Why HR Software Needs Benchmarks
HR benchmarks put your customers’ data into context with their competitors and industry. When you add benchmarks to your product, your customers have the real-time insights they need to make strategic decisions.
The last few years have seen heightened interest in HR benchmarking as businesses work to stay ahead of a tumultuous economy and tight labor market. As organizations work to make every dollar count, your customers want to feel like they’re getting more value from the software they’re using. Benchmarks can make your product more strategic and multifaceted while giving your customers the real-time insights they need.
Your customers want them—and already use them
HR benchmarks and salary benchmarks serve a similar purpose: to put your customers’ data into context so they can make better decisions about their workforces. Whether they’re deciding what salary to offer a potential new hire or seeing how their diversity ratios stack up to the industry, HR practitioners need accurate, reliable, and timely data to benchmark against.
Relying on their own data isn’t enough for your customers to know what good looks like. A 13% turnover rate might be historically high for an organization, but in the face of 20% turnover in the industry, it could be a better sign than it appears. And a diversity goal of a 40% female ratio might seem sufficient for an organization with only 30% women, but if the industry is closer to 50%, that goal won’t be ambitious enough to keep pace.
When it’s time to make quick decisions with confidence to attract and retain employees, benchmarks are the answer. HR leaders already know this. According to a recent study from the National Bureau of Economic Research, nearly 88% of HR professionals who set compensation at medium and large companies use salary benchmarks as part of their process.
HR departments have budget to spend
Almost half of HR departments (43%) are looking to increase spending this year, according to Gartner’s 2023 HR Budget and Efficiency Benchmarks report. And HR technology is the most cited area for increased investments.
This means your customers have money to spend, and they’re looking to spend it on transformational technology that will help them make better decisions to reach better outcomes. Adding benchmarking to your solution is an easy way to capture more budget and help customers get more bang for their buck.
Benchmarking can help HR make the case for needed changes or improvements and provide momentum to carry them through. This makes benchmarks particularly attractive for HR practitioners who are looking to become more strategic partners to the business.
You can make your solution more strategic
Benchmarking puts your customers’ data into context, and it brings a greater dimension to your solution. When customers can evaluate their workforce health, recalibrate employee retention, craft diversity strategies, and inform their HR best practices with the help of your solution, it becomes the indispensable assistant that they turn to time and time again.
Even better, by providing benchmarks right inside your solution, you can recapture the time that your customers currently spend searching for reliable data sources and compiling and analyzing it—outside your solution. Your customers might already be buying datasets to use for benchmarking; adding benchmarks lets you reclaim that spending and differentiate your product.
To optimize benchmarks for maximum actionability, they should cover everything organizations already measure, from diversity and employee learning to retention and salary. The more granular, the better. And real-time data, updated at least quarterly, lets organizations stay on top of changing industry trends, track their progress more closely, and pivot when necessary. Widespread access—putting benchmarks in the hands of all employees or managers—builds a culture of better decisions as everyone has the facts and insights to support their decision-making process.
The right benchmarking tools can set your solution apart in a market where everyone is trying to get more from their HR software.
What it takes to get started
Widespread access, fresh data sources, ongoing anonymizing and categorizing—it would be Sisyphean, but Sisyphys only had one boulder to push up the hill.
The hardest thing teams will face is the standardization of the data across organizations. You have to invest resources to create taxonomies that define common standards and then create matching algorithms to link the often messy data from each organization to your standard.
-Anton Smessaert, Head of Data Science, Visier
As important as it is to delight customers with the HR technology they’re looking to buy, getting started with benchmarks is hard. You need access to accurate, timely data and the people who know how to aggregate, clean, and anonymize it for use. Most datasets available for purchase are based on self-reported surveys, which aren’t as reliable or up-to-date and don’t come with Visier’s standardization and quality control.
HR data can get messy, especially when you’re combining it from different systems. Job titles, job grades, industry locations—all these can become difficult to standardize, especially with the volume of data necessary for actionable benchmarks.
“The hardest thing teams will face is the standardization of the data across organizations,” says Anton Smessaert, Head of Data Science at Visier. “You have to invest resources to create taxonomies that define common standards and then create matching algorithms to link the often messy data from each organization to your standard. You will need to build and validate AI algorithms to do this well. Some taxonomies require continuous effort to keep them up-to-date, like Job titles. And every time you add new data, you need to validate it again so you need to invest in dedicated resources to continuously update your benchmarks.”
Instead of spending time and resources locating data sources, preparing the data for use, and completing the ongoing maintenance, you can use Visier’s Salary Benchmarks API and HR Benchmarks API, which bring Visier’s proprietary benchmarking data to your solution—ready for you and your customers to use.
Benchmarks are quickly moving from a nice-to-have to a need-to-have. The budget is there, as HR departments plan increased spending on HR technology, and so is the opportunity to make your solution more strategic and multifaceted. The only questions are: when and how? Learn more about salary benchmarks and HR benchmarks.
On the Outsmart blog, we write about workforce-related topics like the top talent acquisition metrics your software should offer, how to add insights where they matter with contextual analytics, and how predictive people analytics helps businesses of all sizes thrive. We also report on trending topics like ESG and EU CSRD requirements and preparing for a recession, and advise on HR best practices like how to create a strategic compensation strategy, metrics every CHRO should track, and connecting people data to business data. But if you really want to know the bread and butter of Visier, read our post about the benefits of people analytics