Beware How You Compare

“Don’t compare your beginning to someone else’s middle.”

— Tim Hiller

When was the last time you thought about how you compare to others? The context may have been as an entrepreneur, a business leader, a homeowner, a spouse, or a parent.

For most, it’s within the past 24 hours—but more likely, it was within the last 60 minutes!

Comparisons are inevitable. In fact, we perpetually assess our personal and social value by measuring ourselves against others. This is a function of Ego—our judging and comparing self. Studies suggest approximately 10 percent of our daily thoughts are comparisons. We use them to evaluate our actions, our accomplishments, and our opinions.

Your Ego cranked up at a relatively young age, as you began noticing some of your peers could run faster on the playground, others had more friends, and perhaps more than a few performed better on spelling tests. Through comparison, your Ego creates your psychological immune system, which helps justify your “rightness” in the world and protects your sense of “self.”

As we become adults and business leaders, our comparisons become more complex. We’re constantly comparing our circumstances and status to others to assess how we’re doing. Sometimes these comparisons are overt—for example, analyzing performance data from firms in your industry. But often, our comparisons are unconscious: Maybe you’re angry or upset about certain results or a lost deal, so you peek over the metaphorical fence to see how others are doing.

Your Ego compares and judges, but ultimately, fabricates conclusions to justify your feelings (and sense of “self”).

On one hand, comparison (dressed up professionally as the term "benchmarking") is important for any business because you don’t ever want to operate in a vacuum. On the other hand, it can have serious operational consequences because of two potential pitfalls:

1. Comparisons are rarely apples-to-apples. You may be benchmarking against a metric or a set of conditions you don’t fully understand, which creates a false impression of your position relative to the benchmark (Fact: “We just lost another deal to X-Corp because of price.” Assumption: “They’re profitable at a lower price, therefore we need to be profitable at lower price to compete!”).
2. Your interpretation of benchmark data leads you to create a false ceiling that diminishes creativity, momentum, and performance (“The best margins in our industry are 18 percent, so it’s great that we’re almost there.”).

Regardless of whether you’re setting the bar too high or too low, the results of professional comparison can be more dangerous than value-generating if you don’t do it correctly.

Here are four areas where you should be careful and deliberate about how you benchmark:

Employee Performance

Employee benchmarking tends to be internal. For example, if you’re running a sales organization, you likely have some staff who are very high performers, some who are moderate performers, and (hopefully) a small number who aren’t very good at all.

If your highest performer is producing $3 million a year, and your average performer is producing $1.4 million a year, the tendency is to look at the high performer as your benchmark for what should be achievable for everybody on the team.

There’s logic to this thinking—but the problem is, how do you know $3 million is a good benchmark? What if another person came in and produced $5 million? How would you look at the production of your $3 million earner?

Unless your top performer is the best in the world—and odds are they aren’t—there’s a huge risk in internally benchmarking against them.

When you benchmark against your own internal high performer, you create an artificial ceiling and an expectation of “this is as good as it gets.” It’s the same belief that played out in the 1952 Olympics when Roger Bannister became the first person to run a mile in less than four minutes. At the time, experts believed that running a sub-four-minute mile was physically impossible, but once Bannister broke through, it took just 46 days for another runner to cross the four-minute threshold. As of June 6, 2022, 1,755 athletes have run a mile in less than four minutes!

Unless your top performer is the best in the world—and odds are they aren’t—there’s a huge risk in internally benchmarking against them.

Rather, make sure you’re continually challenging top performers in every area of your business. Believe that there is always more potential and that something’s being left on the table. Don’t ever label employee performance ceilings. Push them!

Peer Group Members

Forums and peer groups have become ubiquitous fixtures in the global business community, including Entrepreneur’s Organization (EO), Young Presidents Organization (YPO), and countless practitioner-facilitated and industry groups. There are two common benchmarking problems here: Lack of context and false ceilings.

Most leaders show up to these peer groups with their Egos and internal narratives in overdrive: “How do I stack up? Where are we better? Where do we lag?”?

I work with a client who meets with and benchmarks against numerous peers in their industry (non-competitively, because they’re in different geographic markets). During one of our monthly meetings, the CFO shared rolling 12-month benchmarked profitability data from one of their more profitable peers. On paper, the peer firm looked ridiculously profitable, which the leadership team found rather demoralizing!

I challenged them on their wholesale acceptance of the data, pointing out they had no idea what was actually happening behind the other firm’s spreadsheet. As it turned out, my hunch was correct. The peer company had included their Payroll Protection Plan (PPP) funds in their operational results, inflating their profits. The PPP was a pandemic-era US government forgivable loan given to qualified businesses that, when forgiven, created a windfall profit. My client was benchmarking against an unachievable target because they’d rightly excluded their PPP funds from their own operational performance data.?

You could spend all day beating yourself up about a comparison scenario like this, but the reality is, if you don’t understand the context of what you’re benchmarking against, it doesn’t work.

The second problem with comparing yourself to peer groups is that it’s also relatively easy to construct false ceilings.

There’s a double-edged sword here: By nature, peers are equals. That’s a good thing, because you’re with others who experience similar problems, challenges, and opportunities. The risk, though, is that your peers also likely share your fears, bad habits, and anxieties. When you compare yourself to them too closely, you’re liable to create artificial ceilings for yourself (“Bob and his team can’t solve their staffing problems, so maybe it’s okay that we haven’t solved ours yet either.”).

If you don’t understand the context of what you’re benchmarking against, it doesn’t work.

Don’t get me wrong; I believe peer groups are beneficial and it’s certainly nice to have others with you in the same boat. But you have to ensure your peers challenge you and add to your growth because overly sympathetic peers, even with the best intentions, will reinforce and reward your status quo.

The remedy here is to ensure diversity in your professional neighborhood by including people several steps (or more!) beyond your level of sophistication and success. They’ll call out your BS, challenge you, and help you elevate your game.

Industry Data

No matter your industry, there’s plenty of data out there about it—from consulting groups like McKinsey or Gartner, government agencies, trade publications, and more. And while external data is critical to consider as you formulate strategy and plan, it can be a serious handicap if you don’t use it correctly.

For example, just because industry data shows you’re being outperformed in a particular area doesn’t necessarily mean you have a problem. It could mean you have a different strategy, or there are outside factors baked into the data that you aren’t seeing. The result is, like Miguel de Cervantes’ famous character Don Quixote, you risk fighting windmills you mistake for giants, which can distract you from your true priorities.

Of course, the inverse of this scenario can also be true. A particular set of data might indicate you’re performing well in comparison to your industry, which can cause you to mentally set a ceiling for your success. The data validates your progress, so you stop pushing or asking yourself how you can improve.?

Rather than let data draw the finish line, ask yourself how you can keep going. Remember: Don’t label performance ceilings. Push them!

Economic Indicators

In my 25 years as a coach, I’ve been through all manner of economic seasons: up cycles, down cycles; bull and bear markets; recessions and surpluses. What I’ve learned during these times is that there’s a significant element of self-fulfilling prophecy when it comes to economic forecasts. If people believe it’s happening, they’ll somehow make it happen.

Too many leaders automatically assume, absent any rigorous thinking, that macroeconomic factors will impact their business. The truth is that those factors may play a role in your firm’s outlook, but there are plenty of situations where your “individual economy” can be vastly different from the economy of your country or region.

If people believe it’s happening, they’ll somehow make it happen.

John D. Rockefeller’s empire was built not during prosperous times in the United States, but in times of economic fear: the Civil War, the panics of 1873 and 1907, and the stock market crash of 1929. While others retreated in fear, Rockefeller approached each of these economic downturns with logic and self-discipline, which enabled him to spot opportunities where others saw none.

Similarly, I have a client that has shattered almost every possible performance record this year, despite the doomsday prognosticators warning of a recession. To be clear, I’m not advocating you ignore economic data and take irresponsible risks, but you should be aware of the assumptions you make when you over-weigh it.?

Conversely, you shouldn’t use economic indicators as an excuse to let off the gas, either. Settling for mediocre metrics and blaming it on the economy is victim-based thinking, which is dangerous in any season.

Don’t let your perception of broad economic conditions shape your perception of your capabilities. Set your course and keep pushing.

Conclusion

“We won’t be distracted by comparison if we are captivated with purpose.” – Bob Goff

One of the most important things you can control as a leader is your perspective. It’s inevitable that your brain will push you to make comparisons between your firm and others, but it’s critical for you to appropriately challenge this default setting. Absent that, ill-informed benchmarking can do you far more harm than good.

Remember:

1. Comparisons are rarely apples-to-apples. Looking at something or someone? seemingly outperforming you can set a false and perhaps unachievable standard when you don’t have the full context behind the data.
2. It’s easy to establish false ceilings for performance when you benchmark through a very narrow lens of comparison and focus on what you (or those around you) think is possible.

Although comparisons are inevitable and an essential part of being human, it’s critical for leaders to utilize every possible method and precaution to benchmark deliberately, logically, and with care.?

In other words, be sure to keep your eyes on your own prize more so than on the achievements of others.

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