What is benchmarking?
Although the word “benchmarking” has become commonplace in a business setting, the term comes from a different field.
The origin of benchmarking lies in the practice of mapping an area’s physical features. Land surveyors would chisel a line into a permanent object, such as a rock or wall, to serve as a reference point for measuring elevations and distances.
Over time, the term has come to broadly mean a standard for assessing the strength or weakness of something else. It’s a tool for setting goals, evaluating performance, and making more informed decisions.
Why benchmarking is important
No number—whether it’s 1 or 1 million—means much without context.
Consider the share price of a publicly traded toy company. Let’s say it increased 5% since the beginning of the year.
Pretty good, right? Not necessarily.
If the S&P 500, a stock market index that tracks the 500 largest U.S. companies, grew 10% during the same time period, the toy company’s performance wouldn’t look as impressive. If, however, the S&P 500 decreased 5%, it would.
By acting as a benchmark, the S&P 500 helps determine whether the toy company’s rise is above average, below average, or in line with other major firms. In other words, the comparison provides valuable information for determining whether a number—in this example, an increase in share price—is significant or not.
Therefore, benchmarks for internal communication can supply useful reference points to reveal whether a specific project or larger strategy is working or not.
What are the different types of benchmarks?
While several approaches to benchmarking exist, below are three popular types:
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Internal benchmarking:
This type compares metrics between departments within the same company to discover which teams are exceeding and which could benefit from some assistance.
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External benchmarking:
This type compares metrics with rival companies of a similar size to help identify areas of weakness and opportunities for growth.
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Strategic benchmarking:
This type compares metrics with companies in other industries to uncover innovations and best practices that could benefit any organization.
Whatever approach, or combination of approaches, a company takes to benchmarking, the end result should provide executives and team leaders with the information they need to see where they stand and make adjustments for the better.
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How to set benchmarks
Setting benchmarks may sound easy, but it’s important for internal communicators to establish a solid foundation before jumping to any conclusions. Inaccurate and unreliable data is dangerous, as it presents a distorted view of what’s actually happening within a company.
Below is a step-by-step guide for internal communicators looking to get started with benchmarking today:
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Define your goals:
Have a clear vision of what you want to achieve. Be as specific as possible, and make sure your plans align with the company’s overall objectives. The more you know about your final destination, the more equipped and encouraged you’ll be to follow the map.
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Identify the key metrics:
Whether you want to increase email open rates or decrease employee churn, you need to gather relevant data that measures your progress. Make sure it’s always tracking and accessible at all times. Big gaps in information will lead to problems down the road.
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Establish a baseline:
Collect data on your current performance to secure a starting point. Again, it’s crucial that these figures are accurate, as everything that follows depends on them.
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Measure and adjust:
With everything in place, start monitoring. Pay attention to how changes in your process correlate with the numbers going up or down. If you’re experiencing more of the latter than the former, don’t be afraid to regroup, revise, and try again.
Ultimately, benchmarking is an ongoing process that requires both persistence and an openness to pivot as necessary. If done right, it can provide a holistic view of where a team, department, or company stands in the wider business landscape.
Keep reading to learn the benefits of setting benchmarks.
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