Benchmarking is a crucial management tool that guides the stakeholders on the overall performance of the organization as well as mobilizing the employees on a continuous improvement of the organisation’s environmental and social performance. Bench marking is considered to have an impact when the results of the organization performance are immediate (Vorhies and Morgan, 2005). It is essential to recognize that benchmarking and the transfer of the best industry practices are supposed to help an organization in the long run through maximum utilization of the available resources and filling in the gaps associated with an organization poor performance (Drew, 1995).
The notion of a single best practice may be overstated. Distinctive human resource practices help to create unique competencies that differentiate products and services and drive competitiveness in organizations. People management practices are the drivers of efforts to create distinctive competencies and, in turn, business strategies. There are various human resource management models that have been used by companies to benchmark and stay competitive in the turbulent business environment and they include the Industrial Organization Model and McKenzie’s 7s Strategy which include shared values, structure, strategy, systems, style, staff and skills.
Shared values are commonly held beliefs, mindsets, and assumptions that shape how an organization behaves and its corporate culture. Shared values are what engender trust. They are an interconnecting centre of the 7Ss model. Values are the identity by which a company is known throughout its business areas, what the organization stands for and what it believes in, it central beliefs and attitudes. These values must be explicitly stated as both corporate objectives and individual values.
Structure is the organizational chart and associated information that shows who reports to whom and how tasks are both divided up and integrated. In other words, structures describe the hierarchy of authority and accountability in an organization, the way the organization’s units relate to each other: centralized, functional divisions (top-down); decentralized (the trend in larger organizations); matrix, network, holding among others. These relationships are frequently diagrammed in organizational charts. Most organizations use some mix of structures: pyramidal, matrix or networked ones to accomplish their goals.
Strategies are plans an organization formulates to reach identified goals, and a set of decisions and actions aimed at gaining a sustainable advantage over the competition.
Systems define the flow of activities involved in the daily operation of business, including its core processes and its support systems. They refer to the procedures, processes and routines that are used to manage the organization and characterize how important work is to be done.
Style refers to the cultural style of the organization, how key managers behave in achieving the organization’s goals, how managers collectively spend their time and attention, and how they use symbolic behaviour. How management acts is more important that what management says.
Staff refers to the number and types of personnel within the organization and how companies develop employees and shape basic values.
Skills refer to the dominant distinctive capabilities and competencies of the personnel or of the organization as a whole.
Industrial Organization (I/O) Model
The external environment is primary determinant of the organizational strategy rather than internal decisions of managers. The environment presents threats and opportunities all competing to have equal access to resources. Resources are highly mobile between firms. Organizational success is achieved by offering goods and services at lower costs than competitors.
• The 49ers have succeeded by using a strategy of long-term player development by recruiting through college drafts rather than trades. This helps the team cement loyalty to the club by the players.
• The Raiders scoop up talented players who fail or do not fit in elsewhere. The club reinforces its strategy through autocracy where the members are not supposed to participate in decision making. The system of the club embraces outside recruit of experienced players.
Retailing: Sales as the Service
• The Sears selection system requires extensive training. The style keeps track of employee attitude and morale through employee surveys, pay programs to match other retail business through industrial organization model.
• The Nordstrom structure of hiring is decentralized and uses no formal selection tests. There are continuous stream of programs to motivate employees with very little attention paid to the staffs in terms of training and commissions when retailing.
• The link between employees and product market strategy is sometimes less direct in services, but there are still relationships between the way employees are managed, the competencies employees help produce, and the way companies compete.
Professional Service Firms; Information and Advice as the Product Boston Consulting Group (BCG)
• The style of BCG is to hire the best undergraduate and MBA students to work for them. • The firm’s system requires rigorous selection procedures and through industrial organization Model provides exceptional compensation to the employees as compared to other organizations. • The firm develops its staff through formal training. • BCG shared value approach expects each team to come up with innovative ways to reinforce its entrepreneurial culture.
• The professional firm develops its distinctive capabilities through on-campus recruiting and employee skills and development through extensive training model. • The firm’s strategy lies in providing clients with consistent services. The core competency is also consistent with the products and the techniques of the company.
• The business school staff development represents internal skills development. The school hires employees and turns them into experts. • The business school invests a lot on employee development through the staff model.
• The school recruitment strategy model relies on external environment to recruit its employees from a network of academicians. • The system model that is used to make the institution maintain a competitive edge in the market is by hiring employees with superior technical skills and by making use of its outside market.
• The insurance firm success is based on its shared value model of becoming the insurance of choice. • The firm makes substantial staff investment through its recruitment, intensive training and testing before hiring.
American International Group (AIG)
• The success of the insurance firm is through its industrial orientation strategy model where the company identifies new areas of business, creates new products, and benefits from the first mover advantage as a result of exploiting the market. • The company’s competencies are its ability to respond to the turbulent business environment. • The company hires from its competitors and invests less on staff development.
The Shipping Business
• The shipping business has a strategy model of empowering its employees in the implementation of its vision. • First service company to win the Malcolm Baldridge National Quality Award • Intensive orientation program for staff development. • One hub at FedEx meant that there were fewer coordination problems, allowing for autonomy and participation through it structural model. • This model highly enhances loyalty in employees.
• The orientation of the company structure model takes an autocratic approach where the employees have no direct say over work organization matters. • Company standards for each task through its shared value model. • Pays the highest wages and benefits in the industry (Industrial Organization Model). • Productivity of UPS’s drivers is about three times higher than that at FedEx due to its high compensation. • UPS’s business demands a level of coordination that is incompatible with individual employee involvement and a “high commitment” approach through it structural model.
Food and Beverages
• Coke builds on employee skills and hangs on them through staff development model. • Coke hires college graduates with little or corporate experience and provides intensive training. • There is promotion and seniority based salary incentives. • Decision making is centralized
• The company relies on employees’ innovativeness to identify market niches • Pepsi hires employees with experience and advanced technical skills through industrial organization model. • Decision making is decentralized.
• Employees have little job security.
• Less loyal employees.
Drew, S. A. W. (1995). Strategic Benchmarking: Innovation Practices in Financial Institutions. International Journal of Bank Marketing 13 (1),4-16.
Vorhies, D. W., & Morgan, N. A. (2005). Benchmarking Marketing Capabilities for Sustainable Competitive Advantage. Journal of Marketing 69 (January Issue), 80–94.
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