Benchmarking

Benchmarking is the process of determining, for a given area of activity, which organisations are ‘the best’ – those who set the standards for performance and quality, and what are those standards.

The aim is to compare your own organisation to these ‘best companies’ and then to compare – structures, processes, procedures, relationships, levels of investment, etc. Alongside this is the aim to motivate those within the organisation to strive to achieve those same high standards.

The aim is not to ‘copy’ the benchmark organisations, but to learn from them and to adopt and adapt elements of their organisation only as far as they can fit within your own structure, culture and broad strategy. Thus benchmarking is often a component of a wider improvement process such as business process re-engineering or quality improvement.

Simply attempting to analyse what makes a good company good – even when that company is in another industry – is a useful exercise.

Benchmarking assists in the setting of what must be ‘reasonable’ targets – after all, if another organisation has achieved them, they must be reasonable. And having external comparators means that internal measurement becomes much more useful. It becomes much easier to establish the difference between competence and excellence.

Information which is freely available in the public domain can be useful as a starting point, but the level of detail is probably inappropriate for really effective benchmarking analysis. Thus, the usual approach is to share data with another organisation – on a mutual help basis. There is now a number of benchmarking ‘clubs’ both within and across industry sectors where members pool data – derived to a common measurement methodology – to act as collective benchmarks for the group.

It is important to choose the right organisations to benchmark against – they should be clearly the same kind of organisation (or, if not, the differences and their effect on benchmarked activities identified). It is equally important to identify the right activities to benchmark – those that align with strategic aims and objectives.

It is usually best to benchmark against some sub-set of a total system so that causes and effects can be more easily identified and followed. A complete system can thus be addressed in phases with each process being benchmarked and improved in turn.

See: The American Productivity & Quality Center http://www.apqc.org/

See: The Benchmarking Network http://benchmarkingnetwork.com