When we design employee surveys for our clients, it’s common for them to ask us about benchmarking and how it can help their company. This is a good question, because benchmarks are a quick way to see if your organization is on the right track. Additionally, it gives managers the ability to show that their workforce is on par with others in the industry.
However, while our research database is large enough to yield some fairly interesting insights, we sometimes find our clients become fixated on obscure, external benchmarks. These insights, while interesting, usually trap leaders in a downward spiral of comparison, and productivity and work slows.
There is no doubt that benchmark scores are useful, but we become concerned when benchmarks are afforded too much weight. Let’s examine a few of the reasons why benchmarks can be problematic.
1. Focus on innovation not imitation:
Benchmarking is primarily an exercise that focuses on imitation instead of innovation. Imitation and innovation do not mesh well together. As Elon Musk has observed, creativity is handcuffed when all we do is tweak our prior practices, or, “reason by analogy.” This is why he advocates creating from “first principles”, or a mode of inquiry that relentlessly pursues the foundations of a problem.
The notion of first principles requires a survey designer to ask fundamental questions without referencing what has been done in the past. What is the true nature of the problem we are solving, and how can we solve this problem? What others have done to tackle the problem in the past, or what they might be doing right now, simply does not matter. The goal is to find the right solution regardless of history. By definition, benchmarks are about analogy instead of first principles.
Additionally, benchmarks can lull us into thinking we have accomplished something, even if we haven’t. If a benchmark shows that your company is only 1 point below the industry average, even though your organization hasn’t changed, that benchmark isn’t showing you an accurate picture of your success. Be careful that benchmarks do not suppress creativity and innovation.
2. Hidden Problems:
When dealing with benchmarks, you are working only within a visible spectrum. Hidden solutions or problems are not revealed through an external benchmark. You have no real sense about causation, because the real drivers of engagement might be something the benchmark does not even measure.
Furthermore, benchmarks provide the observer with a single data point. It should be noted that all benchmarks are time-bound and offer insights only into the past. This leaves us wondering about a benchmark’s overall utility when it offers such a limited point of view.
3. People are people:
As the research firm Gartner has noted, the way humans behave in a workplace environment transcends industries and locations.  Thus, a myopic focus on industry benchmarks may lead an organization to believe they are better or worse than they really are. Heavy reliance on industry benchmarks means a leadership team may not consider what other companies are doing to inspire and guide their employees, because those companies are not included in a benchmark’s profile.
Instead of gleaning value from everywhere, industry competitors cluster around each other, focused on beating the next guy in line, instead of finding a better way to work. Do not let industry benchmarks become the classic case of failing to see the forest for the trees!
4. How to Improve:
Benchmarks fail to give the observer a specific direction on how to improve, since the benchmark is a silent data point that doesn’t show steps other leaders took to achieve their results. This silence leaves leaders guessing on how a successful organization achieved its high-scoring benchmark. Guessing can be a seductive trap; it’s fun, yet instead of carefully thinking about fresh ideas for improvement, we engage in a trial-and-error process, hoping for replicated results.
5. Data Quality:
A benchmark doesn’t typically give insight into sample size, question quality, instrument reliability, and other statistical best practices. Often a benchmark (either strong or poor) can be the result of the data gathering process as opposed to representing an accurate snapshot of employee engagement.
6. Borrowed Ideas:
The process of overseeing, leading, and managing an organization is a system – an integrated process. Individual management practices borrowed from others may not integrate well into an organization’s existing leadership philosophy or culture. For this reason, borrowing isolated management ideas could lead to unintended, or even negative consequences.
7. Know your business:
Do benchmarks know and understand your business? The answer is obviously, no! Benchmarks are backward-looking snapshots that cannot possibly appreciate the intricacies that surround your company’s key objectives.
8. Who’s included in the data:
Benchmarks typically don’t tell you how the benchmark profile is constructed. What companies are included? How old is the data? Did external market forces impact the benchmark, such as a national or local real estate downturn? Was a company that was included in the benchmark simply lucky in its success? All of these issues introduce uncertainty into the benchmark’s overall utility.
Bigger not always better
Rather than an over-reliance on external benchmarks, the better course is to use benchmarks as a scorecard to assess general direction, while focusing primarily on internal benchmarking. Internal benchmarking examines just your organization, from statistical period to statistical period. Internal benchmarks give the observer insights as to momentum, trends, downturns, and key differences. Most importantly, they help a leader ask this strategic question: “Why is one set of employees having a different employee experience than other employees?” This question alone does more for your business than any other question we ask. This helps leaders drill down into the specifics of what people are doing well or poorly. Now the leader is engaged their own employee experience, instead of circling above industry benchmarks that give little more than hints as to what others have done in the past.
Proceed with caution
Yes, benchmarks are certainly useful, and they have a place in modern management practice. But, when it comes to issues surrounding employee engagement or your overall employee experience, your own organization’s data and a look into workplace culture is far more valuable than outside benchmarks.
Your goal is to improve and innovate, not just be better than someone else. Real satisfaction will come as you improve and focus internally. As Elon Musk teaches, you cannot truly innovate if you are constantly focused on what someone else has done instead of freeing yourself to think differently and creatively about the solution.
 Ron Hanscome, Jim Davies, Helen Poitevin, Apply Voice-of-the-Customer Best Practices to Voice-of-the Employee Initiatives, Gartner (April, 2017), https://gartner.com/home. “A key observation here is that organizations do not need to worry much about industry alignment. VoE [voice of the employee] practices usually transcend industries…[.]