How to use benchmarking to improve the performance of your organisation
Benchmarking is a systematic process of measuring the products, services and practices of your toughest competitors (or of those regarded as leaders in a particular practice or business area) and improving your own on the basis of what you learn. The goal is to achieve significantly better performance and profitability, and is usually associated with changes in quality management, restructuring, or reengineering. Benchmarking can help you to become the best-of-the-best in your field. Here’s how...
1. Identify what you want to benchmark.
Best practice benchmarking, the process of seeking out and studying the best internal practices that produce superior performance, can be traced back more than 30 years to Xerox Corporation, which at thattime dismantled rival photocopiers to work out how they were built more cheaply. American Express has been recognised as providing a benchmark for effective and professional telephone services. Similarly, the Port Authority of Singapore provides a benchmark for similar organisations contemplating operational improve-ments. A high-achieving real estate agency in one State may be a valuable benchmark for another office interstate wanting to improve sales success. What you benchmark depends on the areas in which you want to excel.
2. Find out the leaders in that field.
The organisation identified as providing the benchmark need not be a competitor. In fact, it is possible that the organisation will be operating in a different field altogether - or even within your own organisation. You can identify leaders in your field of inquiry through observation, word-of- mouth, reading, or published surveys.
3. Set realistic targets.
Best-of-the-best or best-in-class are not absolutes. You need to:
- formulate criteria that define a ‘class’ of companies of interest
- define measures that can be used to compare companies to determine the ‘best’
- find companies that meet your ‘class’ criteria and that appear to be the best performers to defined measures.
