Benchmarking and its Impact on HR Leadership Development

January 8, 2016

As the competitive landscape in the global economy shifts from west to east, established multinational corporations (MNCs) and start-ups alike must gain a competitive edge in order to remain relevant. While there are a number of areas in which spending on internal organization and management can generate a large return on investment (ROI), HR activities stands out among them as an area with tremendous potential for improvement.

Benchmarking is a tool which elite organizations can use to learn what works within their business, and to gauge which activities can become more efficient based on industry best practices. Applied to HR, benchmarking can help businesses achieve high quality leadership development and in turn ensure a steady stream of talent. In this way, organizations can gain a competitive advantage in their hiring and leadership development processes to get an edge over peers.

The Leadership Development Challenge

For MNCs and small-and-medium enterprises (SMEs), the challenge is clear – too many organizations lack efficiency in their HR and leadership development processes which results in senior management being unprepared for the challenges posed by the modern globalized business climate.

According to recent surveys performed for the Global Leadership Forecast, 86 percent of business leaders understand that their organization’s ability to attract and retain talent will determine future development. Nevertheless, within these organizations only 25 percent of HR professionals believe that their company’s leaders are of a high caliber. The ratio of such professionals with confidence in senior leadership’s ability to tackle challenges such as business volatility, uncertainty, complexity, and ambiguity hovers only between 30 and 40 percent.

Other recent leadership surveys have found persistent dissatisfaction among potential future leaders at the pace of their development under the tutelage of senior management. For instance, a Gallup survey found that only 35 percent of managers report being engaged in their work, with only 40 percent reporting adequate opportunities for advancement and professional development. Perhaps most alarming is that only a third of respondents believe that their supervisors actually encourage said professional development.

RELATED: Benchmarking and its Role in Competitive Intelligence 

The Case for Internal Leadership Development

The fact that so many organizations are lagging in this area should raise red flags in a highly competitive environment, not only in the classic business performance sense, but also the HR and recruitment sense. Failure to get the internal HR leadership development process right can have a massive impact on any organization, resulting in a weaker “bench strength,” or the quality of future leaders being two thirds weaker than those competitors who effectively develop internal talent. Additionally, the Global Leadership Forecast found that such faltering organizations could fill 21 percent fewer of the key management positions when a critical need opened up.

If the costs of failure are clear, the benefits of success in leadership development are even more apparent. According to the Global Leadership Forecast, businesses which get this process “right” enjoy 20 percent higher than average leadership quality and “bench strength,” and can fill 26 percent of critical openings immediately. Most importantly, they are 2.3 times more likely to outperform their peers on basic financial metrics of business success.

How to Leverage Benchmarking for the HR Leadership Development Process

How can organizations ensure that they achieve success in their HR leadership development process? As is the case in SG&A or recruitment processes, benchmarking can be applied to HR leadership development with great results. Benchmarking, through identifying industry best-practices and internal weakness areas in relation to competitors, can help organizations address gap areas. Moreover, it can help them achieve the following six factors that are essential for solid internal leadership development programs:

HR Benchmarking

Adil Husain, Director of Emerging Strategy, comments: “By using benchmarking in a comprehensive fashion to understand and plug gap areas in internal leadership development, businesses can ensure they have the deep bench of future leaders necessary to ensure smooth corporate successions. Factors such as clear and identifiable performance metrics and development paths are clear in this regard. Elite competitive intelligence outfits such as Emerging Strategy can work with organizations of all sizes to ensure they reap the benefits of a successful HR development process.”

Emerging Strategy can provide detailed benchmarking and analysis on HR structures and numerous other business functions. To learn more about the benchmarking services that Emerging Strategy offers,  please contact us at info@emerging-strategy.com.



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