Reference no: EM133012543

Benchmarking HR at Goodyear Goodyear Tire and Rubber Company, like most businesses, has seen massive change and has tried to focus on finding new and better ways to get work done. As part of that search, the company has used benchmarking to help identify the "best practices" for all facets of its operations, including human resources. By measuring itself and comparing the measurements against those of other companies, Goodyear has managed to find more efficient ways to get work done.

The idea behind benchmarking is that it is possible to examine the best practices of other organizations and make changes in operations based on what is learned. More than 70% of the Fortune 500 companies use benchmarking regularly. A benefit of benchmarking is that it forces companies to focus on the specific factors that lead to success or failure.

When Goodyear begins a benchmarking project, it spends up to three months planning. There are major discussions about what the firm hopes to accomplish. Those who are participants receive training in the process. From the highly focused questions that are developed by the benchmark team come answers about specific practices and results. Developing these questions and answers may require conducting interviews in person or over the phone, bringing in an academic to design a scientific study to examine a problem, or using outside consultants to gather information. But obtaining information about Goodyear's practices and those of the other company (or companies) is the key thrust. Communicating information so that comparisons can be made and new ideas generated is the basis for benchmarking.

Recently, when the company-as part of the broader benchmarking process-examined compensation strategies, it put together an internal team with individuals from many departments. The team developed questions and studied topics such as variable pay, the pay for top performers, and the role of training in compensation. Team members first determined what the company needed to learn and then created an agenda to gather the information. After conducting interviews and gathering data from many other sources, the team compared notes on the practices of various successful companies. Then it made its recommendations for changes at Goodyear.

When HR began to benchmark its own practices, it examined a wide range of issues. Leadership development, succession planning, benefits, safety, and compensation were all benchmarked. The company wanted to tie employee compensation to individual performance and the firm's goals of improving customer service and shareholder satisfaction.

After about six months of examining several Fortune 100 companies, Goodyear's HR staff made several changes, including altering the way the company approached its compensation program. It concluded that to remain competitive and provide better customer service, it needed to better define the employee performance appraisal process and tie that activity to Goodyear's business objectives. That link meant clearly communicating what each position was expected to contribute and what its responsibilities were. As a result, part of the Chairman's compensation is now "at risk," depending on the company's financial performance.

The HR Director has summarized Goodyear's use of benchmarking as a way to evaluate the success of company practices and to assess effectiveness. He says, "If your goal is continuous improvement, your company will always want to learn what other companies are doing. And it is important for HR to be aligned with the corporate strategy and be recognized as a valuable resource for change."

Q1:Deciding to improve the benchmark practice, Goodyear selects compensation for their employees. Therefore, to determine the compensation package, it is also necessary to conduct a job evaluation to understand the importance/contribution of the job to the organization's overall performance. As an expert, now you express your opinion on completing a job evaluation regarding different positions for Goodyear.

Q2: Goodyear is trying to improve its strategy regarding its compensation to improve the performance of the company. To determine their compensation, it is also necessary to confirm equity while you are updating the compensation. Now you, as an HR expert, share your point of view on which equity/s they must consider comprehending their benchmark practice.