One of the most common questions our clients ask in employee engagement surveys is for benchmark data. This is a good question because benchmarking is a quick way to see if your organization is on the right track. In addition, it allows managers to see where their current workforce stands in comparison to other organizations.
While our existing database is large enough to provide users with some interesting ideas, our customers are sometimes obsessed with benchmarking themselves against other companies. By comparing their own data with that of other companies or sectors, they cause their managers to get stuck in "downward pulling" vortices in terms of morale.
There is no doubt that benchmark scores are useful, but we worry when too much emphasis and weight is placed on benchmarking. This can distract companies conducting employee engagement surveys from their main objective. So let's explore a few reasons why benchmarking can sometimes do more harm than good:
1-Focus on Innovation, not Innovation:
Bench-marking is fundamentally a process that focuses on resemblance, not innovation. Bench-marking and innovation often don't work well together. As Elon Musk has observed, creativity is stifled when all we do is tweak our default status quo and how we operate. In today's world, exponential growth of companies is only possible through innovation, not by tweaking, copying or emulating.
In addition, benchmarks can misleadingly lead us to think that we have achieved something, even when we as a company have not done anything special. If a benchmark shows that your company is only 1 point below the industry average, even though you have not created any special value in the market, the benchmark does not give you an accurate picture of your success. It may be a sign that you are in a similar situation to other companies that are doing an average job. So be careful that benchmarks do not stifle creativity and innovation.
2-Secret Problems:
When dealing with benchmarks, you only work within a visible spectrum. An external benchmark data does not reveal the real problems. Moreover, you have no real perception of engagement, because your benchmark may not have measured the real criteria of engagement at all.
Moreover, benchmarks provide the observer with a singular data point. It should be noted that all benchmarks are time-related and only provide insights into the past. This leads us to question the overall usefulness of benchmarks that offer such a limited perspective.
3-Human is Human:
As research firm Gartner points out, how people behave in a workplace transcends sectors and locations. Therefore, taking a myopic view of industry benchmarks can lead an organization to believe that it is better or worse than it actually is. Over-reliance on industry benchmarks causes the leadership team to focus on what they are not doing, rather than what other organizations are doing to inspire and guide their people.
Industry competitors often cluster around each other and focus on outsmarting each other, rather than gathering valuable insights from everyone else and finding better ways of working. Don't let industry benchmarks become the classic case of not seeing the forest for the trees.
4-How it should develop:
Benchmarks do not give observers specific direction on how to improve because the benchmark is silent data that does not show the steps other leaders have taken to achieve results. The silence leads leaders to wonder how other successful organizations achieve high scores on benchmarks. Guessing can be a tempting trap, it is fun, but it can lead to a process of trial and error, hoping for similar results to others, instead of carefully and strategically generating new ideas to improve.
5-Data Quality:
A benchmark does not normally give us information on sample size, question quality, instrument reliability and other statistical best practices. Benchmarking (strong or weak) is often the result of a process of data collection, not a study, which provides an accurate picture of employee engagement.
6 - Borrowed Ideas:
Monitoring, leading and managing an organization happens within a system, i.e. it is made up of many integrated processes. Single management practices seen and borrowed from other companies may not be well integrated into an organization's existing leadership philosophy or culture. Borrowing and applying singular management ideas can therefore lead to unintended and even negative consequences.
7-Know Your Business:Do Benchmarks help you know and understand your business? The answer is, of course, no. Benchmarks are snapshots of the past that cannot capture the complexity and friction points around your company's key objectives.
8-Who is included in the data:Benchmarks do not normally tell you how the benchmark profile is structured. Which companies are involved? How old is the data? Has the supply and demand in the external market, e.g. a fall in national or local real estate prices, affected the benchmark? Was the success of a company included in the benchmark actually lucky? All these issues add uncertainty to the overall functionality of the benchmark.
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Bigger is not always better.
Instead of over-reliance on external benchmarks, the better way is to use external benchmarks as a scorecard to assess overall direction and focus primarily on internal benchmarking. Benchmarking allows you to compare one period of statistical evaluation with another period. Benchmarks provide the observer with information on things like momentum, trends, declines and key differences. Most importantly, they help a leader to ask themselves the strategic question: "Why does one group of employees in our company have a different employee experience than other employees?" This question alone does more for your business than any other question we can ask. It helps leaders drill down into the details of what people are doing well or badly. It allows leaders to take ownership of their own employee experiences, rather than relying on industry benchmarks that give some clue as to what other companies have done in the past.
Yes, benchmarks are certainly useful and have their place in modern management practices. However, when it comes to employee engagement or your overall employee experience, focusing on your own organization's data and workplace culture is far more valuable than using external benchmarks.
Your real goal is development and innovation, not just being better than someone else. True satisfaction comes when you improve and focus inward. As Elon Musk teaches: You can't truly innovate if you are constantly focused on what someone else is doing instead of freeing yourself to think differently and creatively about solutions.