Importance of Benchmarks

Outplacement Firms Struggle to Do Job - WSJ.com:

"Chet Shubert, 53, arranged outplacement as a human-resource executive at Wyeth Pharmaceuticals and National Starch & Chemical Co. Last year, it was his turn, when he was laid off following a merger. He says he was offered several months of outplacement at Right's Management's Philadelphia office. In his first group meeting, he was surprised when a staff member said the firm didn't track how many clients get jobs."

This front page article is a lesson in the importance of benchmarks (or control groups for the more scientifically-inclined). Without them, there is no way to measure whether any outplacement firm is better than the other.

While benchmarking seems obvious to the investment management industry now, there was a time in our lifetime when benchmarks weren't considered vital either. Then came modern portfolio theory to usher in their importance.

Now proper benchmarking of investment products is a requirement for GIPS and a given in best practices.