The importance of ‘benchmarking’

The importance of ‘benchmarking’

Anyone involved with the world of quality and quality measurement and accreditation will be familiar with the term “Benchmarking” although the precise meaning of the term is still widely misunderstood.

“Benchmarking” is essentially the continuous activity of identifying, understanding and adapting best practice and processes that will hopefully lead to superior performance. Benchmarking is therefore all about measuring an organisation’s products, services and processes in order to establish targets, priorities and improvements which should lead in turn to competitive advantage and/or cost reductions.

A “benchmark” is therefore a reference or measurement standard used for purposes of comparison.

It is important to appreciate the difference between ‘external’ comparisons, where just data is collected, and ‘benchmarking’ as described here, in which the drivers of the performance are specifically identified.

Internal ‘self-assessments’ are often a good way to get started. The data and information that can be collected and analysed as part of a self-assessment exercise can be used as the ideal input into preliminary benchmarking.

The benefits of conducting a benchmarking exercise might typically include:
• Creating a better understanding of the current business position
• Increasing general awareness of changing customer needs
• Encouraging innovation and creativity
• Developing realistic goals
• Establishing realistic action plans

It is also important to realise that there are four basic types of benchmarking:
• Internal – a comparison of internal operations and processes
• Competitive – specific competitor to competitor comparisons for a product or function
• Functional – comparisons of similar functions within the same industry sector or with the recognised industry leaders
• Generic – comparisons of business processes or functions that are very similar but regardless of the actual industry or sector
Whichever type of benchmarking is selected though, there are four main steps to be addressed:

Step 1 – Plan the study
• Establish benchmarking roles and responsibilities
• Identify the process to benchmark
• Document the current processes
• Define the measures for data collection
Step 2 – Collect the data
• Record current performance levels
• Find benchmarking partners
• Conduct the primary investigation
• Make a site visit
Step 3 – Analyse the data
• Normalise the performance data
• Construct a comparison matrix to compare your current performance data with your partners’ data
• Identify outstanding practices
• Isolate process enablers
Step 4 – Adapt enablers to implement improvements
• Set realistic targets
• Consider any alternative processes
• Consider the potential barriers to change
• Plan to implement the changes

One way of assessing an organisations ‘maturity’ in the context of benchmarking is to ask a series of probing questions and to let the management team, or the staff, score their responses. Responses could range from “We have never done this” to “We always do this” on a scale of 1-5 with the ‘average’ being 3 – “We sometimes do this”.

Typical self-assessment questions could be things like:
– We have processes that are documented with measures to understand performance.
– Our employees understand the processes that are related to their own work.
– Direct customer interactions, feedback or studies about customers’ influence our decisions about products/services.
– Problems are solved by teams and teamwork.
– Our employees demonstrate, by words and actions, that they understand the mission, vision and values of the organisation.
– The senior executives sponsor and actively support quality improvement projects.
– The organisation demonstrates, by words and actions, that continuous improvement is a normal part of the culture.
– Commitment to change is articulated in the strategic plans.

The numerical outcomes derived from the scores can then be used to determine the broad organisational position
High Score = Ready for benchmarking
Average Score = More preparatory work is needed prior to benchmarking
Lowest Score = Not yet ready for benchmarking or need some help to get started.

Whatever stage your business is at in terms of its maturity, benchmarking can be an extremely useful and enlightening business tool to keep your finger on the pulse and to identify how quality is manifested.

Good luck with your own assessment!

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