Not All Benchmarks Are Created Equal

Why “Go Big Or Go Home” May Not Be In Your Best Interest

When an organization looks at shifting employee engagement survey projects from a large survey vendor to a highly specialized albeit smaller survey partner, there’s always pause for concern. Particularly when it comes to comparing employee engagement benchmarks.

If one database comprises 500 or more organizations and the other is considerably less, do these differences impact benchmark validity? And is it best with this kind of change to use a smaller sized benchmark based on comparable organization size? Or a larger overall benchmark including organizations of all sizes and sectors and locations?

Based on TalentMap’s experience, it doesn’t really matter what widget you’re producing or what service you’re delivering or where you’re located, the best employee engagement benchmark comparator is to look at results of other organizations of the same size.

It’s not unreasonable to expect large global firms to have more organizations in their benchmarks than smaller niche-specialists. However, when using global sourced benchmark data, you’re likely accessing a collection of US, UK and European firms of all sizes and sectors which begs the question: is this an apples-to-apples comparison?

It’s a known fact that in the U.S., particularly among larger companies, employee engagement is lower compared to Canada, other countries in the western world, and the State’s own smaller and midsized business constituents. This consideration alone implies employee engagement benchmarks with large-sized corporate U.S. representation, may be lower than the universe in which your organization operates.

Remember too, company size means different things to different organizations. Some rankings are based on revenue or profit, spending habits or numbers of employees (small = 100 or less, medium = 1000 or less, large = above 1,000). Others look at these considerations within context of different industries.

An article published by The Business Journals reported the number of large businesses in the United States is relatively tiny, yet the clout they wield is massive. These large businesses are some of the largest worldwide and include some of the biggest brand names such as:

• Walmart (2.3million employees in 2016)
• UPS (444,000 employees in 2017)
• PepsiCo (264,000 employees in 2016)
• Apple (123,000 employee in 2017)

Conversely, Financial Post magazine’s ranking of corporate Canada’s top 500 in 2016 indicated the average company employed 9,037 people (of the 426 that reported labor numbers). Only three companies topped the 100,000 mark: George Weston Ltd. with 201,500 employees, Onex Corp with 161,000 and Magna International with 155,000 employees.

Given that benchmarks are based on responses from individuals – not organizations – the sheer volume of responses from even one or two large enterprises will heavily weight benchmarks to reflect large organization sentiments. Not good if you’re a small, medium, or even “large” organization with considerably fewer employees.

In other words, whether an employee engagement benchmark has 50 or 500 organizations is irrelevant. What matters is peer size. And what matters even more is what the industry calls variance. In simple terms, a benchmark of 50 organizations which all have very similar results will be more reliable than a benchmark of 500 with wildly different results (higher variance).

All TalentMap benchmarks have very low variation, which means they’re not very different from each other at all. This allows for objective and realistic target setting. If your organization is at 70% engagement and the benchmark of your peers is 75% then your organization might want to consider enacting strategies to get to 75% and beyond.