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Benchmarking (Part 1)

Written by: John Heap

Article Overview: To know how well we are doing, we need to compare ourselves to somebody else. Benchmarking is the process of comparing our performance to some kind of standard or to the competition - and using that comparison to drive improvement.

Benchmarking (Part 1)

Benchmarking (Part 1)

To know how well we are doing, we need to compare ourselves to somebody else.

Benchmarking is the process of comparing performance with a known performance level (the benchmark) as a means of evaluating performance … and subsequently improving it.

The benchmark might occasionally be internal (comparing our performance with what we did last year or comparing the performance of one part of our organisation with another) but external benchmarks are more effective (comparing us to another organisation or some form of ‘standard’).

Often we look for some form of measure of excellence and use that as our benchmark …. where such a measure does not exist, we may compare ourselves to our competitors (if we can get hold of appropriate data) or we might join a benchmarking ‘club’ where organisations share performance data so that we can compare ourselves to a ‘norm’ set by the other members of the club.

Establishing benchmarks helps set clear goals for an organisation – since there is a degree of objectivity about the measures (they exist outside of our own internal world) and they are ‘real’ enough for people throughout the organisation to understand why we are using them. They also help in the process of continuous improvement as the benchmarks will themselves change as standards change or as our competitors improve. Our benchmarks are hopefully some form of ‘best practice’ that we aspire to and can work towards.

MEASURE - COMPARE - IMPROVE

Focusing on external benchmarks ironically is the best way for us to ‘understand ourselves’ – because it throws a spotlight on what we do and what we achieve. Benchmarking helps us look at support activities as well as our core processes. We might, for example, look at a competitor – of broadly the same size and turnover – and find that their human resources department consists of 12 staff whilst ours has 47. Of course we must be clear that the benchmarks we use are ‘appropriate’ ... that we are indeed comparing ‘apples with apples’. Even allowing for the fact that structures might be different (they might call some of our HR staff by other names and have them in different departments or services) it would seem that we are overburdened by this support service … we should certainly try to find out why there is this discrepancy and whether we should be seeking to move towards this benchmark.

Benchmarking is often tied into other initiatives. We might, for whatever reason, have decided we need a performance improvement ‘campaign’. If so, we might use benchmarking to decide on what is reasonable and feasible in particular areas … it is difficult to argue with targets if we know that our competitors (and especially the ‘best in class’) are already achieving them.

So, benchmarking is (or should be):

· Externally-focussed

· Based on real data

· The driver of performance improvement

Related Articles
  Do's & Don'ts of BenchMarking
  Why Benchmark?
  Benchmarking (Part 2)
  How to be More Effective Selecting Sales Candidates
  The Important Distinctions Between Relationship, Collaboration and Performance Benchmarking

Article Tags: Benchmarking, Performance Measurement, Productivity



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