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Goodyear Doesn't Tire of Benchmarking

November 1, 1995
At Goodyear Tire and Rubber Co., benchmarking is well entrenched in the corporate psyche. And human resources is no exception, says Mike Burns, vice president of HR and Total Quality Culture at the Akron, Ohio-based company. "It's about learning and sharing ideas so everyone can benefit," he says.

So when Stan Gault, chairman and CEO, joined Goodyear in 1981, he established his early commitment to a total-quality culture process. That process, says Burns, became the vehicle to raise the benchmarking bar at the North American division, which employs a work force of 45,000.

Human resources, he says, was involved from the beginning. Under Gault's direction, a leadership team was formed, which included the CEO, the president and COO and a cross section of leaders from different business functions—including HR. "In the beginning, we had about 20 leaders, but it quickly cascaded as we moved the process down to all parts of the company," says Burns. "The more involvement and input you get, the better decisions you'll make."

As HR began to benchmark its own practices, it examined a wide range of practices, including leadership development, succession planning, benefits and employee safety. But one area that received considerable attention was compensation. Goodyear wanted to begin tying employee compensation to individual performance and the company's overall financial accomplishments. "We asked, 'How do we make compensation reward top performance and bring it more in line with the company's goals of improving customer service and shareholders' satisfaction?'"

Hence, Goodyear benchmarked the HR practices of several Fortune 100 companies. "It gives you a way to expand your horizons and think about how you're conducting your business," he says. After about six months of in-depth research, human resources made several changes, including the way it approached its compensation program. The company concluded that in order to remain competitive and provide quality customer service, it should better define the employee-performance appraisal process and tie it to the company's business objectives. "That meant [articulating] what each position was expected to contribute and what the responsibilities were," says Burns. As a result, even part of the chairman's compensation is now at risk based on the company's financial performance, he adds.

As Burns sees it, Goodyear not only improved the specific HR practices it re-examined, but learned a more fundamental lesson about benchmarking. It's a process that never stops. And it doesn't give you all the answers, either. If your goal is continuous improvement, says Burns, your company will always want to learn what other companies are doing. "And it's important for HR to be aligned with the corporate strategy and [recognized] as a valuable resource for change," he says. Much like a set of realigned tires that keeps your car moving in the right direction.

Personnel Journal, November 1995, Vol. 74, No. 11, p. 72.