MONITORING SUCCESS: The Evolution of Benchmarking & Dashboarding
A brief historical survey reveals several narratives about the origin and applications of the term “benchmarking.” Some associate the word with rapid deployment of military forces, with the assembly line for automobiles, or with various management processes. However, none of those management systems used the term “benchmarking.” It was originally used to measure foot sizes. Customers would place their foot on a bench for cobblers to mark, creating a pattern for a custom-fit shoe every time. Over the past few centuries, “benchmarking” has evolved to reference the measurement of all sorts of things, including the utility of our fundraising processes.
Product Benchmarking is the process of comparing a competitor’s product based on cost, production time, or quality. The objective is to design a new product or improve an existing one. This process often involves reverse engineering—taking apart the competitor’s product to identify its strengths and weaknesses.
Process Benchmarking follows the same logic, but instead of engineers disassembling a competitor’s machine, an organization’s leaders disassemble an industry-leading competitor’s process. The objective is to identify the key elements of their success as a comparison to their own organization. Essentially, benchmarking provides a snapshot of your organization’s performance and helps you understand how it measures up against a specific competitor.
Dashboarding (also commonly referred to as “benchmarking”) is used today by nonprofits to measure ongoing performance (i.e. monitoring against itself) in terms of specific indicators, such as the cost per dollar raised (CPDR), donor retention, average gift amount, and/or other trackable data.
While a benchmark may be a one-off event (as the original name suggests), it is often a continuous process. This single snapshot comparison tends to evaluate a broad collection of selected competitors’ best practices, while a nonprofit dashboard is used in the ongoing process of measuring key performance indicators (KPIs).
TOO MUCH OF A GOOD THING?
Unorganized attention to detail without prioritization will lead to a loss of productivity.
Great attention to detail can be a wise and virtuous leadership characteristic. However, unorganized attention to detail without prioritization will lead to a loss of productivity. Nonprofits now have unprecedented immediate access to data on donors and their giving. But more data does not necessarily make smarter, wiser, or better decision-makers. Excessive amounts of data can cause nonprofit leaders to lose focus and forget the essentials their experience has taught them to follow.
A standardized list of benchmarks or dashboard KPIs can misidentify the appropriate data to monitor. For instance, a year-over-year Return-on-Investment (ROI) for medical research is almost impossible to track as a Key Performance Indicator. How much time and investment will it take to find an effective cure for chronic diseases, such as Type 1 diabetes or various kinds of cancer? If you are a nonprofit fundraiser thoroughly addressing the root causes of systemic problems, it will certainly be reflected in your institution’s ROI. Simply put, treatments are relatively simple, while cures are very complex and unpredictably expensive. Think about it for a few moments. What are the systemic problems underlying the mission of your organization? See HARD SELL: Making the Case for Large Investments with Unpredictable Results. The same is true for planned giving initiatives that often take years to develop.
ACADEMIC VS MARKETING APPROACH
The early days of benchmarking were driven by academic research among actual industry leaders—William Deming, author creator of Total Quality Management; Dr. Robert Camp, author of Benchmarking: The Search for Industry Best Practices that Lead to Superior Performance; David T. Kearns, CEO of Xerox Corporation; and others. Today, however, benchmarking is overshadowed by sales and marketing websites, each with its list of key performance indicators. According to most of their articles, the objective seems to be signing up nonprofit executives in the website’s proprietary benchmarking system.
So, how do nonprofit leaders sort through all the marketing clutter to develop a system of regularly monitored KPIs that are a dead-on reflection of the present and future performance of the organization?
STRATEGIC PLACEMENT OF KEY PERFORMANCE INDICATORS
First, strategizing KPIs requires significant reflection and input from key staff. Benchmarks or dashboards hastily constructed or dictated from above are almost always ineffective and, for all practical purposes, ignored or quickly abandoned.
Second, collecting the data and getting it onto a virtual dashboard is relatively easy. The more important part is having the foresight to place the key performance indicators front and center, much like the gauges in the cockpit of the Cirrus SR22 Turbo I flew for ten years. Using the cockpit analogy, three big gauges (altitude, heading, and airspeed) stare me right in the face. Those metrics show me how well I am flying the plane, so I monitor them constantly. Smaller side gauges represent performance indicators which are also important but don’t need constant monitoring.
The 1972 crash of Eastern Airlines Flight 401 is the classic example of Controlled Flight Into Terrain (CFIT), an aviation term used to describe a perfectly air-worthy aircraft under complete pilot control being inadvertently flown into the ground or an obstacle. When Flight 401 approached Miami International Airport, an indicator light failed to illuminate and signify the nose gear was locked into the down position. The three experienced and highly qualified pilots became so fixated on the non-illuminated landing gear light that no one noticed autopilot automatically disengaged at 2,000 feet. By the time they realized what was happening, it was too late. Since the crash, all airlines have instituted a training program known as Cockpit Resource Management (CRM), which ensures that during unexpected circumstances, someone in the cockpit remains singularly focused on the most important task— flying the plane.
Nonprofit executives have developed a habit of watching and fixating on the wrong gauges or simply ignoring the essential KPIs.
Increasingly, nonprofit executives have developed a habit of watching and fixating on the wrong gauges or simply ignoring the essential KPIs. Either mistake can become critical, and some nonprofits are in danger of flying their organizations into the ground.
MONITORING OUTPUTS OVER INPUTS
There are two basic performance indicators for nonprofits—donor performance (donor inputs) and development staff performance (staff outputs). While long-term donors rarely show up unsolicited, their generous giving is something you can merely influence, not an action you can control. You can only control what you and your team do.
DONOR PERFORMANCE is a metric I recommend you monitor only once a year, simply because you cannot control how much a donor gives nor when they give. All you can control is your development staff’s performance. Consequently, metrics related to staff performance are the ones that should command your undivided attention—i.e. calls, visits, touches, and attention to A through D-level donors. Due to their size and success, larger organizations can slip into the habit of celebrating donor performance rather than remaining focused on the key indicators of development staff performance. In other words, they are focused on the wrong gauges and forgetting the essentials of flying the plane.
PRECISION DEFINITIONS OF STAFF PERFORMANCE
Staff performance might be evaluated as who, what, and how: who is responsible, what they will do, and how they will continually measure up to the predetermined performance indicators. For example,
WE WILL increase our donor retention rate by at least 1% year-over-year by providing straightforward annual reports and by cultivating relationships with current donors through visits and personalized correspondence. See: PLUGGING THE LEAKS: The True Impact of a 1% Increase in Your Retention Rate.
ALL ORGANIZATIONAL LEADERS will reinforce donor confidence by maintaining a donor-centric rather than an organizationally-centric approach to all donors. See HARD LESSONS LEARNED: My Ten Greatest Fundraising Mistakes.
WE WILL ask each new donor for referrals as well as ask existing donors for referrals once each year. See: REFERRAL SYSTEMS: How Much Are Fundraisers Leaving on the Table?
WE WILL periodically evaluate donor visits and conversations for definite giving signals by a process of Precision Q & A. See GIVING SIGNALS: Clearly Defining Successful and Unsuccessful Donor Visits.
DEVELOPMENT STAFF will employ a scheduled approach and follow through to major donor annual giving commitments. See CULTIVATION STRATEGY: Fundraising for Your First Quarter.
WE WILL promote gifts of appreciated assets with an annual appeal to donors with significant giving capacity. See UNFORTUNATE FOCUS ON CASH: Donation Types as Predictors of Future Growth.
These examples measure staff performance indicators. Some KPIs would be monitored regularly; some only occasionally, varying based on the strengths or weaknesses of your organization. Team members who want to do things their own way, preferring not to be so focused on development staff performance indicators, they feel they perform better when they don’t have to look at those gauges. They are, in effect, “flying by the seat of their pants.” See “THE EFFECTIVE ASK: Sticking to a Script or Flying by the Seat of Your Pants.” Resisting benchmarking will make your team more likely to miss the most important gauges and, consequently, forget to “fly the plane.”
Nonprofit leaders, like pilots, must vigilantly monitor indicators.
Nonprofit leaders, like pilots, must vigilantly monitor indicators. These gauges inform our dashboarding and benchmarking evaluations. Benchmarking has historically been a way to ensure a custom fit, and that principle still applies: nonprofits should tailor benchmarking strategies to their unique mission, rather than blindly adopting standardized KPIs. As excessive and non-prioritized data can distract from the most valuable insights, nonprofits can benefit from focusing on development staff performance instead of donor performance, which is out of staff control. The ultimate goal of benchmarking and dashboarding is not just to collect data but to use it strategically–ensuring that organizations remain mission-driven and financially stable, “flying” towards long-term success.
2025 Copyright, R. Edward Thompson, Ed.D., FCEP
