How to benchmark in the 21st century. (Don’t).

 

 

When you work in an industry it’s easy to accept the common practices as necessary – everyone does it so it must be worth it, right? But when you really think about something (and know how it actually works) there are times when questioning the status quo can be helpful.

 

The employee engagement industry rarely critiques itself. There is a dominant formula and narrative that works – organisations buy into it, conceptually and financially, and allow it to define their attempts to engage and communicate with their staff.

 

One great example is benchmarking, or norms. The story goes like this: when being sold a survey, the survey company will tell you to buy some external norms, otherwise you won’t know how your company is performing compared to your peers, high performers, industry and so on. Sounds reasonable, and it’s the type of thing that is easy to engage busy leaders with. They’re used to looking at gaps between numbers – that makes sense and can be dealt with quickly and definitively. Whereas company culture… isn’t.

 

Now of course that’s not true of all leaders, or all organisations. But having worked in the industry for years, there are definitely a lot out there that are slaves to their external norms – they’re the key metric by which they gauge engagement success. And we think they’re doing themselves a disservice. Why?

 

  • They discourage critical self-reflection and aspirational goals. “Okay, so 40% of our staff don’t trust us as leaders. But that’s in line with the benchmark, so that’s not a priority”. To us, that rationale is hard to justify (especially considering the other points later on). Really great companies consider scores in their own right, what they mean in their context and strive to learn more. We think without the norm to soften the blow the reaction would be more along the lines of: “4 in 10 people don’t trust what I say?! That’s not acceptable. Let’s find out why and change it”.

 

  • They’re usually not comparable. If you were to really dig into the norms you’ve been using, you’d probably find that you’ve little confidence in the comparability of them to your organisation. Say for example you select a retail norm; then generally that norm will include every company the provider deems as working in retail (they’ll give you a ‘flavour’ of the companies most similar to yours), or it might include every response they have that indicates they work in a ‘retail’ function… globally. Sector is just one dimension to consider: what about scale, complexity, business model, level of change – what is really relevant to compare your organisation to?

 

  • They’re out of date. Most of the time, the norms for ‘this year’ are an aggregation of data collected 3-5 years ago. Would you use data that old to make decisions in any other part of the business? Currency of data is a huge issue for an exercise of this scale, and providing an ‘up to date’ benchmark of that’s relevant to a specific business context is virtually impossible. It’s just something that’s worth being aware of, and not something that’s often openly discussed in the industry.

 

  • They don’t account for subtlety. Or culture. There’s been an increasing movement towards wanting to understand the ‘deep culture’ of organisations because it is this that largely influences engagement, and how to engage in context. Achieving better than high performing norm does not guarantee a positive company culture and it is not a proxy for success. We reckon the major financial institutions in 2008 probably did pretty well against whatever norms they compared themselves to, but that this contributed to masking the rotten value structure and risk culture at the heart of that industry; we all know what happens next. An extreme example for sure, but one that helps exemplify the limits of numbers.

 

So what’s the solution?

 

Look internally. Your own company benchmark should be the arbiter of performance for the rest of the company. Do sub-divisions match the overall experience? If not, why? Also, think about the type of organisation you want to be and set aspirational goals, then work backwards and plan what you need to do to achieve them.

 

Invest in conversations, not benchmarks. Put some faith back into people and invest in them, rather than arbitrary numbers to measure them against. Managers being able to coach and develop comes up time and time again as a key driver of engagement across all industries – it just might be a better use of resources.

 

Focus on understanding the texture of experience. The comments gathered in a survey are much more powerful a tool in terms of uncovering culture. So is talking to staff, in focus groups and interviews. Getting to grips with qualitative information can provide a much more meaningful lens through which to connect with employee’s views. It’s an approach for for the 21st century – people want to be treated as individuals, not numbers. Talk to us about how we can help with this.

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