| A mutual fund could set a benchmark as a target for | | | | to improve their sales using the benchmark as the best |
| the performance. For such a fund, one that is 100% | | | | practice. Yet the three sales organisations differ |
| focused on the stock-market, the benchmark could be | | | | slightly. One sales team is focused on active clients, |
| a stock-market index, like the Dow Jones. For individual | | | | the other on clients that you offer additional services. |
| portfolios that carry more than stocks only but include | | | | A benchmark would do more harm in this area, |
| currencies and bonds, it is more difficult to define an | | | | because it will flatten the differences your company |
| appropriate benchmark. | | | | introduced to increase overall sales. Instead of having |
| And that is exactly the problem with benchmarking as | | | | three teams you just as well may go back to having |
| a performance management instrument in | | | | only one. |
| organisations. How are you to measure a | | | | The problem of a benchmark is also present for |
| performance if every company is unique and wants to | | | | mutual funds managers because they can deviate less |
| deviate from the standard? | | | | from the market that they might want to. But an |
| And that is exactly the problem with organisations. | | | | organization could do this. If you have set a strategy |
| How are you to measure a performance if every | | | | they only way to implement this is by setting the |
| company is unique? Benchmarking is done to compare | | | | benchmark according to the strategic rules. That is not |
| activities with the objective to improve these. So how | | | | by observing others, but by benchmarking against your |
| do we translate the financial adagio, "If we beat the | | | | own profile. |
| index, we have done well," into an organizational | | | | For the market sake you could add some market |
| counterpart? | | | | condition indicators that level the (benchmark) outcome |
| Benchmarking you company against peers is sheer | | | | with the market situation; these should be in line: a |
| impossible; a small difference in focus, product offering | | | | positive market outlook should increase the level of the |
| will make an overall comparison useless. | | | | benchmark. |
| So you should step down to get more focus and | | | | (As for the Hollywood divorces, I haven't check the |
| therefore a reliable or credible benchmark. For instance | | | | level being more or less than average, but I assume |
| you could visit three sales teams and use the one with | | | | that the quality of live in Hollywood is neither better not |
| the best results as a benchmark. The other two will try | | | | worse, but just "different". |