Benchmarking Consultant

Benchmarking Training

1. Introduction
2. What is benchmarking
3. What it is not
4. Why benchmark
5. Types of benchmarking
6. Competencies and competition
7. Steps in implementing benchmarking
8. Conclusion

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Steps in benchmarking - Five key stages

There are five key stages in benchmarking:

1. Proto-planning
   1. Decide what you wish to benchmark
   2. Decide against whom you need to benchmark
   3. Identify outputs required
   4. Determine data collection methodologies
2. Data collection
   1. Secondary/background research
   2. Primary research - from the benchmark
3. Analysis
   1. Of the gaps
   2. Of the factors that create the gaps (enablers)
4. Implementation
   1. Implementation planning
   2. Roll-out of new modus operandi (changes)
5. Monitoring
1. Collecting data
2. Evaluating progress
3. Iterative change

Proto-planning

Choosing what to benchmark

Before starting a programme you must choose what to compare. It is of little value benchmarking irrelevant processes or activities [e.g. how efficient cleaners or night watch men are] - they should be areas that have the potential to add real sustainable competitive advantage to your business. Those areas that you benchmark should be chosen with reference to key criteria such as:

• Core to you and your competition
• Important to you in terms of [some or all of]:
  • Volume (large number of transactions undertaken)
  • Cost (high costs - based on time and FTE's)
  • Value (significant in terms of revenue to you and/or benefit to the customer)
• Easy to measure and offering comparisons
• Risk inherent:
  • Processes that are difficult to control, thus presenting a risk to the business
  • Processes that vary in performance and impact profits and costs
    

..so that you can maximise the benefits from improvements. NB - not every process needs to be world class, it is` only those that `will deliver sustainable competitive advantage. Similarly one process should not shine at the expense of the entire system or there will be an efficiency mis-match leading to ineffectiveness.

The company must understand its strategic intent, and identify core competencies, key business processes, and critical success factors. Then the particular process to be benchmarked must be documented and flowcharted, to determine its inherent capability.

Specific activities are:

• understand business strategic intent
• identify core competencies, and map company capabilities
• select the specific process to benchmark.
• select a benchmarking team leader and participants.
• identify the customer profiles and expectations.
• analyse process flow and performance measures.
• define process inputs and outputs.
• document and flow chart the process.
• identify, understand and measure critical success factors.
• select critical success factors to benchmark.
• develop the company selection criteria.
• establish the data collection method.
• develop a preliminary questionnaire.

Choosing your benchmark

Having decided what you want to benchmark the next question is: 'against whom will we benchmark?' - the choice of organisation is key and dependent on several factors as discussed above. Requirements must be established for selecting benchmarking partners, given the benchmarking objective, or for characterising the degree of relevance that any particular company may have as a potential benchmarking partner. At this stage you need to decide if it will be a one : one exercise or a peer group.

Deciding on outputs

Before collecting data it is vital that you decide on the format of the outputs. This will in turn shape both how you collect the data and the method you use for analysis. This should lead to developing benchmark metrics for use during the project.

Defining the data collection methods

This will be driven by:

• the outputs required
• the form of the information
• the nature of the exercise (group versus one : one)
• time
• process to be benchmarked

Data collection

Data collection is based on 'secondary research - public background - and primary research - directly from benchmarks

Secondary- it is important to learn as much as possible before making any direct contact and this can be accomplished using 'desk research including publications and websites etc. This enables you to get a picture of the firm(s) that you might wish to benchmark and an understanding of what you can bring to them. From this you can develop a shortlist.

Primary- direct data collection from the benchmark. If this is a one to one exercise then it will involve staff 'living' with the organisation to understand what it does and how; if it is part of a larger exercise say of peers/competitors then it will be a formal data collection programme in which you will participate. This will involve:

• planning the data collection
• developing an interview guide/questionnaire
• conducting primary research (telephone survey, mail survey, or individual interviews);
• monitoring process performance and analyse performance gaps;
• making on-site observations to clarify and verify previous observations;
• conducting a post-site-visit debriefing with team members, to record observations;
• preparation of a report

Analysis

The analysis consists of two aspects:

• determining the magnitude of the performance gaps between you and the other companies, using the benchmarking metrics identified during the proto-planning step
• identifying the process enablers that facilitated the performance improvements at the leading companies

The analysis step in the benchmarking process model consists of five phases:

1. data analysis
2. data presentation
3. root cause analysis
4. results projection
5. enabler identification

The goal of this step is to identify adaptable process enablers for implementation

The specific activities are:

• organise and graphically present the data for identification of performance gaps
• normalise performance to a common measurement base
• compare current performance against the benchmark
• identify performance gaps and determine the root causes
• project the performance 3 to 5 years into the future
• develop scenarios case studies for discussion
• isolate process enablers that correlate to process improvements
• evaluate the nature of the process enablers to determine their relevance to your organisation

A typical comparison is shown below:

Implementation

The objective of this phase is to make the changes to your processes to improve performance and this involves, implementation planning - i.e. developing the how of the change; rolling out the new methods etc and finalising measures for excellence. The main activities are:

• set goals to close, meet, and then exceed the performance gap
• select best practices and enablers for consideration
• modify process enablers to match the company culture and organisational structure
• enhance these enablers based on team observations for integrating process improvements
• develop a formal action plan for implementing improvements
• obtain management buy-in and ownership of the required changes
• commit resources
• implement the plan - piloting where sensible
• iterate changes based on pilot
• roll-out elsewhere as appropriate

Monitoring

This is about ensuring that the new processes work and that any 'edge' created is sustained, and involves collecting data on the new process, evaluating progress and if necessary, iterating changes, monitoring and reporting improvement progress, identifying opportunities for future benchmarking and recalibrating the measure regularly.

~ Neil Jones ~

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