January 25, 2024
Is benchmarking right for your organisation?
In a time when many organisations are reviewing one or more of their global mobility policies, a question arises as to whether policy benchmarking is a productive exercise. In fact, many organisations conduct benchmarking as a precursor to policy review, using an assessment of the extent to which their policies are aligned to those of competitors or similar organisations to determine whether or not a review or adjustment is necessary. For others it is an integral part of the policy review process, alongside other key strands of stakeholder engagement and data analysis.
The scale and scope of a benchmarking exercise can vary widely dependent on the needs and objectives of the organisation, ranging from a rough polling of a small number of organisations on a limited selection of policy constructs, to a much wider-scale exercise involving multiple comparators and policies. Organisations also have a choice as to who can support their benchmarking exercise, and this may well be dictated its the objectives and scale. Industry associations, relocation management companies (RMCs), large consultancy firms and industry veterans acting in a consultancy capacity are all well-positioned to undertake this type of work. Whichever combination of tactics is used, an organisation needs to know that the outcome of such an exercise merits the investment in resources, whether that be ‘confirming what we already suspected’ or providing new ideas to innovate and evolve existing practices. In the following sections, we take a look at the advantages and disadvantages of policy benchmarking and offer some guidance on avoiding the pitfalls.
Firstly, let’s explore some of the advantages of benchmarking.
Identifying best practices and novel approaches
To a certain extent, the advantage of best practice identification is more heavily weighted towards organisations with small programmes or organisations expanding their geographic footprint who have a relatively new mobility programme. These organisations can benefit from tried and tested approaches of much larger and more experienced organisations to identify and adopt methods optimised by others operating in a similar industry sector. For organisations with young mobility programmes, a best practice benchmark can help to establish norms for their individual sector, for example, calculation of disruption allowance or number of days' temporary accommodation.
Identifying novel approaches may prove more beneficial to organisations with mid-size to larger mobility programmes. Benchmarking can highlight pioneering approaches adopted by comparable companies innovating in ways that foster competitiveness, enhance the employee experience and/or bring additional value to the business.
Programme improvement, process efficiency and risk management
Over and above the identification of common approaches and new formats for administering mobility policies, a benchmark study can identify a myriad of areas where the mobility programme can be improved and processes made more efficient. This could include, for example, how different types of allowances are administered (through home / host payroll or through a third party; whether or not to provide home leave and the boundaries placed around that benefit; whether or not to outsource some pre-assignment activities; offshoring programme administration or setting up a global employment company (GEC). All of these have the potential to enhance the running of the programme and to produce cost savings in the right circumstances.
Global mobility has always had to tread a tightrope between acting as an enabler for the business and enforcing a compliant approach to workforce mobility. Against a backdrop of an increasingly challenging regulatory environment, this has never been truer. Benchmarking has been a vital tool for many organisations grappling with the growth of international remote working. This new cadre of employee, has obliged global mobility to put in place brand new policies, processes and sometimes technologies. Benchmarking has allowed companies to establish risk management strategies alongside peer organisations. Programme improvement is especially important as the environment in which an organisation operates changes. With companies facing increasing requirements to report on the sustainability of their organisation and its operations, benchmarking again facilitates peer learning.
Talent attraction and retention
Another evolution of global mobility over recent years has been the tightening of ties between mobility and talent. Increasingly, mobility has been seen as an effective tool to both attract and retain highly skilled employees, potentially providing an organisation with a competitive advantage in the so-called ‘war for talent’. Furthermore, an increased awareness of the benefits of diversity, equality and inclusion has broadened the talent pool and demanded yet more agility from global mobility. Benchmarking therefore provides an organisation with the means to make some sort of assessment of the competitiveness of its mobility policies.
The employee experience is undoubtedly a significant factor in talent attraction and retention. Equally from the perspective of the business, the employee needs to focus on the objectives of their role without being unduly concerned about the process of relocating. Policy benchmarking can provide an organisation with insight into how other firms are adapting their policies, adjusting the format and delivery of policy benefits and engaging with technology to enhance the employee experience. This includes the benefit of being able to assess the accessibility of international working through the mobility programme structure in line with the organisation's diversity, equality and inclusion goals.
Let’s consider now some of the limitations of benchmarking or the pitfalls of a poorly executed benchmarking exercise.
The most significant risk in undertaking a benchmarking exercise is to draw the wrong conclusions from the data presented. Whether benchmarking a specific aspect of one policy or a policy in its entirety, the results are almost always anonymised and this creates a variety of opportunities to make incorrect assumptions.
Organisations are unique in their size, structures, culture, strategic objectives, operating markets, market share and in many other ways. There is the potential for a poorly executed benchmark to ignore any one of these facets either in the data gathering or in the data interpretation which could lead to an inaccurate or misleading conclusion. Take the fashion industry as an example. Companies operating in this sector range from retailers of fast fashion to high-end luxury fashion. Even competitors operating in the luxury section can vary from a relatively new market entrant using technology as a point of differentiation to an established world-famous fashion house.
The former may relocate a small number of very senior employees whereas the latter may have a more established programme of international talent acquisition. Like all companies, these two may have commonalities in the way that they manage international transfers, however, they are also likely to make very poor comparators dependent on the objectives of the benchmark study itself.
To use a different case study, geographic presence may lead to adoption of different policy benefits. For example, a Japanese bank might insist that all employees undertake cultural training, whereas this might be inappropriate for a bank primarily operating in the UK and US markets. Organisational structure may refer to the diversification of product and market an organisation competes in, or it could refer to the influence of merger and acquisition activity on a global mobility programme. In this latter example, it is entirely feasible that an organisation is effectively running two programmes concurrently which may affect the responses recorded in a benchmark study.
Policy effectiveness and application
Comparing an existing policy or practice to that of another organisation tells you little about the effectiveness of that policy in practice. In line with the points made regarding organisational uniqueness, the benchmark study will likely tell you very little about the frequency of use. It could be that the comparator organisation only uses a given policy type for a very limited number of senior employees. Moreover, the study is unlikely to provide any information on how recently the policy has been updated and whether the comparator organisation in looking to make changes. You know nothing of how well the policy is received by the business and by the end-user employees, nor of the frequency of exceptions made to the policy.
In an organisational culture where it is common to negotiate employment packages and global mobility manages flexibility through exception, the policy may be a poor reflection of how mobility is executed in practice. Consistency of policy application cannot be reflected in a benchmark study. For example, an organisation may have a global policy which acts as a primary model, however it may apply regional variations and exceptions. This is not uncommon for some organisations operating in markets in Asia.
The tension between the written policy document and the pragmatic application of the policy is a significant factor in whether or not a benchmark achieves a true comparison. Equally some policies remain equivocal on the benefits being provided to the relocating employee, referring more to the individual assignment / transfer letter. Moreover, the policy structure adopted by some organisations purposefully has separate policy documents or guidance notes on certain benefits or practices which may not be reflected in the benchmark study.
A benchmark study can be self-limiting for a number of reasons. The number of comparator companies may be limited simply by the number of organisations willing to participate in such a study and potentially by the network or organisations the orchestrator of the study has access to. Technology allows benchmarking to be facilitated relatively quickly and easily, however such is the demand for data that participants often suffer from survey fatigue, choosing either not to respond or providing limited information in their responses. The possibility of a limited number of comparator organisations increases the probability of near-competitors being excluded from the study.
Aside from misleading comparisons, there a couple of additional limitations which are worth bearing in mind.
The counter argument to not having the skills and resources to develop policies organically, is that replication simply makes an organisation a follower, not a leader. Ultimately, this may be a question of where an organisation is at a given moment in time dependent on its growth (or decline) and the maturity of its mobility programme. There is a risk though, that benchmarking pushes an organisation towards replication rather than innovation and implementing a cookie-cutter mobility programme as opposed to one purposefully designed to bring value to the distinct needs of the business.
Time and cost
Dependent on the size and scope of the project, a benchmark study can take a significant amount of time from inception to producing meaningful analysis. In a large review project that encompasses other internal data analysis alongside stakeholder survey and interview, this has the potential to elongate the process. Furthermore, engaging a third party to assist with the benchmark may add in an element of cost.
Key considerations of whether or not to benchmark
Before embarking on a policy benchmark study, an organisation may wish to consider the following:
• Is the objective of the study clear?
• What other data is being collected in order to formulate a holistic picture of the status quo?
• Given the scope of the project, which partner is best suited to produce the outcomes
we’re looking for?
• Is the scope of the benchmark tightly defined and can a partner work within those parameters?
• Are the outcomes required from a partner clearly stated?
In summary, benchmarking is an exercise that can be minimalistic or very broad in its scope. It can provide useful insight into the best practices and policy innovations employed by similar organisations and as a result, increase the value global mobility brings to the business through cost efficiency, competitive talent attraction and retention and enhancing the employee experience.
The results of benchmarking, however, can provide a limited perspective on how other organisations practically apply their policies. Organisations should be aware of unknown factors inherent in the benchmarking process, such as the extent to which other companies are helpful comparators and how current the policies being compared are. Used in isolation, benchmarking may not fully meet an organisation’s policy review objectives, however, partnering with the right organisation to undertake a benchmark study will help to mitigate some, if not all of the limitations of the exercise. .
If you have any questions regarding the topic above please contact us.
As Account Director at Sterling Lexicon, Stuart focuses on working with clients to optimize their global mobility solutions. Stuart has worked in global mobility for 19 years. His broad experience of working with different program sizes across a variety of industry sectors helps to bring success to clients' programs and wider business strategies. If you would like to discuss any of the points raised in this article or learn more about Sterling Lexicon, please do not hesitate to contact Stuart Jackson at email@example.com.