The Pros & Cons of Benchmarking People Development

Abigail Phillips
Apr 29 2021 | Insights
Woman looking at paperwork.

Measurement seems to be everywhere these days, but can an over-focus on performance data and benchmarking sometimes be detrimental to the intended outcome, especially for people development? Ezra's Insights Lead, Abigail Phillips, discusses the pros and cons of data-driven initiatives and the need to find the metric "sweet spot" to truly evaluate success.

In business, a common adage is that what gets measured gets done. Does this mean to get things done, you have to measure everything, all the time?

It’s a question we field at Ezra constantly, especially in an age where technology gives us limitless opportunities to collect, gauge, measure and analyze data metrics for just about everything. 

Coaching, a practice that is skyrocketing in popularity presents many opportunities for benchmarking. What is benchmarking? We use this term to describe the process of measuring business performance against the performance of others. For example, we could produce benchmarks that tell our coachee leaders how they are progressing in their coaching engagements against others in the same company, similar industry leaders in other companies, or similar leaders in the same country or continent. 

The big question is not could we do it, it’s should we?

Even through a phone app, coaching is a very intimate interaction. A coach-coachee relationship must be built on trust which is, in turn, a by-product of confidentiality. In virtual coaching, emphasis on intimacy and confidentiality is no less important.

That does not mean you have to abandon measurement completely. With Ezra, coachees can measure their progress against a pre-determined set ofleadership competencies. The measurement involves input from the coachee and their managers before and after a period of coaching without spilling the details of the coaching sessions.

Is this benchmarking style beneficial for leaders and organizations? Absolutely! Even if it doesn’t quite satisfy our craving for broader, more in-depth comparisons, it’s still a concrete metric that gives insight into a business’ organization. 

To fully understand what benchmarking can and can’t do for an organization, let’s look at a few pros and cons.

The pros of benchmarking and measurement

Establishing benchmarks helps put our own performances into context. Without an objective, data-based measurement, how do we know that we are succeeding?

Let’s say we’re applying benchmarking to a key business metric such as employee engagement. If your company’s average score is 5/10, at face value that’s average verging on poor. But, if you were told that most other companies in the same industry had an average score of 3/10, all of a sudden that score doesn’t seem so bad.

The opposite is also true; if you found out most other companies had an average score of 8 or 9 out of 10, you would be more concerned about your own score by comparison.

So, it’s easy to see how benchmarking, applied in the right situations, can be a huge benefit to an organization trying toimprove overall culture and performance. Is there a systemic problem within your company that needs to be addressed, or can small adjustments make all the changes you need? Either way, it’s good information with a clear purpose.

So what's wrong with metric-focused development?

Most HR professionals will tell you that there are limits to the value of comparing our own performance, or the performance of our organisations, to that of others.

Let’s go back to the employee engagement example. We knowemployee engagement is important because there is a wealth of academic and commercial research that demonstrates its relationship to motivation, performance and length of service. All these factors directly impact an organisation’s bottom line.

It’s a linear relationship: a higher engagement score means higher KPIs and, ultimately, a better bottom line.

So, why do many companies obsess over how their scores compare to others?

Whether you’re in the top 10 per cent or the bottom 10 per cent, there’s no room for complacency unless your score is a solid 10/10. It might make an organisation feel better about their seemingly low score to know that most of their competitors are in the same boat. But this isn’t going to help them maximise their ROI on their people.

In cases like this, organisations are better off focusing on their own benchmarks to try and improve performance against internal metrics. That way if their engagement scores go up, they’ll know they’re probably doing across a range of other metrics.

It’s also important to note that not every group or indicator can be successfully benchmarked.

For example, let’s say you wanted to know how the department heads at your company were performing in comparison to people with similar positions in other companies. Depending on the size and growth-stage of the company, the people holding those jobs are likely to be very different from each other even if they have the same title.

Would you compare the head of marketing at an early-stage start-up, with no direct reports and a minimal budget, to the head of marketing at a global FMCG who’s responsible for a large team and huge budget? Probably not.

Benchmarks aren’t always nuanced enough to control for meaningful differences. This can cause tunnel vision and at times, misguided conclusions.

Data-driven business decision-making is definitely the way of the future. But make sure you’re mining the right kind of data, and applying it in a meaningful way.

Don’t put yourself in a position of spending time and money to measure something that doesn’t give you the kind of insights you need to produce better outcomes. Once you do find that sweet spot – a metric that is completely relevant and helps you improve what you’re doing – it can be a transformative moment for any organization.

Take control of your talent development metrics with Ezra’s world-class employee coaching, built to fit into today’s working life. We’ve redesigned leadership coaching for the modern age to help transform people through affordable, scalable and high-impact solutions, with equitable access through our world-class coaching app. Find out today how digital coaching could make a big difference to your organization.

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