Why External Benchmarks are a Waste of Time

Companies have long turned to external benchmark reports to see how they compare to other businesses in terms of time, money and performance. Large investments are made to obtain this data so that leaders can appear to be competitive and knowledgeable. Even more impressive is when a benchmark report includes data gathered from competing firms. This data is then used to make organizational decisions and plot out future goals. 

The problem with external benchmarking data

While external benchmark reports have been a staple in the human resources world, they do not actually provide real value to organizations for a number of reasons.

  • External benchmark reports are only a snapshot against other organizations
  • Data contained in these reports is often 1-2 years old by the time it’s published
  • The benchmark data is based on unrelated industries that may not have any bearing 
  • Benchmark reports often set the standards too low in certain areas of HR 
  • Reports may reflect opinions and percentages based on unspecified respondents
  • Favorable comparisons may result in the conclusion to do nothing, whereas continual improvement should always be the goal

These are just a few of the flaws that we’ve identified in external benchmark reports. Although they are helpful for informational purposes, they are not a quantifiable method of measuring any single organization’s success. 

Afterall, isn’t it better to look after the weeds in your own garden, rather than worry about your neighbor’s? :)

Here’s an example: 

External benchmark reports with data drawn from outside organizations can set the standards low when it comes to topics like employee satisfaction and engagement. For the last five years, multiple reports and surveys have been sent out stating that employee engagement is around 30 percent or lower in most organizations.

This poses the question - is it acceptable to be above the “industry standard”? Of course it is. There are many reasons for employee engagement to be low and it’s up to each organization to determine how well they are doing, instead of comparing their metrics to others. 

Benchmark reports that compare company performance based on factors such as financials are equally problematic. Businesses operate differently and how they make money can be unique. Imagine comparing retail to manufacturing or software development to healthcare. They are so different, but there are salary reports out there that lump certain job types together and advise how much people should be paid. A sales person in IT has a vastly different job than a sales person in pharmaceuticals, therefore they should be paid differently.

Internal vs. external benchmarking

What can give companies value are internal benchmarking reports, with information drawn from areas within the organization. Department data is gathered and compared against each other in areas like performance, employee engagement, profitability, efficiency and customer satisfaction. This can help pinpoint any problems and highlight things that are going well for the company. It’s like a report card for the business. 

Internal data is far more valuable because it’s based on real-time data drawn directly from the organization itself. This data is often reviewed quarterly, so that goals can be set for the next few months. Internal benchmarking can help management focus on successful strategies and project the performance of the company for the near future. 

External data cannot predict the success or failure of any one company. It can actually create complacency if leaders think they are doing everything right and are measuring high on the benchmarks. It can give a false sense of security that can give the competition the edge. On the other hand, if the company is falling behind benchmark data, the company leadership may mistakenly become concerned that the business is doomed. 

Advice about using any benchmarking data 

While there is some merit to using benchmark reports, it’s not wise to use this information to make any decisions. It can provide insight into what other companies are doing and if there are any ways to use innovation to improve things.

Comparing apples to oranges will never produce any real results, so use your own system for tracking the performance of your company. 

Employee engagement software can help your organization to keep track of how well things are going with employees -- a factor that influences all other areas of your business.

Employees who know their employer cares about their happiness at work tend to put forth more effort and this is the key to a successful business.


Thymometrics is a new breed of employee feedback technology. Through real time, always-on surveys and feedback solutions, we provide revolutionary yet simple tools to empower employees and monitor wellbeing whilst providing managers with deep and useable insights to improve business culture, wellbeing programs, productivity and profitability. Contact us to see how you can use accurately track internal benchmarking in real-time and take actions when they have the greatest positive impact.

For more information, please call 01223 750251, email info@thymometrics.com or visit thymometrics.com.