And, here is where the “Competitive Benchmarking” comes to play!
Unfortunately, it is not such a simple task to conduct it and so, there are lot of chances for your benchmarking to go wrong.
Let us consider an example. Supposedly, you are machine manufacturer and, you heard about your competitor company say AMC Ltd., who seems to be extremely proficient in employee retention. While your company is experiencing a rate of 20%, the AMC Company has 8% rate which makes you keen to find out the reason for such a big difference between the two companies. After all, the employee exit impacts company’s productivity and turnover.
In order to address this, you send your HR and Operations Managers to AMC, but of course after getting due permission from them, with the goal of benchmarking AMC.
On their return, you ask about their findings. They shared insights such as s AMC having incredibly high annual revenue resulting in higher pay outs, assigning of mentor to each new employee who could help them out, conducting of post-exit interviews, and providing a development plus safety training etc. All this leading to lower employee turnover rate.
When you ask about any process differences that your company should adopt, they both have vague answers. And, ultimately narrow it down to the pay difference as the key to AMC’s retention rate. However, they insist that this approach as unacceptable for your company, due to your own market’s competitiveness.
Both these managers then come out with a few other options but their time constraints make it nearly impossible for their implementation, and even you acknowledge that there are more demanding issues to be dealt with than focusing energy on these ones.
After few months you see your employee turnover rate jumping to 40%. Now you feel it was not worth to sending the managers to benchmark AMC, as nothing has changed rather than incurring of additional expenditure. At last, you excuse this as AMC being too a different of a company to bring in anything that you could apply.
What went wrong here? Well, to be honest, “Everything” – in short following were the fallacies of managers and yours in conducting competitive benchmarking, thereby failing to get the most out of this process:-
⇛ Lack of clear goals
⇛ Poor preparation
⇛ Poor analysis of observations
⇛ Lack of finding relevant data
⇛ Preconceptions and paradigms
⇛ Irrelevant context & comparison
It goes without saying, conducting competitive benchmarking is labor intensive, time & cost consuming. So, to ensure it is done effectively, it becomes imperative that you avoid the above mentioned pitfalls that destroy the value of benchmarking, as it happened in the above scenario.
Have you encountered any kind of pitfalls while conducting competitive benchmarking? Comment Below.
