Benchmarking is more than simply making a collection of statistical comparisons. If handled properly, the technique can be used to create significant efficiency improvements in your organization.
A company measures its performance against that of other companies to assess whether it standards are higher or lower.
Collecting snapshots of what that so doing, but failing to examine the reasons for differences in performance, and not using the data to identify and developing best practice.
Benchmarking in Strategic Management
There is little point in spending time and effort collecting comparative data for its own sake, or if managers use it is only to justify current standards.
There are five main stages to effect a benchmarking.
- Selecting aspects of performance that can be improved, and defining them in a way that enables relevant comparative data to be obtained—in effect, producing performance indicators that will make sense to other organizations.
- Choosing relevant organizations from which to obtain core or headline data
- Studying the state to improve possible opportunities for improvement.
- Examining the procedures of the best performing organizations to pick ideas that can be adopted or adapted to achieve performance improvements.
- Implementing any new processes.
In selecting performance indicators the call for in pieces of initial data collection, it is helpful to distinguish between input and output measures and, unpredictable, the place priority on the latter. It is often easier to define inputs and outputs. Examples of input measures include staffing ratios, per capita expenditure on training or, in manufacturing companies, the wearying proportions of labor, materials, and overhead costs.
The drawback with input measures is that they greatly provide an indication of the quality of outputs. Take, for example, the widely used indicator of response time to customer enquiries. This provides only part of the picture because it gives no indication of the quality of service. Apparently, good figures may conceal significant customer dissatisfaction, while longer response times may result in clients being delighted with the results.
Benchmarking for Strategic Leadership
Ideally, this practice involves high standards in both inputs and outputs. Indexes of customer satisfaction one form of output measurement. Some personal departments conduct surveys in which their international clients—the line managers—are asked to rate the quality of the various services provided by the Department. If other organizations conducting similar surveys can be found, these ratings can for part of a benchmarking study and may indicate areas where a change of procedures could lead to improvements.
There are two different approaches—genital and selective—are choosing organizations from which to obtain comparative data. The main purpose of the fourth month in is to produce a whole range of performance measures across an entire sector. Examples of general data sources include the government’s ratings of people performance in every primary school; the audit commission’s performance indicators for local authorities et cetera.
The state must be considered with caution. Misleading conclusions can be drawn from individual performance indicators when they are viewed in isolation.
Approach that is more selective is required when an aspect of performance and that requires attention has already been identified.
In this case, it is necessary to identify organizations of brought similar nature—preferably those with a reputation for effectiveness in the relevant activity.
With the topic-based benchmarking, it is possible to collect more data about a single issue than can be obtained from a general survey. It may also be feasible to ask but spends to supplement their answers by sending details of specific policies, such as copies of absence control procedures of performance appraisal guidelines.
Performance and Competitive Benchmarking
The purpose of obtaining benchmark data needs to be kept firmly in mind: identifying potential improvements in performance. Once such opportunities have been spotted, the more intensive aspects of benchmarking can begin.
The score beyond the study of comparative statistics and the documentation of other people’s procedures. They involve a detailed, on the ground study of the methods of high performing organizations. Understandably, this requires the full co-operation of the group concerned, though it is encouraging that many companies are willing to provide extensive information and facilities.
The organizations that have benefited from the suspect of benchmarking recommend the use of steady teams including staff from different functions and levels.
The final stage of the benchmarking process is the implementation of new systems. Here, it is important to recognize that the success of other businesses may be influenced by the motivational and cultural context in which their systems operate, as much as by the technical characteristics of the systems themselves. As a result, of the issues for steady teams to investigate is the nature of the homework environment—physical and psychological—in which best practice flourishes.