Benchmarking: Internal Competition is Healthy!

Why make the effort with benchmarking?

I recently wrote about the importance of Benchmarking. I am particularly hepped up on the idea about the psychological benefits. Benchmarking kicks competition into overdrive for people and their companies, and as a result, performance improves. This is based on Social Comparison Theory where humans naturally want to do better than their last score, or better than the other person, department, or company–whatever the case may be. But of course, there are many more reasons than that to benchmark.

So, you are convinced that benchmarking is for you. Here are three cool tips to get the most out of your INTERNAL benchmarking. First, a word of caution. Internal benchmarking can be very competitive which is good for the company because improvement follows fast. But it can be stressful for department leaders. Assure everyone that this is a learning experience for everyone where the goal is to find best practices and apply them across the organization. 

How to succeed with internal benchmarking?

1. Start with establishing what will be measured and then begin internal data collection and analysis 

   • Collect both financial and non-financial data from internal records and systems across departments/teams.

   • Analyze this data to establish baselines and identify top-performing areas or processes within your organization.

   • This allows you to benchmark internally first before looking externally, leveraging data you already have access to.

2. Focus on practicing benchmarking 

   • Go beyond just comparing performance metrics and numbers.

   • Dive deeper into qualitative factors like processes, procedures, technology usage, and human practices.

   • Observe and learn from the teams or departments exhibiting best practices to understand drivers of their success.

3. Encourage cross-functional collaboration 

   • Break down organizational silos during the benchmarking process.

   • Facilitate knowledge sharing sessions where top-performing teams showcase their methods to others.

   • Create a culture of continuous improvement by promoting the adoption of identified best practices across the organization.

The key principles are to start internally by leveraging your own data, take a holistic view beyond just metrics by examining practices, and foster an environment of cross-team learning and collaboration. This allows you to identify and spread internal best practices in a relatively easy manner before potentially looking outwards for external benchmarking.

Ready to benchmark EXTERNALLY? Stay tuned for my next article on comparing your organization to others!