Why it's good to rate yourself against the best - and how to do it honestly.
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Benchmarking is a term that comes up regularly - at conferences, in pitch documents, in business plans - but one can’t help feeling that the process may get more lip service than actual, consistent implementation in many business environments.
In essence, benchmarking is about comparing process and performance metrics between teams, divisions, sites or whole organisations against a defined reference point.
UK business operates in markets mostly characterised by some degree of uncertainty these days, as well as considerable pressure to perform at or near what ‘the best’ are achieving.
Benchmarking provides a way to see where you stand on the scale and take appropriate action if that’s what’s needed. It’s a competitive world out there, and few organisations can afford complacency.
Defining the paremeters
The problem with benchmarking is that it can be difficult to get started. Almost anything can be benchmarked, of course, as long as you can clearly define it and accurately measure it. Applying the process internally only requires that whatever is being benchmarked repeats in the same form – number and quality of widgets produced per quarter, say.
Internal benchmarking can be a very valuable discipline; but understanding what’s happening in your own business is only showing a part of the picture. Senior management, and certainly those in the C-suite, also need a reliable understanding of what’s happening outside.
In many sectors it can be easy to fall into the trap of feeling you’re offering a product or service tailored to a particular demand - not only bespoke but also providing good value – as long as your benchmarking results are on the positive side of the chart. But what if your competitors are doing just as well, only cheaper and faster?
What is often described as ‘strategic’ benchmarking – comparing performance to external markers - can be vitally important but also rather more difficult, as it requires finding the right comparators.
But in principle there is much to be gained from measuring your performance against that of your peers. External benchmarking allows you to determine how you’re performing, in comparison to the market leaders and – perhaps more impotanly - your direct competitors.
But even though we are awash with data these days, it can be difficult to get what you need: like-for-like information that is reliable and straightforward to use. Ironically, the growing breadth of data at our fingertips is at risk of being overwhelming. Unfortunately, this can lead to perceptions of benchmarking as something to fear rather than the useful tool it is.
Time, quality, cost, productivity, staff engagement, customer satisfaction, supplier performance – the list of potential measures that promise valuable business information can be quite long. And the drivers behind the ‘need to know’ can be both internal and external.
In the case of the latter, we see this in various ways that reflect social and economic concerns: take the emergence in recent years of sustainability reporting, for example, or the now obligatory reporting for large organisations on gender pay gaps.
Where the drivers are internal the focus is typically on costs and resource use – which are related, of course, but not identical.
In our current climate of economic uncertainty, which in some sectors tips over more into ‘economic challenge’ territory, the issue of costs often centres on the cost of providing accommodation; specifically, the amount of floorspace provided and the level and quality of the necessary services (catering, cleaning, security, maintenance etc.) and how these are procured and managed.
There can be considerable benefit in benchmarking these areas, which can reveal new options for more cost-effective solutions.
Gary Barbour, director at Autonomous, a cloud-based facilitator of service provision who provide contractor management systems, believes that the service sector, in particular, should not underestimate the value of benchmarking, he questions how else companies can truly ensure they’re getting the best value from providers, whether they’re in-house, outsourced or a mixture of both.
“By scaling yourself against your peers, you’re able to honestly measure where you sit within the industry, based on success and performance, as opposed to merely turnover, reputation and company size. The use of big data can help organisations gather relevant information and then outline how this can be translated into providing a high quality service.”
“The ubiquity of technology has allowed smaller companies to take on larger established industry giants by allowing them to offer a competing range of services without the same burdensome infrastructure of a large headcount and asset base.”
The other side of that coin, in a sense, is how your people perceive the workplace they have been provided and, crucially, how they believe it is supporting their productivity…or not.
There is a whole range of aspects to this, factors often taken for granted simply because ‘that’s the way it’s always been around here’ – but relatively simple research frequently reveals that such an attitude is costing money and good people, either through their departure or difficulties in recruiting in the first place.
Leesman, the world’s leading assessor of workplace effectiveness, has surveyed over quarter of a million employees worldwide. Its database benchmarks employee satisfaction in 90 areas, covering workplace design, activities, features and facilities.
Their latest data found that many employees are having to endure workplaces that fail to support their basic working day, obstructing their ability to positively contribute to business success.
Chris Moriarty, managing director, UK and Ireland sees benchmarking in this area as crucial, if used for maximum benefit: “If benchmarking is independent, companies need to be provided with a quick, inexpensive, systematic approach to the collection, analysis and ultimately benchmarking of the data they’re after – in order to make the most of the indicators it’s then given.”
Clearly, the tracking of business performance on key indicators can offer substantial benefits in areas that may otherwise go overlooked.
Time is money
Like much else in the business world, technology is opening up new possibilities in benchmarking – for example, what if it became a live (or virtually so) process, as opposed to the current retrospective model.
If we can look at what is going on now, as opposed to what happened last month or even last year, we would be better able to make informed – and timely – decisions, with the associated benefits to costs, resources and business outcomes.
Through emerging technologies and innovative approaches to capturing and processing data, a new form of benchmarking could indeed emerge into the market.
‘Near real-time benchmarking’ is already evolving into the corporate real estate and facilities management arenas. Using sensors and Internet of Things (IoT) processing power, service providers are beginning to benchmarking at the point of service delivery.
This new model allows delivery to become instantaneously more efficient, as the benchmarking is ongoing, not merely forming part of a scheduled performance review.
This updated benchmarking model has the potential to monitor performance in line with contractual or in-house key performance indicators, or industry standards - in real-time.
Couple this with additional business intelligence and benchmarking moves beyond the ‘routine’ to become a key component in a powerful and dynamic strategy for business management.