When comparing compensation for a position such as CEO, for example, companies try to focus on peers whose CEOs have similar responsibilities, Gaffin adds. Gaffin says companies today go even further when identifying and comparing themselves to peers - an approach that helps set peer group analysis apart from benchmarking. For example, some firms consider financial or productivity performance when identifying peers. Gaffin says she knows of one service firm that will compare itself only to industry rivals that are considered among the top 100 places to work. It's qualifying the data before you aggregate it.
Companies often change criteria for determining their peers depending on their needs.
Peer Practices Companies can gather peer data from consulting firms, government agencies and professional organizations, all of which regularly survey businesses and then publish their responses. Although analyzing peer data might seem like a cumbersome endeavor, industry giants aren't the only ones doing it. Smaller companies are using the practice and finding the analysis just as crucial to their financial well-being. Despite its economic value, peer group analysis can have drawbacks. It doesn't serve to differentiate you.