When looking at the demographics quartiles for a peer group, certain considerations can be assumed by considering the size and complexity of the company being benchmarked.
Below is examples of five companies and their size / complexity compared to the distribution of a peer group
Based on these distributions, we can assume the following when analysing each company’s data:
- This company is smaller than the majority of the peer group and will therefore be affected by economies of scale. Costs may be higher on a normalised basis as a result.
- This company is slightly less complex than the majority of peers, but well within the middle 50% of the peer group (Q1-Q3). As a result, we may see some costs be slightly lower due to the simpler processes and procedures
- This company fits in with the peer group and therefore, data is not expected to be skewed due to size.
- This company is more complex than 75% of their peers, and as a result costs may be higher due to more complex processes and procedures
- This company is larger than every company in the peer group, and therefore economies of scale are expected to make the client seem more efficient on a normalised basis