Benchmarking- Ch:6

Chapter outline 1- Benchmarking Defined 2- Rationale for bench Benchmarking 3- Prerequisites to Benchmarking 4- Obstacles to successful Benchmarking 5- Role of management in Benchmarking 6- Benchmarking approach and process 8- Making full use of benchmarking data

Benchmarking Benchmarking is the process of comparing and measuring an organization’s operations or its internal processes against those of best-in-class performer from inside or outside industry. (pg. 518)

Rationale for Benchmarking 1. Improving productivity: businesses following action plans can expect productivity gains of up to 40% with a 10% increase relatively easy to achieve Beating the competition: learning about adaptability and change is a benchmarking essential Addressing growth issues: learn how to develop the right products and services at the correct pace Customised to fit all: businesses of all sizes can benefit from the generic principles of benchmarking An holistic approach: it is both qualitative and quantitative, ensuring more accuracy in developing a whole picture of your business. Opens minds to new opportunities: whilst the results can make uncomfortable reading, the process usually raises new challenges for businesses High quality of data: it allows direct statistical comparisons to be made with competitors Helps businesses attract funding: in some areas of the UK, it has been used as part of the bidding process for grant aid Leads directly to an action plan: Rather than simply highlight problem areas, it undertakes a strong review of turnover and profitability Maintain client relationships: by being an ongoing process, benchmarking keeps clients in contact with advisers over the longer term.

Prerequisites to Benchmarking 1- Will & commitment 2- Vision and strategic objective link 3- Goal to become the best – not simply improved 4- Openness to new ideas 5- Understanding of existing processes, products, services, practices, and customer needs 6- Processes documented – 3 reasons 7- Process analysis skills 8- Research, communication, and team building skills (pg. no. 522)

Obstacles to successful Benchmarking 1. Internal focus 2. Benchmarking objective too broad 3. Unrealistic timetables 4. Poor team composition 5. Setting for “OK in class” 6. Improper emphasis 7. Insensitivity to partners 8. Limited Top-Management support (pg. no. 523)

Role of management in Benchmarking Commitment to change Funding Human Resources Disclosure Involvement (pg. no. 524-525)

Benchmarking approach and process 1. 2. 3. Obtain management commitment Baseline your own processes Identify and document both strong and weak processes

Benchmarking approach and process 4. 5. 6. Select processes to be benchmarked Form benchmarking teams Research the best-in-class

Benchmarking approach and process 7. 8. 9. Select candidates B-I-C benchmarking partners Form Agreements with benchmarking partners Collect Data

Benchmarking approach and process 10. 11. 12. Analyze the data; Establish the gap Plan action to close the gap or surpass Implement change to the process

Benchmarking approach and process 13. 14. (pg. no. 526-527) Monitor results Update benchmarks; continue the cycle

Use of benchmarking data Benchmarking produces quantitative and qualitative information. Quantitative information is the point from which future progress is measured and use as the basis for improvement objectives. Qualitative information covers personnel policies, training, management style that provides insights on how benchmarking partners got to be best in class. (pg. no. 531)