George S. Chua l June 12, 2024 l Business Mirror
Depending on your point of view or perspective, someone may consider something a smashing success while another person may consider the same thing an utter failure. Certain people may consider that a person who is blind in one eye a handicap and yet in the quote by Dutch theologian Desiderius Erasmus five centuries ago, “in the land of the blind, the one-eyed man is king.”
Certain females may be physically stronger than some males but on average such would not be the case, which is why in most sports, males and females are in different categories. Admittedly, it does get more confusing when transgender issues are involved particularly when originally biological males request that they be reclassified as females. Similarly, standards are different for different parts of the world. For example, the average height of a male Asian person is only 5 feet 6.8 inches, therefore Asian males who are 5 feet 10 inches tall may be considered tall. However, if they go to Europe, their height would only be considered as average, since the average height of a male European is 5 feet 10 inches.
In the business world, we also encounter issues with relative performance where there is a need to establish benchmarks based on peer groups, industry and historical data. In the case of peer groups, you can compare the performance of a company against their competitors. For a market leader to benchmark itself against a new player, should not be acceptable and would not make sense.
In situations where there is a much more level playing field, the performance of a company may be benchmarked against the industry. As an example, if the company grew by 20 percent, it might seem that this is a good growth, but not if the industry grew by 30percent. Being able to maintain your market share might seem alright, but not if your ranking gets downgraded. This typically happens when you are unable to match the growth rate of your primary competitors, which will result in an erosion of your market share and vice versa.
Historical data is also used as a benchmark for performance. You can compare your company’s performance not only against your peer group and the industry’s data but also against previous performance. If the revenues of the company increased by 20 percent, but your peer group and the industry grew by 22 percent and 18 percent, respectively, and the company’s growth rate last year was 15 percent, did your company do well? Relative to your peer group, you did not do so well, but relative to the industry and the historical performance you did well.
Of course, there are numerous factors to consider. Nonetheless, it is sufficient to say that when you measure performance it should be relative to what benchmark you are comparing against. We should also not lose sight of the fact that there is more to simply increasing revenues and market share; in most cases the more important consideration of increasing profitability. This is the reason why a wealthier person is not necessarily happier than someone with less wealth, which is relative on the benchmark used.
The views and comments of Dr. George S. Chua are his own and not of the newspaper or FINEX. The author was 2016 FINEX President, 2010 to 2020 FPI President, an active entrepreneur in fintech, broadcast, media, telecommunications, real estate and a regular member of the National Press Club. Dr. Chua is also a Professorial Lecturer 2 at the University of the Philippines Diliman and BGC Campus, a Trustee of the FINEX Foundation and the Vice Chairman of the Market Governance Board of the Philippine Dealing and Exchange Corp. Comments may be sent to georgechuaph@yahoo.com or gschua@up.edu.ph. Photo from Pinterest.