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'Keeping up with the neighbours': A thoughtpiece on external benchmarking

Tom Leary by Tom Leary

A thought piece on the futility of external benchmarking

We get asked often whether we can add ‘benchmarking’ to the scope of the organisation design work we do. Our central argument is that, whilst often desired, external benchmarking generally has limited value. However, there are benefits to be realised by benchmarking across your organisation, particularly if you are a business of scale and span multiple territories and geographies.

In truth, ‘benchmarking’ rather undersells the opportunity.

What we are seeking to understand is the insight as to the efficiency and effectiveness of an organisation in order to make course corrections in line with your strategy – essentially, an objective, non-politicised or financially skewed view of how an organisation is functioning and performing.

In our experience, many leaders love a benchmark (and for obvious reasons). Understanding how we fair against the ‘the competition’ gives us a sense of where we stand in the pecking order. It also provides a level of validation by having a quantitative measure to use rather than defining where you want to be or relying on gut feel.

This article provides some of our thinking on this topic and offers a few tips we would recommend considering if you are planning an internal benchmarking activity. At a high-level, these are:

  • Secure senior sponsorship for the work
  • Carefully ringfence your P&L
  • Translate elements of your P&L to headcount where required
  • Take the time upfront to ensure your organisation is truly comparable
  • Measure both efficiency and effectiveness
  • Adjust for the context of each part of the business
  • Don’t measure too much

Here you can find our latest article, which includes a more detailed description into how you can apply these tips practically, as well as the specific dangers associated with external benchmarking and practical advice into what you should be doing instead.

'Keeping up with the neighbours': A thoughtpiece on external benchmarking

Access the full article here

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