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Benchmarking

Benchmarking has been around a long time, one sign of its value and importance. It is helpful when engaged with processes as diverse as business intelligence analysis and process design and can be done internally or externally. The purpose of benchmarking is to quantify and analyze business processes to understand performance, inform strategy, help justify investment decisions, and enable tactical planning and change management.

Benchmarking, in essence, is a protocol for capturing and comparing data for like processes across operational domains. Domains may be internal to one organization or cross-organizational in nature. Benchmarking seeks to define performance, process, and outcomes, most often through quantifiable data but sometimes in more organic or cultural ways, for the purpose of informing change management relative to processes and strategies. Its concepts can be applied across any number of functions. Before you start, however, knowing why, who, and what you are benchmarking is key.

Why Benchmark?

You may be interested in comparing your business to a competitor or another part of your own organization which has similar processes. In either case, benchmarking increases understanding of performance gaps and advantages. When benchmarking a competitor, the focus may be on a strategic level such as market strategy and penetration, product performance, customer retention and the like. Tactical benchmarking is focused on improving performance to add value by reducing errors, improving efficiency, accelerating production, and aligning resources.

Who Should You Benchmark?

Always start by benchmarking yourself first. Establishing an unbiased baseline of your current state provides a valid basis for comparison. Working through the exercise will also inform your process and question set before engaging with others.

You may not be able to go as deep when benchmarking competitors but benchmarking them is an important step. And you may be surprised at how much you can learn about them from readily available business information. Financial reports, news articles, partnerships / alliances, and talent intelligence can tell you much. When you cannot go deep you can still intuit and tease out logical causes of the symptoms you recognize in publicly available information.

Many industry associations collect and report statistical information from members, which is sanitized and then parsed in various ways. This information in particular can be a gold mine. It is industry specific and sorted by scale, region, product type, business sector and other categories. You can immediately identify your own standing relative best performers.

Your peer relationships probably hold a lot of information. Suggesting a mutually beneficial benchmarking effort (when competitive conflicts are not in play) is a good way to gather information and build the relationship even stronger.

Don’t forget to look outside your industry to investigate other industries that have similar issues. Once, when working for an architectural firm that specialized in heart surgery suites where microbial air purity is critical to patient outcomes, I wanted to find out what state of the art HVAC design in similar circumstances looked like. Was it the same, behind us, or were they ahead of us in solving the issue? What were they doing, how effective was it, and why did they do it? I realized that hanger-sized satellite assembly clean rooms have exactly the same problem on a much larger scale. Could I learn anything from their experience? I did, and our firm pioneered the adoption of similar design standards for surgery suite projects.

What Should You Benchmark?

The answer will vary by organization, of course, but there are a few general principles to follow.

Any work process, regardless of type, can be benchmarked. I recall once hearing “count the paperclips.” It wasn’t a literal comment, of course. The point was, count whatever you are able to count at the beginning, and then grow into it. For production and administrative processes, document the current process map with time stamps, costs, and quality metrics. Identifying bottlenecks, duplication, low value steps and other grimlins are like nuggets in the pan.

If benchmarking at a strategic level, investigate key business ratios, strategy paths and outcomes, why strategic initiatives failed or succeeded, and talent acquisition/retention.

Ken Burkhalter is a facilities and project management consultant, focused on strategic planning, capital projects, and organizational development. You can contact him at ken@kburkhalter.com.

 

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