joint ventures, high management turnover, broadened spans of managerial control, rapid technological change and globalization – are challenging traditional HR and executive development practices established since the mid-1970s. The impact can be seen in many ways: There are fewer levels and broadened spans of organizational control which means that organizations are finding it harder to retain talented people; Radically changing organizational structures have effectively abolished career paths and middle management in both the private and public sectors; External recruitment of talent has risen dramatically as many HR departments and their organizations have opted for this soft option rather than developing talent from within; Reduced budgets and more demanding shareholders and other investors have forced companies to focus developmental resources for optimum return in the short-term and invest less. WHY HR IS NOW BECOMING INCREASINGLY IMPORTANT Organizations in Australia have changed significant aspects of their employment policies during the 1990s. The role of trade unions has declined, bargaining about employment conditions and wages has shifted to the enterprise level and increasing numbers of organizations are introducing techniques to communicate directly with their employees. There has been a growth in pay for performance schemes, flexible employment practices, training, performance appraisals and broader job structures. The bureaucratic and hierarchical organizational structures have given way to broader and flatter structures where self-managed work teams have become more prevalent and workers. MAJOR CHALLENGES FACING AUSTRALIAN ORGANIZATIONS. Although there has been a marked decline in the Australian dollar, the ability of Australian organizations to compete with goods and services from overseas competitors may have been impaired due to the poor economic health of many Asia-Pacific economies. Consequently, overseas competitors are able to provide products and services at a lower price to the detriment of the local industry Australian organizations now need to concentrate more on highly value-added products and services produced by a skilled and motivated workforce. This requires that Australian organizations need to take a more "strategic" approach to HR that will enable them to cope with the challenges resulting from rapid changes in technology and globalization. HR PRACTICES WHICH ARE CRITICAL TO ECONOMIC SUSTAINABILITY Employment security Selective hiring of new personnel Self-managed teams and decentralization of decision-making High compensation contingent on organizational performance Extensive training and development Continuous improvement HR programs Reduced status distinctions and barriers Trust between management and employees at all organizational levels Efficient and effective use of new information technologies WHAT IS "BEST PRACTICE" IN HR? There is no single best practice to which all organizations should aspire. Rather, the literature shows that each firm has a distinctive HR system that represents a core competencies required for the survival and sustainability for that particular organization. “Best practices" in HR are subjective and transitory. What is best for one company may not be best for another. What was best last month may not be best for today. The concept of "best" is highly subjective and non-specific. FACTORS WHICH CONSTITUTE BEST PRACTICES IN HR ARE Communications Continuous Improvement Culture Consciousness Customer Focus & Partnering Interdependence. Risk Taking Strategy and commitment. . IMPLEMENTING HR PRACTICES AND POLICIES When implementing HR practices and policies, managers should note that HR practices: Cannot be "copied" from one organization to another. Must be implemented with regard to the organizational context of a particular firm. Are more effective, and can produce a synergistic effect, if they are complementary to each other. Require significant planning, resources and effort. Necessitate that people who are expected to assist with the implementation of the new HR practices must be consulted and be a part of the planning, development and implementation processes right from the start. There must be an effective management system to support long-term productivity improvements. Policies and training have to be aligned with HR practices. Must be broadly complementary to HR policies linked to "high-involvement work practices" and are thus relevant to explaining the variation in the diffusion of such practices. KEY FINDINGS AND LESSONS LEARNED The literature refers to some key findings from research and lessons learned. These include: The most striking increases in high-involvement work practices are in the use of on-line work teams and off-line problem-solving groups. Higher levels of managerial tenure had a positive and statistically significant association with greater increases in the use of high-involvement work practices. In newly industrialized countries, investments such as increased training, performance-based pay, the elimination of status barriers, and more selective recruitment and hiring practices were assessed by the corporate parent. High-involvement work practices may represent "competence-destroying" change, which is difficult to implement, and may lead to worsened performance in the short-term. Plants that undergo a major disruption in their operations – creating opportunity for various organizational changes - were more likely to adopt high-involvement work practices. Manufacturing technology is necessary but insufficient, without work force commitment to performance. Any competitive advantage will not be sustained without a skilled, motivated, and committed management team and work force. Organizations must enhance work force ability to improve productivity. Technology without a talented work force is an opportunity that has not been utilized enough. NEW ROLE FOR HR PROFESSIONALS The role of HR departments is being transformed as line managers assume greater responsibility for a number of people management activities and as HR specialists focus more closely on integrating HR and corporate strategy. It will become increasingly important for HR specialists to demonstrate that they can contribute to organizational efficiency and effectiveness in both the short and long term. HR professionals can now play a more proactive role by: Demonstrating that they understand these employment changes has an impact on employees and that employee’s experience organizational change in different ways. Realigning the expectations of managers and other employees within their organizations. HR practitioners are responsible for communicating the need to understand the changing nature of work and the impact of such changes on the organization. Monitoring how well employees are coping with employment changes where many employees do not feel that they are effectively making the transitions when organizational changes and flexible work practices are introduced. Providing advice to executive management to adopt a long-term strategic approach to HRM that is more conducive to the development of employment relationships based on mutuality of organizational and individual goals and expectations. CONCLUSION There is significant evidence in the literature to indicate that a strategic approach to HR policies and practices in Australia has been largely pre-occupied with strategy in its narrowest form. An explanation of this may be that strategic HR practices have been used opportunistically rather than strategically, and the approach by HR specialists and their CEOs has been overridden by the need to survive and grow in an increasingly complex and volatile economic environment. Unlike their financial counterparts, HR specialists are often ignored when strategic business decisions are made. This supports the belief that the material considerations for long-run strategic decisions placing HR as the critical function in corporate strategy do not exist. Organizations that continue to seek solutions to their competitive challenges by downsizing, outsourcing and weakening their organizational culture are now "on borrowed time" and will not be sustainable. Organizations need to match HR policies and practices with long-term business strategies required to compete in the global market place, and generate employee commitment and retention over the long-term. HR practices are required that are incremental and collaborative and provide the opportunity to employees to make decisions affecting their work and to share in the rewards of their creative efforts. EXAMPLES OF TOP 10 BENCHMARKING FIRMS THE TOP 10 BENCHMARK FIRMS IN RECRUITING AND TALENT MANAGEMENT The very best companies in recruiting are constantly striving to improve everything they do through continuous learning. One of the best learning tools at their disposal is benchmarking, which often provides learning that can be applied immediately. Unfortunately, unlike many other professions, there is no standard measure as to what makes a recruiting function world class, which might provide a list of which firms are benchmark worthy (for benchmarking to be truly beneficial, all parties involved must be able to learn from each other). The Top Ten 1. First Merit Bank. Some may find it hard to believe that the most strategic and innovative approach to recruiting isn't found inside one of America's most recognized companies, but rather from this bank headquartered in Ohio. In addition to a great referral program, they are the best in understanding how recruiting can adopt successful approaches such as data mining, customer relationship management, competitive intelligence, and assessment metrics from other business functions. 2. General Electric. Long recognized as "the" benchmark firm when it comes to building a performance culture, GE wins hands down as having the best overall talent management strategy. They prioritize jobs and focus on "game changers." Their employer-of-choice brand is second to none and they are among the leaders (along with Home Depot) in recruiting from the military. 3. Microsoft. Giving GE a run for their money as best in talent management is Microsoft. They excel at workforce planning, redeployment, utilizing analytics, and leveraging the internet. They are also truly world class when it comes to the effective use of contingent workers. Microsoft was also ranked #57 on Fortune Magazine's 2005 100 Best Companies to Work for in America. 4. Wachovia Corporation. This hands-down leader in diversity recruiting is also well versed in utilizing metrics and running a fee-for-service recruiting model capable of actually generating revenue by selling excess recruiting capacity to other organizations. Their recruiting strategy is world-class in a relatively conservative industry. 5. Starbucks. Given the "less than glamorous" nature of the retail industry, the approach taken by this coffee giant to employment branding and becoming an employer of choice is phenomenal. They also excel at high-volume hiring. Starbucks was ranked #11 on Fortune Magazine's 2005 100 Best Companies to Work for in America. 6. Marriott International. This hotel giant was one of the earliest adopters of employment branding, and one of the few companies to maintain a dedicated focus on the art. While they still excel in employment branding, their diversity recruiting and work with the disadvantaged are world class by any standard. Marriott was ranked #63 on Fortune Magazine's 2005 100 Best Companies to Work for in America. 7. Southwest Airlines. The clear winner for innovation in recruiting, this company not only excels in selection but also scores huge in branding with the launch of its own TV show (Airline). Every employee periodically receives productivity and financial reports so they can act more like owners. 8. Booz Allen Hamilton. The things that set this professional services firm apart from the competition comprise a laundry list of "must have" programs for professional-level talent. In addition to these programs, they also excel at employment branding. BAH was ranked #75 on Fortune Magazine's 2005 100 Best Companies to Work for in America. 9. Valero Energy. Managing in a place "run by CPAs" requires extraordinary metrics, and Valero comes through with the best metrics in recruiting, bar none. Their use of regression analysis for workforce forecasting is truly best in class. In addition, they have development metrics that demonstrate the relationship between recruiting effectiveness and stock price per share, and they have created a sourcing channel report that demonstrates the ROI in the effectiveness of their best sourcing channels. Valero was ranked #23 on Fortune Magazine's 2005 100 Best Companies to Work for in America. 10. T-Mobile. Excellent work in nearly every aspect of recruiting, T-Mobile is a stand out in both the usage of metrics and online candidate assessment. In 2004, T-Mobile set out to demonstrate the business impact of recruiting and succeeded beyond expectations. With a largely tech-savvy target audience, they also excel at innovation in Internet recruiting. A SUMMARY OF THE BENCHMARKING INTERVIEWS The overall trend in the delivery of modern human resource practices is to refocus the traditional orientation of the Personnel Office from conducting transactions alone to combining service delivery and strategic planning. For example, at Genzyme, Human Resources (HR) is 70% a business partner and 30% a service provider. Johnson& Johnson has organized HR into three segments: Thinkco, Touchco and Serveco. Thinkco is a strategic unit providing direction to individual areas; Touchco exists within the business unit to deliver specific human resource practices; Serveco handles human resource transactions across the organization. In the aggregate, three key factors are necessary for high level human resource practices: strong leadership, clear organizational values, and ongoing measurement. Success requires faith in administrative processes, use of technology, and high-level involvement of HR in the overall strategic planning for the organization. Every organization the team interviewed cited the critical importance of high-level leadership to advocate for change and to clarify the focus of future human resource practices. To better define and clarify the values of the institution or corporation, several organizations have specified human resource principles that provide a basis for the development and implementation of new practices. For example, one multi-national organization developed a process to review practices world-wide, after which it issued a statement defining seven principles of leadership and appointed people to guide the subsequent implementation of new human resource practices. These organizations used employee surveys, exit interviews and cross-functional meetings initiated by HR to measure the success of changes in human resource practices. Common Themes Certain approaches to human resource practices were fairly common across many of the organizations interviewed. 1. Planning and Appraisal In general, planning and appraisal processes focus on developing the individual; letter grades are not used. Several organizations use a "360" evaluation tool in which subordinates, colleagues, and supervisors contribute to an individual's evaluation. An important outcome of this process is a training plan that links both the needs of the individual and the goals of the organization. Positive, honest feedback is critical. 2. Individual and Team Development The key to individual and team development is training. Characteristics of successful organizations include: budgeting training expenses and releasing individuals to attend training sessions; providing centralized core training appropriate for the job; training managers, coaches, and supervisors in work and family issues; and providing training specifically tailored to the needs of teams. 3. Career Planning Consistently, career planning is described as being the responsibility of individual employees. Several organizations said, "the job belongs to the company; the career path belongs to the individual." 4. Hiring Technology is widely used by central HR for recruiting, hiring, retaining and assessing performance and competencies. Nevertheless, screening, interviewing and final decisions remain the responsibility of the business units. The documentation supporting these transactions is processed and stored electronically. The organizations believe this technologically enhanced hiring process is valuable to both the internal and external candidates. 5. Succession Planning Succession planning is of growing importance to organizations as they come to realize that professionals who have achieved a high level of success within a particular discipline have not necessarily developed all the competencies for leadership. Several organizations have taken specific steps to develop new leadership. For example, Johns Hopkins has established a Leadership Institute that may contribute to succession planning. 6. Job Design Successful job designs offer flexibility; are guided by what needs to be done; and meet the demands of the marketplace. 7. Classification Job classification remains the responsibility of central HR. Problems occur when standards for classification are not applied. 8. Compensation/Recognition/Other Rewards Total compensation and rewards are being desegregated into base salary, discretionary bonuses, and non-financial recognition. For example, AT&T provides cash awards for ideas which lead to cost saving. At Lucent Technologies, bonuses are based on a combination of individual merit, the performance of the business unit, and the performance of the corporation. Together, the experiences of these organizations offer guidance to MIT as it works to expand its human resource practices, to deliver base line services more efficiently and to develop the workforce to meet the strategic needs of the Institute. FINDINGS There were many findings which were made from the study which are as follows: Benchmarking establishes HR systems. It ensures compliance with Federal and State Employment Laws. It maintains HR systems on an ongoing basis. Steps of benchmarking process are very effective. Areas which are benefited by the benchmarking practices. The Top 10 benchmarking and their strategies for success. BIBLIOGRAPHY www.benchmarkoutsourcing.com www.gibs.co.za.com www.globalbestpractices.com www.osp.state.nc.us www.dpc.wa.gov.au www.qut.edu.au Article Reviews: www.ere.net The Top 25 Benchmarking firms in Recruiting and Talent Management. www.fsed.org HR Practices for High Performance Organizations. Flower, Alan. 1997. How to: Benchmarking? Personnel Management. 12 June. SYNOPSIS FOR DESSERTATION On BENCHMARKING THE HR PRACTICES Submitted To: Submitted By: Snigdha Malhotra Divya Bajpai Faculty Guide G-19 A1802008173 Introduction The current scenario in the IT sector India has the largest pool of manpower, second only to the US. According to a study conducted by the National Association of Software and Services Companies (NASSCOM)-quantity of skilled knowledge workers in India seems to be a non-issue, and it would be so at least for another couple of years. The arithmetic out of 1.22lakh engineering graduates qualifying every year in India, about 73,000 are software engineers from IITs and other RECs. Thus, around 73,000 fresh software engineers are expected to be available annually. Total demand for software professionals during the next couple of years is estimated at 1.40 lakh. Against this, India is expected to have a pool of 1.46 lakh software engineers. Besides, quite a few Indian universities have started courses leading to Masters in computer Applications and there are private Training Institutes which offer high level software engineering courses. According to an AIMA survey, 60% of the IT Companies have a written job description of all levels of employees. The rest 40% either have a partly written job description or they donot have anything written at all making it difficult for both the employee and the employer. Most CEOs site lack of skilled professionals as one of the major hindrances to growth in the Indian Software Industry. Reputed software companies might get people at the base level but getting somebody with an experience of more than 4-6 yrs is a problem. The problem of retention was more prevalent in the telecom, IT and the Services sector than manufacturing and traditional sector. When asked about employee retention, the majority among HR professionals of IT felt that it was all about retaining good people in the company and creating such situations for the non-performing employees that they quit on their own. It was felt that employee retention was a collective responsibility of the HR department, top management and individual departments in an ascending order with the HR Department having the maximum and individual department having minimum accountability. Data shows that in companies with more than 1000 employees, the HR Department was strong whereas in mid-sized companies, the individual department was responsible along with the top management. Large companies with growth rate higher than 10% did not face serious retention problems, but large companies with lower growth rates had acute problems in retaining their employees. In all industry segments, the employee attrition rates at the junior level were on the higher side compared to that at the top management level. Studied over the last two years, retention levels have either increased or remained same due to better compensation, healthy competitive environment, higher profitability of the company, and good working conditions. But the case is not so with the IT sector, where the key motivator is the lure of U.S market. OBJECTIVE OF STUDY The project focuses on The importance of retention in the IT companies. Most effective methods to find the cause of turnover. Factors favoring retention. Innovative methods adopted by companies to retain people. Constraints faced by the organization in implementation of retention strategies. Effectiveness of the methods used to retain people. To make continual improvements towards best. To determine the taste and preferences of customers of various places. To get a larger share in this rapidly increasing market. SCOPE OF STUDY It includes: what should be research method to be followed to know about desired results. What is to be sample size and design that represents whole data of research which depicts real picture of study. RESEARCH METHODOLOGY STUDY This research project is a descriptive type of study on the topic- “BENCHMARKING OF HR PRACTICES”. Research Design: Research Design is simply the framework or plan for a study, which is used as a guide in collecting and analyzing the data. It is the blueprint that is followed in completing a study. As the objective of the research is descriptive in form, the research design must be made accordingly: Formulating objective of the study. Designing the method of data collection. Selecting the sample size. Collection of data. Analysis. Conclusion. Descriptive research includes websites, books, magazines, observations and fact-finding enquiry of different kind. Review of literature India's skilled, high-quality and low-cost IT-ITES manpower has continued to be a major edge for the sector in the global markets. Recognizing the importance of this pool of talent to the country's continued dominance and leadership of the global IT-BPO segments, the industry, the Indian central and State Governments and academia have been working together to ensure that IT manpower resources are rightly skilled and geared up to cater to the dynamic and fast changing needs of the technology sectors. Both the IT services and ITES-BPO industries have been scaling their operations over the past couple of years and adding to their employee rosters. According to the annual ICT industry survey conducted by NASSCOM, during 2005-06, the overall employee base of the IT-ITES sector rose to an estimated 1.3 million professionals. The NASSCOM study also indicated the following: the number of people employed by the export segment within the IT-ITES industry touched around 930,000, a year-on-year increase of 32 percent the IT software and services industry added over 120,000 professionals during 2005-06 the ITES-BPO sector added 100,000 professionals on its rolls the IT-ITES industry together created indirect employment for an estimated three million people during 2005-06 Future IT-ITES Manpower Requirements Current HR trends within the IT-ITES industry point to the following scenario in the future: the Indian industry will require 850,000 IT professionals and 1.4 ITES-BPO professionals by 2010 the Indian IT industry has taken adequate steps to develop talent, particularly among college students assuming that current trends in graduate turnout and employment are maintained, the demand for IT software and services professionals will be met the BPO industry is unlikely to face talent shortages in the short term current accessibility to talent is very high (at around 80-90 percent of total graduates), but only 10-15 percent of these students have the skills for direct employment without prior training NASSCOM HR Handbook : Invited Articles 7 only about 50 percent of this suitable pool is willing to join the industry ITES-BPO sector, at the current page, is likely to experience a shortfall of around 500,000 employees Indian Human Resources minister to reform technology sector Kapil Sibal, India's Minister of Human Resource Development (HRD) held a meeting Monday to present his reform plans for the Indian Institutes of Technology (IIT) sector by increasing the entrance percentage to 80% and above in the class XII (final year) board exams. A three-member committee was set up to review the proposal. Sibal said, "The present criteria is that students need to secure 60% in class XII for appearing in IIT-JEE. This is not acceptable", pointing out that the current criteria where students getting more than 60% in the board exam of the twelfth class are eligible for IIT-JEE is not good enough and that it has to be raised to 80-85%. He also stated that students undervalue final year board exams, preparing instead for the Indian Institute of Technology Joint Entrance Examination (IIT-JEE); they enrol in coaching institutes and concentrate on their study material in order to enter IIT. He wants to abolish these "teaching shops." The meeting decided that they would set up two committees, one headed by Anil Kakodkar, Atomic Energy Commission (Chairman) and other by T. Ramasamy, Department of Science and Technology (Secretary). The first committee is scheduled to decide final year board percentage and the second one is scheduled to set the curriculum. The Kakodkar committee also plans to decide how to abolish coaching institutes and how to move IIT field forward with a greater emphasis on research. The committee is expected to submit its report in the next six months. The minister also clarified that some of these will be implemented from the 2010 academic year and some from 2011. The meeting was also expected to reduce the fee for African and South Asian Association for Regional Cooperation (SAARC) countries as their fees are higher than those of Indians. The review committee says that people of other countries are tempted to study in India but they refrain due to high fees. The Ramasamy committee is expected to submit its report in the next three months. Lastly, the meeting said that it will appoint board members and directors on the basis of nominations and independent rank and power to ensure IIT's activity IT SECTOR PROFILE The IT industry has so far witnessed three major changes. Each changeover has been marked by emergence of technologies that have dramatically increased the number of it users and applications riding a new wave of growth. Elements of the previous period remained, but new technology was the driving force in the growth of it industry in the new period. The first period marked the beginning of mainframes and ushered in computer technology but usage was limited. In the second period mini computers led the IT growth and helped automate several business processes. The third period which began some 20 years ago, belonged to the pcs and client server technologies. Of applications and it industry revenues. This fueled an’ order-of- magnitude’ growth in the number of users, the number of applications and it industry revenues. Much of this was achieved by making it products available at cheaper rates, which enabled manufacturers to widen and deepen the market. The fourth period, which is in its early stages, is the internet era or the wired market era. The wide and instantaneous reach of internet, displays its potential to fuel another order-of-magnitude growth in the IT industry. This would obviously require selling at still lower price points and revamping current distribution strategies and marketing approaches. The internet era provides another opportunity to grab leadership positions- not only in the IT sector but several other industries as well. Companies, which are quick to react and take the initial lead, will grow faster than those who fail to do so. Already the corporate are using the internet to deliver product information, establish corporate identity, provide customer service, advertise etc. Internet also provides a cost to effective communication medium. Apart from e-mail, it can used to make inexpensive phone calls, videoconferencing, real- time interaction etc. Players Indian software industry has a mix of a few large companies and several small to medium sized companies. Currently 42 Indian companies have exports of more than Rs 1 billion. First generation entrepreneurs, who had limited access to finance and low risk taking capabilities, operate most of these large companies. Smaller companies which are also typically entrepreneur run companies, have a similar potential to strike it reach. Some of the key players in this industry are infosys, wipro, mahindra british tele., mastek etc. Geographical distribution Most of the software companies are concentrated in western and southern part of India. These are further concentrated in a few cities. Choice of location has been driven by availability of infrastructure facilities, cost of space and manpower availability. In terms of business size, mumbai, pune, hyderabad, banglore and chennai have the highest concentration. Procedure for software export Export of software may be categorized in the following ways: -on-site services: in this category the unit provides the services at the clients site abroad by deputing their professionals. The declaration form for getting remittances in their rbi account is form "a" and form "b". -of-shore service: in this case software development and services will be done in india and exports are done either in physical form i.e. On magnetic media, paper, etc. Or in non physical form i.e. Via telecommunication/ data communication links. In the case of physical form the declaration form used is gr form and softex form for non-physical form. For exporting the software by the stp unit "software declaration form" in triplicate need to be attested by. The jurisdictional director of stp. The attested copies of the declaration form need to be submitted to RBI after effecting the exports for necessary remittances in this regard from the client. Government initiatives Government has provided several policies to hold and improve prosepects for domestic software companies. These include Setting up of stps : stps (software technology parks) are autonomous organizations set up the department of electronics (doe). Under the stp scheme, member software units are provided various incentives. Currently the government has set up stps at various cities like bangalore, pune, bhubaneshwar, thiruvanthanapuram, hyderabad, noida, gandhinagar, etc. To provide further incentives to units in the stp government relaxed the 100% export requirement. Software companies are also exempted from applicability of minimum alternate tax (mat). Export processing zones (epz) : the government has set up various epzs. Units setup inside the zone can have 100% foreign equity. The firms are expected to export 75% of their production and can sell the balance in te domestic market. Additional incentives exemption from income tax on export profits. Telecom policy : in may 1994, the government released the telecom policy to improve the telecom municationinfra structure in India. The policy sought to encourage privatization of infrastructure, which was a radical step at that time. Curbing piracy : to protect rights (ipr) of software companies, apart from cracking down on piracy, the government has also made several policies to actively discourage piracy, the government has also made several policies to actively discourage piracy. Authorized sellers of imported software are allowed to reproduce software in India and sell it without import duty. Local software manufacturers are exempt from excise taxes. Other incentives include : Depreciation on it products allowed at 60% pa, taking into cognizance the high rate of obsolescence of such products. Exemption of with holding tax on interest on ecb is proposed to be extended to the IT sector as well. This will reduce cost of borrowings for it companies through the ecb route. 100% customs duty exemption on all software used in the sector. Extension of 80hhe to the supporting developers. This will enable supporting developers to enjoy tax concessions, similar to the supporting manufacturer’s concept in manufacturing sect. The new information technology bill The much-awaited information technology (it) bill was passed by the Lok Sabha in the month of May 2000. Even though there has been some criticism about the provision of the bill, the fact TAT the e-commerce transactions / cyber-crimes are still very nascent areas in the Indian context means that it would have been quite impossible for any bill to have been fully comprehensive. As the market matures and the users get a hang of the existing regulations, new amendments can be brought about as and when required. Trying to make the first bill comprehensive would have only delayed the implementation. It would be useful to have a look at the major provisions within the bill and their impact. Should boost e-commerce The bill is expected to give a major thrust to e-commerce activities in the country. Though e-commerce activities have started of with most e-commerce sites offering payment through credit cards (where the user keys in his credit card number), there were many apprehensions regarding this given the absence of clear-cut laws and the lack of legal recourse available to any consumer. With the new set of laws, it is expected that buyers on the net would have the required confidence to transact without fear. Digital signatures would come into play. A good part of the new act is the fact that it recognizes digital signatures. The creation of digital signatures, their certification and verification is an absolutely new area which opens up large areas for software companies with an expertise in the areas of encryption. CONCLUSION "Benchmarking is a process for identifying and importing best practices to improve performance."  Benchmarking is not a simple comparative study, simply copying practices from other organizations, or simply assessing performance. Benchmarking helps in establishing solid HR systems and maintaining HR Systems on an ongoing basis. It also helps in recommending systems and establishing a timeline for project. It also helps in assisting with staffing the company as needed. There are various benefits of benchmarking. It helps in making affirmative action plans and thereby makes HR policies and procedures manuals. It helps in enhancing Teambuilding. The Performance Review Systems are made effective by practicing benchmarking. Wage & Salary Surveys are done to make the existing policies more effective. Hence, Organizations usually benchmark performance indicators (e.g. profit margins, return on investment (ROI), cycle times, percentage defects, sales per employee, cost per unit) or business processes (e.g. how it develops a product or service, how it meets customer orders or responds to enquiries, how it produces a product or service). PAGE 64