FEATURE INSIGHT
Benchmarking
DonMacarthur, CIPP consultant, encourages your participation
A ccording to the Rolling Stones, “summer’s here and the time is right for fighting in the street, boy”. But not for payroll professionals of course: summer for them is the time to complete the CIPP benchmarking survey. Hopefully by the time this issue of Professional in Payroll, Pensions and Reward comes out many readers will have completed the survey already or will have started to collate the answers from different teams in the organisation. But for those who haven’t yet started there’s still time – just! Access the survey at cipp.org.uk/benchmarking today, before it’s too late. What’s the point? The origins of the word ‘benchmarking’ are in mediaeval masonry or surveying or marksmanship, depending which dictionary or encyclopaedia you read. In each of these arenas the purpose of a benchmark was to help you to produce precisely the same result time after time. The mason wanted to carve every stone block identically, the surveyor wanted to keep placing his levelling rod in exactly the same place, and likewise the marksman wanted to hit the target every time. It is quite an easy step from there to understand the modern application of the word to businesses that want to be sure that they’re performing as well as, or better than, the competition. To quote one definition, “benchmarking is the process of comparing your results to peers in your industry”. Having some benchmarks for your peers, or your industry, enables you to get a picture of how well you’re matching
up, and what sort of targets you can set yourself to do even better. I saw this some years ago when working with North Sea oil companies that were always keen to compare returns on investment or other types of cost-benefit ratio. ...benchmarking is the process of comparing your results to peers in your industry What’s the problem for payroll? There can be no doubt that benchmarking could be a very useful tool for payroll managers, but in practice this is much tougher to achieve than in other industries and professions. The oil companies I worked with may have differed a bit in size, but in other respects they were ‘peers’: their operations were pretty similar, and their benchmarking results were therefore pretty comparable. But payroll teams do not all run similar operations: they are not all ‘peers’. They serve every type of business or industry, their employee numbers can range in size from single figures to almost half a million, they outsource different tasks or none, etc etc. So, the CIPP’s first challenge is to work out ways of segmenting the payroll industry into groups with similar characteristics, because only then can we start helping the members of those groups – ‘peers’ – to compare or benchmark their financial and
operational performance. That’s frustrating, because it means having a year or two more when the survey results won’t be as useful as they could be. But the potential rewards for the payroll community from getting this right are enormous, and I would urge readers to support the 2019 survey as strongly as possible to help us reap those rewards sooner rather than later. What sort of rewards might we expect? The current set of questions homes in on several areas where comparisons could prove really illuminating. And from a quick review of some of these it is obvious that the potential areas for delving deeper are limited only by our imagination. What about payslip accuracy for example? Is there any correlation between error numbers and particular types of payroll? Leaver overpayments are attracting very close attention these days, which is hardly surprising given the amounts of money which need to be recovered and the costs involved in pursuing these. The volumes can of course be distorted by attrition rates or other features: if staff turnover is high for example, the ratio of overpayments to total staff levels is likely to be correspondingly higher. But these factors can be adjusted for, and we can then start seeing if the numbers or values of overpayments, or the amounts which can’t be recovered, vary with the type of employer. We have not incidentally asked about overpayments to continuing employees this year. Is that right, or would readers appreciate information about these as well?
| Professional in Payroll, Pensions and Reward | July/August 2019 | Issue 52 42
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