Benchmarking a Key Tool for Acheiving Business Objectives

Research and Markets have announced the addition of the 'Benchmarking Benchmarking: Shared Learnings for Excellence report to their offering.

During the past decade, benchmarking has proven to be an effective tool for achieving business objectives. Customers today demand excellence. In response to this hunger for top-quality products and services, companies are searching for best practices" they can use to design new processes. No one has the time or resources to reinvent solutions, so organizations benchmark for new ideas and new insights to give them the competitive edge.

Seven key findings resulted from this comprehensive study on organizations current benchmarking practices. The findings fall into three general categories: process improvement, resources, and commitment.
The findings will be explored further, with graphs and company examples, in the remainder of this report.

Process Improvement

1. Benchmarking is most powerful when it is part of a larger change initiative as a continuous improvement tool.

2. Only a few organizations that benchmark have a formal process in place to widely transfer knowledge of best-practice data, though many informal vehicles are used. The research confirms that benchmarking is most powerful when considered and used as a tool in the continuous improvement
toolbox. It is most successful if it is part of a larger change initiative. In response to this, the study identified seven reasons that organizations
use benchmarking to support a larger change initiative.

Nearly a quarter of the respondents use benchmarking as part of the Malcolm Baldrige National Quality Award assessment process for internal improvement. The Baldrige criteria identify the need to look outside ones organization, which often prompts the use of benchmarking.
This correlates with the 1995 survey results where 24 percent of the respondents were using the assessment to identify benchmarking opportunities.

Organizations in our study also admit they dont have a formal" process in place to transfer knowledge of best-practice information, though 42 percent say they have some approaches in place. Many times the findings are shared just within the project team or department and
not spread throughout the organization. The majority of the advanced survey group indicate they are moving toward developing a formal method of knowledge transfer.

3. Organizations rarely budget specifically for benchmarking. Costs are included in project budgets.

4. The majority of surveyed organizations have a benchmarking group that provides assistance, training, and guidance when needed or asked.

5. The primary challenges to benchmarking are time and resources. Benchmarking resources play a large part in the success of an organizations benchmarking efforts.

Without the time and resources devoted to the project, its difficult to receive the benefits from such a powerful
opportunity for improvement. Respondents to current survey reveal that more than 60 percent of our respondents spend less than 20 percent of their time benchmarking.

They hold all kinds of titles such as benchmarking champion, project manager, and benchmarking designated participant. In todays fast-paced world with limited time and resources, organizations cannot benchmark everything. Companies are selectively choosing benchmarking when they can show it will directly impact the organizations profitability.

Survey results also uncovered that companies are rarely tracking the financial measures from benchmarking studies per se. Companies are now integrating benchmarking into the larger context of continuous improvement and rarely budgeting for benchmarking separately. Instead, benchmarking costs-and benefits-are rolled into specific project budgets where benchmarking is perceived to be a tool that affects the bottom line.
Commitment

6. Senior management is supportive of any tool that enhances the
bottom line.

7. Practitioners plan to continue using benchmarking at about the same pace in the future.

Just as in the case with resources, benchmarking studies are doomed to fail without commitment from within the organization. Survey respondents reveal that senior management tends to support overall process improvement, which typically includes benchmarking. The main goal is that it affects the bottom line or accomplishes the mission of the organization. In work helping organizations conduct benchmarking, it has been challenging to provide executives the yardsticks or benchmarks" they so desperately want to calibrate their organizations performances. This information leads to goal setting for the future. The challenge is not to collect the information but to help executives understand the context and processes that produced those numbers. Many times the information is misinterpreted and not used in the proper manner.

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