Need to know: How competitors measure performance

It can be incredibly valuable to consider how performance management compares between your organisation and your competitors. By looking at how the performance management criteria compares, you will be able to gain a deeper understanding of your business.

The key measures of performance that can be looked at when comparing your organisation to its competitors are:

  • How the company measures itself. Does it study return on investment, share price, analyst reports, or against a scorecard?

  • How individual performance is measured.

  • How do those measures differ from yours?

When looking at this, it can be useful to understand the measures that your organisation doesn’t use. For example, research by professor Alex Edmans, of the Wharton School at the University of Pennsylvania, found that firms listed in the Fortune Top 100 Firms to Work For in the US outperform others by creating a return on investment of 14% compared to 6% for those not listed, meaning that staff satisfaction must have a bearing on the bottom line. And this is exactly the type of data that HR might consider collecting.

What you measure and how this is used helps to determine the focus and culture of your business. So if you are measuring the performance of your sales people, do you measure them simply on the money they bring in, or do you also measure their customer relationships, the number of customer accounts they open, or the number of accounts they retain, or on their customer feedback?

Ask yourself: do your competitors get greater productivity from their staff, or are they any better at recruitment or retention? It can be helpful to study the core competencies they expect – ie, do they value innovation over customer relations?

Regardless of the measures you’re comparing, there will be formal measures – analyst reports, or core competency frameworks – that it will be fairly easy to identify. More informal measures are trickier to get data on and, as ever, the best way of gaining information about the culture and focus of your competitor businesses is through networking.

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