The (surprising) power of benchmarkingApril 2016
How good are you? Most companies tell their employees they are (of course) the best. But the truth is little time or money is spent confirming or dispelling the notion. Why take the risk of diminishing your company’s perceived achievements, because after all that’s how performance reviews and subsequent bonuses and promotions are determined, right?
Nevertheless, benchmarking may actually be your best technique for gaining more resources and recognition. By comparing your performance to others, you gain objective insights about whether your company is indeed a leader or, alas, a laggard. And whether your resources should be reallocated to address your preferred position.
Benchmarking can be particularly valuable to managers who manage corporate responsibility programs that encompass social, environmental and governance.
Sources for benchmarks can be third-party rankings, proprietary and industry research, or analyst reports. International reporting frameworks for governance, environmental, and social performance (such as the Global Reporting Initiative, SASB, and IIRC) also lend themselves to peer comparisons. These are particularly valuable because they encompass policies, issues and established data that has been judged material for business and many are industry-specific.
Here are just some of the benefits of benchmarking:
· It’s not me. It’s them. For some reason, internal experts often are minimized when it comes to their opinions. By using a credible source for comparisons, your opinions are enhanced. And when bad news comes, you can avoid the “kill the messenger” syndrome.
· By the numbers.“Better” and “best” are more credibly defined by metrics. A data-based benchmark removes the subjectivity from business aspects often dismissed as “too soft” to matter -- social impact, reputation, brand value, corporate responsibility, equality metrics to name a few.
· SWOT matters. Benchmarking identifies not only deficits, but strengths and opportunities as well. Sometimes, ongoing programs aren’t recognized for their innovation or uniqueness until comparisons are made.
· Reality trumps Perception. Sometimes executives make assumptions about their company’s weaknesses, and therefore are reluctant to disclose them. An industry benchmark may actually show that your company meets or exceeds the industry average. This opens the door to more bragging and disclose. Or, if the numbers show a lag, executives will be more willing to discuss improvements and consider additional resources.
· Market-based Goal Setting. Too often performance goals are set based on internal incremental improvement. This myopic approach ignores external factors that affect market shifts, industry standards and competitor action. Incorporating benchmarking as part of the goal setting process can lead to better, more market-responsive performance.
· Inspiration. Aspiration. Innovation. Yes. Benchmarking uncovers best practices and good ideas. Every company needs that! And good ideas don’t just come from your industry peers, so consider broadening the benchmarks to other kinds of companies.
· Forewarned is Forearmed. Have peers in your industry alrady red-flagged issues that are off your radar? Benchmarking can help scan the landscape to identify threats so that you can prepare or at least thoughtfully consider their implications before a crisis arises.
· Outlier. Outlier. Pants on Fire. Comparisons can sometimes show how your company is different from your peers. An outlier program, policy or product can signal innovation, or conversely, an obsolete or out-of-step aspect of your business. Such programs deserve review.
Benchmarking isn’t new. It is embedded in quality standards like Six Sigma. Yet, CSR professionals don’t always use this valuable management tool to guide strategy and performance. The time has come to add it to the tool box.
Illustration: Creative Commons
Lynnette McIntire is the CEO of Silver Birch Communications, which specializes in sustainability communications and strategy, executive thought leadership, issues management and stakeholder engagement. She also is a Senior Fellow of Social Innovation at Babson College's Lewis Center and teaches executive sustainability courses for Boston College's Center for Corporate Citizenship.