Why benchmarks are crucial to team performance – five best practices

Optimising team performance is a key driver of success. One powerful tool to support this goal is benchmarking.

Benchmarks remove bias from evaluations.

Benchmarking team performance can be a game-changer for businesses aiming to excel in today’s competitive environment. Relying solely on self-assessment or ‘marking your own homework’ without comparative benchmarks can lead to flawed conclusions.

A world of comparative benchmarks

Relying solely on self-assessment is akin to ‘marking your own homework’ – without comparative benchmarks, it is easy to reach flawed conclusions. That’s why benchmarking in team performance can be a game-changer for businesses aiming to excel.

The importance of comparative benchmarks cannot be overstated. Whether it’s assessing the efficiency of a new medicine, a business strategy, the capabilities of a cutting-edge technology or the dynamics of human interactions, the world of business is driven by performance metrics and evaluations.

The illusion of objectivity and pitfalls of ‘marking your own homework’
Dunning-Kruger effect, where individuals with low ability at a task overestimate their ability.
Relation between average self-perceived performance and average actual performance. The orange line shows the tendency of low performers to overestimate their abilities on a college exam. Dunning 2011.

When evaluating performance, especially in subjective areas such as human interactions, the danger of subjectivity looms large. People have a tendency to overestimate their own abilities or downplay their shortcomings. This phenomenon is commonly referred to as the Dunning–Kruger effect, and creates an illusion of objectivity that is far from the truth.

Consider what happens if a team assesses their skills without benchmarking against industry standards or peer team performance. The absence of comparisons can make it harder for the team to recognise potential areas for improvement, which might lead them to overstate their effectiveness. This lack of perspective and objectivity can hinder personal and professional growth, as well as impeding the team’s overall progress.

Aprais

We sometimes refer to this form of self-assessment as ‘marking your own homework’, an analogy that vividly illustrates the inherent flaws in evaluating performance without external benchmarks.

In the academic realm, the concept of self-grading would undermine the credibility of the education system. Similarly, in the professional world, relying solely on self-assessment without comparative benchmarks creates a breeding ground for complacency and mediocrity.

Comparative benchmarks in business and technology

In the business and technology sectors, where innovation and efficiency are paramount, the use of comparative benchmarks is a standard practice. Companies compare their performance metrics against industry averages, competitor benchmarks and best practices to identify areas of improvement and stay ahead of the curve.

For instance, a tech company developing a new product would assess its performance not only based on internal criteria but also against similar products. Such comparisons provide valuable insights into where the product stands in terms of features, pricing and user experience compared with its competitors. This information is crucial for making informed decisions, refining strategies and ensuring a competitive edge.

The importance of benchmarking team performance

When it comes to human interactions, the need for comparative benchmarks is particularly pronounced. Communication styles, leadership qualities and interpersonal skills are highly subjective, making it challenging to evaluate them objectively. Without a benchmark for comparison, individuals may fall prey to cognitive biases, leading to inaccurate self-assessments.

Getting a comprehensive understanding of an individual’s performance could involve comparing their leadership skills with industry benchmarks, evaluating communication styles in the context of team dynamics or assessing collaborative abilities against peer standards, for example. The same principles can be used to benchmark team performance. At Aprais, we use benchmarks based on the more than 27,000 client-agency relationship evaluations we’ve conducted, to compare a team’s relationship performance with their peers by category, by region and by the nature of their business. The depth of this database enables us to highlight behaviours and skills that need improvement

Aprais team relationship benchmarks
Source: Aprais dashboard example

This strategic approach offers several benefits that can contribute to the overall success of a team and, consequently, the organization as a whole.

  • Identifying performance gaps: Benchmarking allows teams to identify performance gaps by providing a clear picture of how their performance compares with industry standards or competitors. This insight is crucial for recognising areas that require improvement and setting realistic performance goals.
  • Enhancing decision-making: Informed decision-making is a cornerstone of effective team management. By benchmarking team performance, leaders gain valuable insights into successful strategies employed by top-performing teams, which can then be shared with other teams. This knowledge enables leaders to make data-driven decisions that can positively impact the team’s outcomes.
  • Motivating team members: Establishing benchmarks creates a sense of purpose and motivation within the team. Knowing that they are striving for excellence and comparing themselves with industry leaders can inspire team members to push their limits and achieve higher levels of performance.
  • Optimising resource allocation: Benchmarking helps organisations allocate resources more efficiently. By understanding how top-performing teams manage their resources, leaders can optimise budgeting, staffing and other crucial aspects to enhance overall team effectiveness.
  • Fostering a culture of continuous improvement: Benchmarking is a powerful tool for instilling a culture of continuous improvement within a team. Regularly measuring performance against benchmarks encourages team members to seek innovative solutions, adapt to changing circumstances and stay ahead of the competition.
Best practices for benchmarking team performance

To make the most of benchmarking in team performance, organisations should adopt a strategic and systematic approach. Here are some best practices to consider:

  1. Define clear objectives: Clearly articulate the objectives of benchmarking to ensure the team understands the purpose and benefits. This clarity sets the stage for focused efforts and meaningful improvements.
  2. Select relevant benchmarks: Choose benchmarks that are relevant to the team’s industry, size and objectives. This ensures that the comparisons provide actionable insights rather than generic data.
  3. Use key performance indicators (KPIs): Identify and track KPIs that align with the team’s goals. This enables precise measurement and evaluation, allowing for targeted improvements in specific areas.
  4. Encourage collaboration and learning: Benchmarking should be viewed as a collaborative effort. Encourage team members to share insights, learnings and best practices from the benchmarking process. This collaborative approach fosters a culture of shared knowledge and continuous improvement.
  5. Regularly review and adjust strategies: Team performance benchmarks should not be static. Regularly review and adjust strategies based on evolving industry trends, organisational goals and the changing competitive landscape.
Holistic view or tunnel vision?
Benchmarking overcomes tunnel vision when evaluating performance.

Comparative benchmarks therefore offer a holistic perspective, enabling individuals and organisations to gauge their performance against external standards, ensuring that evaluations are grounded in reality.

Systematically comparing performance with industry standards and best practices helps identify areas for improvement, optimise decision-making and foster a culture of continuous improvement. This helps businesses stay competitive and excel in their fields.

Thus, benchmarking team performance stands out as a strategic imperative – not merely a tool for evaluation, but a catalyst for growth, motivating teams to reach new heights and ensuring sustained success in an ever-evolving business environment.

Embrace the power of benchmarking and unlock the full potential of your team for a future of sustained excellence.