Why Is Benchmarking So Critical to Your Organisation’s Performance? Why do organisations benchmark?
Eight tips for effective benchmarking
The following eight tips help you have a more affect with a benchmark
- Decide what you want to achieve
- Set up the benchmark systematically
- Do not compare apples with pears
- Benchmark regularly
- Be honest
- Do not copy the competitor
- Give analysis an opportunity
- Determine the appropriate comparison group
1. Decide what you want to achieve
A benchmark should have a purpose and a focus. Decide in advance what you want to achieve, such as finding clues to improve one or more specific organisational processes. And also determine what part of the organisation is involved, for example, a department, a product group or a specific product.
2. Set up the benchmark systematically
In an organisation wants to learn from a benchmark and actually improve results then a systematic setup is necessary. First find the other participants to benchmark with.
Determine with the participants which indicators to benchmark. Determine also how often the benchmark should be executed and the degree of discretion. Use, where necessary, an independent organisation or industry association in order to ensure the confidentiality.
Based on the agreed definitions participants provide data and compare results. Each participant then analyses its own performance. On the basis of the analysis, the organisation may evaluate its own actions and improve it where necessary.
The benchmark can be repeated on shorter or longer notice, according Demming's quality improvement cycle plan (prepare), do (implement), check (analysis) and act (improve).
3. Do not compare apples with pears
Before the benchmark is executed, the participants have to align the key figures, so that they are comparable. This prevents comparison of apples and pears. In this way you get actionable insights for improvement.
4. Benchmark regularly
Select the proper frequency of a benchmark. A one-off or ad hoc benchmark provides insight only once and takes relatively much time. Better results appear when a benchmark is repeated. This gives insight in the trend performance, in which you see the results of your improvement actions.
5. Be honest
Honesty wins. Enter wrong answers in order to put the competitor on the wrong track, causes poor results for every participant. This makes the benchmark unusable for all participants.
6. Do not copy the competitor
To improve your processes, do not copy the competitor. Most of the time you won’t get better than them. The goal is to challenge competitors and beat the benchmark. To make sure that your processes and corresponding performance are better than theirs. To achieve breakthroughs, you could look to the same processes of organisations in other industries or you can use your own employees brainstorming about process improvements.
7. Give analysis an opportunity
Be careful to draw conclusions based on a difference in performance. Such a result does not reflect how an excellent position is reached and kept. Moreover, a difference may be desirable according to the chosen business strategy. So give sufficient attention to the analysis of the results.
8. Determine the appropriate comparison group
Benchmarking is done with a group of organisations with which you want to be compared. The larger and more diffuse the group, the less useful benchmark. It is better to perform two benchmarks with two specific groups, instead of one benchmark with a too big, bland group.
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