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Measuring Employee Engagement through External and Internal Benchmarking

Ok… it’s time for an honest moment here. I got a D in statistics while in college. I waited until senior year, spring semester to take my math course and Yes, mom… I got D. To this day, I’m known as the person in my family who can’t do math. That said, I’ve never been one for data and putting said data into context. But even I, non-math person extraordinaire, understands the need to breakdown data to create actionable results. So here’s my personal hand at providing some insight on the value of external benchmarking and internal benchmarking.

After running an employee survey, companies are left with an abundance of data. This can be overwhelming as it needs inputting, analyzing and interpreting in order to create relevant action plans. The results, overall, look favorable. But how can you determine whether your employees are really engaged, or just moderately engaged? How can you tell if your organization’s results are typical or vastly different than the results of other organizations similar to yours? What do your results really mean?

Survey results are used to assess and understand the engagement and satisfaction levels of employees within your organization. Understanding how your results compare to other groups, such as other companies or the industry as a whole, the total organization or just the best groups, helps to “normalize” your results. With this frame of reference you can begin to make more informed decisions and implement improvement strategies that provide the greatest benefit to your organization.

The Value of Using Both External and Internal Benchmarking

YES. It’s important to know how your organization’s practices in engaging employees stacks up against other organizations, particularly with those you are competing for talent. In fact, when asked if forced to choose one over another, 58% of senior HR representatives would opt for external benchmarks, with 42% choosing internal historical data.

Simply put, both external and internal benchmarking paints a complete picture.  In internal benchmarking, an organization can compare its historical and overall scores to interpret the latest employee survey results. External benchmarking will be used to determine where their survey scores lie in comparison with other companies. Some practitioners might argue that external benchmarking is more of a “nice to know” but there are others, such as myself(!), who believe that  improving employee survey scores based on internal data alone may not be enough unless you know where to improve scores relative to your competitors.

External Benchmarking

There are many companies such as Towers Watson, Blessing White and Globoforce who compile external normative benchmark data, norms, for the sole purpose of sharing data and helping organizations assess their comparative strengths and opportunities. Normative scores are typically presented as a favorability rating and represent a large number of responses gathered across many companies. This approach allows survey results to be compared with a vast dataset with millions of views collated from a range of companies. The most commonly-asked survey questions are typically used in external benchmarking, allowing comparison with a large number of other companies.

One important consideration to keep in mind with external benchmarking data is that the scores represent averages. You may or may not wish to use the “average” score as a target for your organization. But external benchmarking can be useful as a temperature check, to give you an outward sense of your results. It can also avoid knee-jerk reactions to apparently poor scores. So, if you are trying to establish a frame of reference for judging the favorability of your results, external benchmarks are an excellent way to make that comparison.

Internal Benchmarking

If your company conducts employee surveys on a regular basis, it may also be useful to create an internal norm specific to your company. Averaging item-level results across several work groups or departments within your company creates internal norm scores. Different types of internal benchmarks below:

Trend or Historical — One of the simplest and most commonly used trend or historical data which is used to compare against previous survey years’ results. This allows for a meaningful, longitudinal perspective to be taken. Scores may increase or decline following actions taken or initiatives implemented by the company and in response to external factors.

Across the Company — Generally, this is the average of all survey responses in your company for each survey item. These scores enable internal departments and/or divisions to determine whether their item-level results are higher or lower than the rest of the company. This could be across business units or departments in relation to the overall company performance. This allows for high and low performing pockets of the organisation to be identified, and thus the opportunity to share best practice, knowledge and experience.

Best-In-Class — Internal Best-In-Class scores represent the average score obtained by divisions or departments who scored within the highest percentile of the entire organization on the survey. Best-In-Class scores help dissuade managers from believing that certain results are only attainable outside the company, or that there is a “ceiling effect” in which managers within the company can only perform to certain levels given the current competitive, political or economic environment. Internal norms, whether the internal company average or the Best-In-Class norm, provide proof to those disbelieving managers that better results can in fact be attained.

Case Studies

  1. A large global manufacturing organization used both external benchmarks and internal benchmarks to compare and “normalize” the results of their employee survey. Using external normative data, the organization was able to see how their results compared to other organizations with global operations as well as other organizations included in their industry designation. The result of this external comparison showed that while scores on some survey categories were below 50% favorable, the scores were significantly higher than other companies globally and within their industry. In other words, they determined that they were a leader in these categories. Other categories showed less favorable results compared to external organizations within their industry. Understanding these comparisons provided the momentum necessary for the organization to make improvements in those critical areas most in need of change. The organization’s desire was to remain competitive within the industry, keep turnover to a minimum, and make sure key talent and expertise was not lost.
  2. A leading service organization used both an internal benchmark (total company average) and a Best-In-Class benchmark to understand how work groups compare across the organization. Many offices, located in different states, were similar in function but operated at varied levels of output. Internal comparisons identified those work groups that were effective and highly functioning and those work groups where immediate improvements were needed. These comparisons helped senior management focus on those work groups requiring the greatest attention first. Using information and examples from the Best-In-Class work groups, senior management was able to create standard practices across the organization based upon improvement strategies that have been shown to actually work in their own organization.




43 thoughts on “Measuring Employee Engagement through External and Internal Benchmarking”

  1. Pingback: Manager Newz » Blog Archive » Liberate Your Company Through Employee Engagement

  2. Pingback: E L S U A ~ A KM Blog Thinking Outside The Inbox by Luis Suarez » Liberate Your Company Through Employee Engagement

  3. It is certainly good to use internal and external benchmarks. The issue though is that companies have to actually measure what they say they want to measure. My research on ’employee engagement’ has shown that companies rarely measure engagement but rather commitment to the company. This means that drivers are different or have a different significance. And the intended outcome, most of the time performance, is only to a limited amount a direct effect of that commitment. This leads to companies restricting their own success.

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