
Weighing one approach against another.
© iStockphoto
How would you describe your company's or your department's performance? Great? Good enough? Average? Bad? These terms are all relative, so what do they really mean?
Whether you're doing well or not so well depends on what you use as a basis for comparison. Do you compare current performance with previous years? Do you compare yourself with other companies your size? Or do you compare with other companies in your industry that serve the same niche market?
To find out whether your performance measures up, you need to use the right kind of measuring stick. If your performance last year was really poor, then a 10% improvement this year doesn't necessarily mean that you're doing well. If your sales increase by 20%, you might be happy – but if your competitor's sales increase by 50%, suddenly your 20% looks very different.
Likewise, if you compare your performance with other organizations based on random criteria – like market placement or size – there's no way of knowing whether the standard set by those companies is something you should try to match. Being better than the bottom five companies in your industry may sound good, but are there a total of 10 companies or 100 companies? That makes a big difference.
For a more meaningful measure, you need to compare your performance with industry best practices. This is called benchmarking. A benchmark is a reference or standard against which you can determine how well you're doing.
The benchmarking process can help you answer questions like these:
Mind Tools members, click here.
Join now for just $1, first month

Get training, help and ideas to boost your career: the Mind Tools Club gives you much, much more than you get here on the basic Mind Tools site.
And if you join before midnight on May 9th, we'll also give you a FREE copy of our Future-Proof Your Career workbook.
Join the Mind Tools Club before midnight, May 9th, and get our Future-Proof Your Career workbook (worth US$19.99) for FREE.
Learn on the move with the free Mind Tools iPhone, iPad and Android Apps. Short bursts of business training ideal for busy people.