Apples to Apples

Apples to Apples

By Jeremy Eden and Terri Long

Jeremy Eden and Terri Long are co-founders and co-CEOs of Harvest Earnings, a Chicago-area management consultancy. From Low-Hanging Fruit: 77 Eye-Opening Ways to Improve Productivity and Profits (Wiley). ©2014

The premise of benchmarking sounds great. You can see how you stack up against competitors so you can target ways to match or outperform them. It seems reasonable to think that if your direct competitor can achieve 98 percent yield in their factories while you can achieve only 94 percent, then they must be doing something that you should start doing.

Benchmarking supposedly works by knocking down your resistance to change by compelling you with hard facts that someone else is performing better and then by motivating you to find the specific actions someone else is doing that you should be adopting.

Except that in practice, benchmarking is usually a complete waste of time, because invariably no one is doing exactly what you are doing. So after months of data collection showing that you are in the second quartile of performance rather than the first, more months are spent arguing—usually correctly—that the measurements are not comparing apples to apples.

In the First Bank of Big City, they record each action when serving a customer separately when they report transactions per teller, but in Second Bank of Big City, they count certain actions done with one customer together when they report transactions per teller.

Even when the measures do compare apples to apples, the actions that one takes are not meaningful to the other. In Big City, they have so many transactions that it pays to have some of them automated, while in Small City, there are just too few. More months spent arguing without gaining insight.

The second irony is that while benchmarking is supposed to motivate change, it more often than not is used to justify the status quo. “We’re above average” or “we’re in the second quartile” are used to justify “we’re good enough.”

Instead of benchmarking, you need to take the position that the executive VP of a call center took with his troops: “You know that according to industry measures, we are among the absolute best performers. But you also know that even the best in our industry can be a lot better. So let’s compare ourselves not to what others accept but, rather, to what we expect.”

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