The benchmark conversation: discussing the figures in five questions

Every accountant, adviser and finance business partner knows the moment. The figures are on the table, they are correct, and the person across the table nods politely at every page. An hour later they leave with a report that ends up in a drawer. The numbers were explained, but nothing changed. A comparison with the industry is the fastest way to turn that meeting into a real conversation.

This article is for everyone who discusses figures with the people who run a business: external accountants and advisers with their clients, and controllers and finance business partners with the managers of a business unit, a subsidiary or a branch. Business owners and managers preparing for such a meeting will find it just as useful.

Why the industry changes the conversation

A number on its own says little. A number next to that of comparable companies immediately raises a question: why us, or why not us? The conversation shifts from accountability to improvement. Robert Camp, who wrote the standard work on benchmarking, framed it as the search for the practices that lead to superior performance (source: Robert C. Camp, 1989). The figure is the starting point, not the verdict.

Kaplan and Norton warned that financial measures alone can give misleading signals (source: Harvard Business Review, January 1992). A benchmark conversation therefore never stops at the percentage: it asks what lies behind it in customers, processes and people.

The conversation in five questions

1. 01

   What strikes you?

   Let the other person look at the comparison first. What they see themselves, they take more seriously than what you point out. You also learn immediately where their attention goes.

2. 02

   Where do you differ most?

   Choose the two or three largest differences together, in percentage points of revenue. No more: a conversation about ten lines becomes a conversation about none.

3. 03

   Is that a choice, or did it just happen?

   Higher housing costs because of a prime location are a choice. Higher personnel costs because nobody manages the schedule are not. This question separates strategy from drift.

4. 04

   What does it cost or deliver?

   Translate every percentage point into money. A difference of a few percent only becomes real when the manager sees what that amount means for their own business.

5. 05

   What will we do, and how will we measure it?

   One or two actions, each with an owner, a date and a number that should move. The next conversation is then about progress.

Preparation in half an hour

• The right industry: pick the one that matches what the business actually does, as specific as the figures allow.
• The same classification: classify costs the way the industry statistics do. How is explained in cost analysis with sector data.
• The corrections: owner pay, owned premises, group charges and one-off items, or you will discuss differences that do not exist.
• Three differences: pick the three you want to discuss in advance, but let the other person look first.
• One page: put the comparison on one page. A thirty-line table ends up in the drawer.

Pitfalls

More on benchmarking as a method in benchmarking. To look wider than costs, use the business health check as an intake.

Conversation card, agenda and report outline

Below you will find the full conversation card with follow-up questions and signals for each question, an agenda for a forty-five-minute meeting, a one-page example report, and an approach to offer the benchmark conversation as a recurring service or a standard part of the business review cycle.