Why Is Benchmarking So Critical to Your Organisation’s Performance? Why do organisations benchmark?
How to Organise a Successful Benchmark
Organising a successful benchmark all boils down to understanding what your member businesses want, how they operate and most of all how they think. Now while that is easier said than done having all these variables in place can help you go a pretty long way. If your members aren’t aware of what benchmarking is all about, educating them about it will help to retain existing ones and attract new members. Plus, it is essential to make sure that all members are aware of the fact that the association is in a unique position to conduct meaningful benchmarks which help everyone.
The association’s own mindset is also instrumental in ensuring that the benchmarks conducted help to add value. That’s done by structuring the benchmarks in a meaningful way. Many associations take it upon themselves to assume that benchmarking isn’t their job. That mindset puts the association at risk of soon becoming irrelevant especially when competing associations or those related to the industry start conducting benchmarks for their members.
No association should assume that members don’t want or don’t need benchmarking. Our experience shows that most if not all industries can in some way or the other benefit from benchmarking. The only difference is the extent of the difference it can make. In highly competitive industries, benchmarking can be more beneficial as opposed to niches where there are only a handful of competitors.
Why Benchmark for Members?
Associations should ask why they want to benchmark? What is the prime reason for benchmarking? How many members have asked the association to conduct benchmarks? Do you think that adding benchmarking is a great way to add a new revenue stream?
As stated in one of our earlier articles benchmarking, for the most part, can only be a success if members have demanded it. Benchmarking is similar to a product whereby it is run to satiate demand for improved performance or industry insight.
Tip: One good way to create awareness is with social proof from other similar industries. For instance, an association can partner with the association of a related industry to provide hard proof of how benchmarks help businesses in that industry. It is only through creating awareness that members will then demand benchmarking or they may deem it irrelevant. Though as an association you’ll be seen as doing your job, i.e., helping businesses grow.
Can Your Association Accommodate Benchmarking?
It is a valid question mainly because it ties in with another important question, i.e. what do members expect from your association? Many associations may be focused on advocacy or other aspects of a particular industry. In these cases, obviously offering benchmarking to members may not be adequate. That said benchmarking is the most effective way to present members with actionable information. The association will still need to identify the constraints of benchmarking and structure things accordingly.
Once you have determined that benchmarking is a workable solution to perhaps retaining members and getting new ones onboard, the next thing to consider is competence. Does your association have the skills to pull off a successful benchmark? Don’t get us wrong most associations don’t have the competence, but they can develop it. ,
One way to do it is to outsource the process to another company or a consultant. However, outsourcing is going to cost money, which could be a little more than what it will cost you to do it in house. On the flip side for associations just offering benchmarking services choosing to outsource it provides an excellent opportunity to learn how it is done.
Setting Goals and Expectations
It is essential that an association sets goals for their benchmarking and inform everyone about it. By setting goals, you are ensuring that members know what to expect. Also, members who don’t see themselves as fitting into the vision of the benchmarks will make their voices heard. That feedback can then be used to improve benchmarks or other aspects of the process further. Don’t ever make the mistake of not setting goals. Not having benchmarking goals is like getting into a car and driving nowhere.
Tip: The goals you set should be realistic, measurable, timely and relevant. You certainly never want to set unrealistic expectations or goals which can’t be proven with figures.
Let’s assume that the association sets the goal at wanting to help 50% of its members get good performance related information. That performance related information will need to be defined, i.e. revenue generated, product lifecycle, overhead, etc. Which of these will the benchmarks address? For instance, if you choose to say that the goal of these benchmarks is to measure profits across the industry. The next question how will that be done?
Measuring is easy with profits. All members who participate will provide their bottom-line figures for let’s say the past five years. When you run the numbers through a benchmarking tool, it will tell you exactly how many members are falling behind in profits, how many are ahead, and what the average profit margin is in the industry. All of these are measurable and graspable figures. Straight figures, ratios, and percentages give businesses the opportunity to understand which direction the industry is moving and setup their services or products accordingly.
Relevant and Attainable Goal Setting
The goal you set should be attainable and acceptable. You will have to take time, costs and effort into consideration when setting your goals. Plus compare those factors with others like profits, increased membership, etc. For instance, it will cost you 2x, as much to get 80% of the members to participate than 60%. In this instance 60% participation is a good start and so setting the goal at 60% is also attainable.
What is the relevance of reaching your goal? Do you have a capable team? As an association you want to help many members but do they want to be helped? Sure! They want help but they want to know if it is worth it.
Finally, be sure to set a deadline. A cut-out date for every step of the process should be set like issuing the polls, getting back the response, compounding everything and providing final results to members. When you set a deadline, everyone is motivated to work towards that goal. Plus, members will take polls more seriously when they have to do it within a specific time constraint.
Note: Goal setting for any association should be in line with their long-practiced policies. If the association, for instance, has a policy of not disclosing specific information about their members, that shouldn’t be breached to reach the goal. For example, if the goal is to increase members, the association shouldn’t release exact figures of other businesses which have grown because of the association’s benchmarking efforts.
Decide on a Benchmark Model
It goes without saying that there are many different benchmark models. We have developed the COMPARE method, but there are others. However, it is important to consider several factors before finalizing the model. The most important being if the model fits in well with your industry? Can the model be tailored to suit certain types of benchmarks? What are the drawbacks of the models you are considering? All these considerations are important since they contribute towards end up with the right model. It will also help to prevent having to go back and forth with various models to the dissatisfaction of your members.
Also, if this is your first time choosing a model, it would be a good idea to hire a professional like a consultant. A consultant who has experience with different benchmarking models can help you pick the right one. However, it is one of those decisions which shouldn’t be hurried through.
Launching into Success
We know from experience that many associations may not be successful with their first attempt at benchmarking. There are a myriad of moving parts, and any one of these failing can lead to disaster. However, by structuring how the benchmarking process should work associations can effectively eliminate the possibility of leaving anything to chance.
It is up to associations to set initial expectations for members. Members shouldn’t be wooed with hype but instead given specifics. Create awareness with solid data gathered from other industries to convince members to participate. All businesses want to grow, and if they see that benchmarking is successful, there is no doubt that most will want to participate. The more participation you get, the higher the chances of a successful outcome.
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Our intelligent online do-it-yourself Benchmarking Survey Tool has been created to make you successful in benchmarking. We support you with useful gadgets in all parts of the process managing your benchmark.
- Online questionnaire with realtime calculations
- Analysis and validation tools embedded into the same tool
- Online reporting through dashboards
- Offline reporting through generated pdf reports