Improving Financial Business Management with Benchmarking Data. “Profits,” “the Bottom line” and “Overhead” are the fundamental elements...
How Frequently should Associations Benchmark and Why
One of the questions that we get asked a lot is how frequently should benchmarking be run by associations. It appears as though associations or their representatives aren’t aware of how their industry works or perhaps out of touch with members when they ask this question. But make no mistake, it is still a good question especially for any association that’s looking to grow and add more members to its list.
When it comes to benchmarking frequency does matter but not as much as how to use benchmarking for performance improvement. What we mean by that is your benchmarks should consider data points that matter most to businesses in the industry. Some benchmarks can be run multiple times a year, for others once a year is enough work.
Keep in mind that benchmarking requires gathering all the needed data points, and that information often comes from the members themselves. So, the first thing to sort out is how frequently do you want members to answer your questionnaires? You also need to ensure that the association has enough workforce to carry out each benchmark throughout the calendar year.
Categorize Your Questionnaires
One of the strategies that are highly effective is scheduling a specific type of benchmark at a particular time of year. For instance, many associations will run financial benchmarks in December. The reason is that it gives businesses enough time to answer finance related questions which are generally spread out throughout the year. Now granted that for some businesses December is the busiest time of year. It is especially true for companies in the gifts or retail industry. However, associations can work around it by scheduling the financial benchmark for mid-January.
Associations that run multiple benchmarks throughout the year will want to take the following steps:
- Make sure that they have a questionnaire for each specific benchmark
- A members’ poll should decide which benchmarks are the most important
- A poll should determine the best time of the year for each benchmark
- Identify which benchmarks can be run multiple times a year
Each questionnaire should reflect a particular category of the benchmark. For instance, associations should have a separate questionnaire for sales, another for profits, and yet another for production figures, etc. Make sure to keep the survey as short as possible. If its too long and takes a lot of time to answer most members will never get down to it. Also, some participants may find it impossible to gather the required data, or it may cost them a lot.
Tip: some questionnaires can be simple ‘yes’ and ‘no’ questions which are very easy to answer.
Structuring your Questionnaire
Make sure that the questionnaire does not require too many data points. At best four to five points should be the maximum. Too much data collection can make benchmarking complex, too little and the benchmarks won’t be as useful. So, it is essential to strike the right balance.
The benchmark study should have data points which are easy to measure and readily available. The data points should offer something of value to the participants, i.e. for a valid comparison.
Some data points in the questionnaire can be removed for the sake of simplicity because that information can be found elsewhere. For instance, public records, newspapers and the stock market news should have some of that information.
What you shouldn’t do?
When collecting data points make sure that it isn’t done too frequently. If it is done too frequently, participants will have to spend much more time trying to fill out all those questions. Some may see some value in the added effort, but for others, it may be a hassle.
Don’t assume that businesses will automatically answer every question. Make sure that you only ask questions that they (business owners) are comfortable answering. For instance, instead of asking a CEO’s take-home income, ask what percentage is allocated for upper management in the company.
Tip: Think about the language of the questionnaire. Don’t ask openly probing questions since members may hesitate to answer them.
Multiple Annual Benchmarking Requires Manpower
If an association expects to run a dozen benchmarks each year, they need to have the right people on board and enough of them too. Conducting a benchmarking study, either individual or general does require knowledge of the industry. The people who are put in charge of collecting data should understand the industry too such as how to deal with empty data points, communication with businesses and marketing.
Associations should put together a team, each member of which has a specific skill set which can help with data collection, handling, and analysis. Make sure that each member of the team understands the goal of the association’s benchmarking efforts. Plus, associations depending on their size may also require volunteers, often students to handle the grunt work.
Schedule Benchmarks for The Same Time Each Year
When you’ve decided to run multiple benchmarks each year or the same benchmark numerous times a year, it should be scheduled for the same time each year. By having it at the same time every year, businesses and your staff know how to go about collecting and assimilating the required data points. It also helps remove many otherwise unforeseen issues which may affect benchmarking data. For instance, an association in Florida may want to avoid running benchmarks during the hurricane season which is generally in October.
Which Benchmarks Can Be Run Multiple Times?
It can be a tough question to answer, and a significant part of it will be industry dependent. Generally, you’ll only want to consider running a benchmark multiple times a year if the data is constantly changing. For instance, in some industries sales statics may change every three months. So, running a sales benchmark for example which encompasses the entire industry every three months may help offer insights into how one business in relation to others has done during a given quarter.
Some financial benchmarks can also be run, again depending on the industry multiple times a year. However, apart for perhaps one or two, most industries don’t require running the same benchmarks multiple times. That said if your members vote to have some types of benchmarks run multiple times then that’s what associations should elect to do. After all, businesses know best how to use benchmarking for performance improvement.
Finally, Plan for Everything
Everything that can go wrong will probably go wrong if everything isn’t planned. You need to do solid strategic planning and operational planning for best results. Use strategic planning to figure out where the benchmark study will fit into the grand scheme of things for your industry.
Make sure that your team can cope with all the commitments your association is considering before it is made. If required bring external team members onboard. If the tools you’re about to use are scheduled to receive a significant update, perhaps arrange for the supplier to postpone the release until after so that the results aren’t muddied in any way.
Other articles you might like
Once you have finalized all the required steps for implementing your benchmarking efforts and you are pretty sure...
While benchmarking is an essential part of growing businesses within an industry by measuring their progress the key to successfully...
How we support you
We believe that benchmarking could be much simpler, cheaper and more efficient through professional automation. And we believe you can add much more value for your clients with intelligent automation.
- More than 15 years of experience in benchmarking
- Help on implementing the questionnaire
- Support on analysing and reporting the results
- Training you to conduct your own benchmarking surveys successfully