Even if you think you are doing everything right, how do you know unless you measure and compare? No organisation is the best at everything and the same is true for yours. So, if you aren’t benchmarking, you can’t possibly be doing everything you should be doing. It is first important to understand what is benchmarking not? In benchmarking you don’t just compare numbers and if your results are average or better, you keep on doing what you’ve always been doing.
For one, do you really want to be average?
Secondly, benchmarking should be a learning process, not just a measurement exercise. You should effectively compare the results and then dig deep to understand what you can do differently.
Think about several runners who ran a race and finished with the same time. All runners had excellent technique except for runner No. 2. If you were benchmarking their times, you would say the second runner did well and that would be that. In fact, you shouldn’t be satisfied with how the numbers make you look. By focusing on more than just their time, you can see the real benchmark was their technique and with improvement in their technique, the second runner could easily win next time.
Things you need to know
Benchmarking can be a great tool for organizational improvement, but it must be used properly and carefully to avoid the many traps you can fall into. Use benchmarking as a basis for improvement and be careful to avoid the traps.
Of course the first step when benchmarking is to be clear on why you are doing it and what you will use the results for. That will dictate how your benchmarking exercise should be structured and managed for the best results.
- Decide on your goal.
- The decisions you will make before you start.
- The next steps you will take to investigate the cause of the results, and recommendations for change.
- If you don’t think you can make changes or influence your results, then rethink the priorities or find ways to make it happen. Use the results to push change and make your case within the organisation.
Accurately comparing results and measurements is not as easy as it seems, and using averages can sometimes result in wrong decisions.
Since you have decided to benchmark and clearly understand why, you can focus your attention on the areas that are most important and understand how to do the comparisons so they are meaningful and lead you to more detailed information you can make decisions on.
For any detailed benchmarking exercise, you need to assess each component or measurement and compare the situations, then make adjustments to ensure an equal comparison. The similarity is important, since many factors influence costs and results.
When comparing to averages, remember that averages can be very deceptive and misleading. That’s why you need to dig deep and fully understand what you are comparing.
The key to benchmarking is to understand that it is not an end process, it’s a beginning process. You use it to identify areas where you need to take a closer look.
Traditional benchmarking simply compares numbers, which can be a good starting point if you are comparing the right things, but you must expand benchmarking to look at processes, procedures and more, things that tell you why you are performing well – and should keep doing those things – and why you aren’t performing well – and must change those things.
Compare how you operate with processes, people and systems with other high performing organizations and understand what they do differently. Then, assess whether you can emulate their success and implement it. The biggest mistake you can make is assuming you are doing everything you should be doing and doing it well. In fact, there will always be someone else who is doing something better and you can learn from them – even if your benchmarking results look good.
Be prepared to change
If you are benchmarking, hopefully it’s to find things you need to improve or change, so be prepared to implement changes before you even begin.
Your senior management should be aware of your initiative and expect changes to be recommended to them for approval. Don’t be shy to identify things that need improvement – it’s more a statement on your leadership than trying to sell the status-quo as the best it can get. Standing still is a sure way to fail, and not admitting you can improve your organization is the same as standing still.
Prepare your organization for the possible outcome, which may include organization changes, business cases for new systems or developing / implementing new processes or activities. These things take resources, so be ready to develop a strong business case and sell your change.