Benchmarking

Benchmarking is becoming increasingly popular in the UK public sector as organisations recognise its value as a rigorous management tool for building self-knowledge by viewing internal practices in a new light.

In this article Laura Brooks, an experienced benchmarker, provides a no-nonsense guide to benchmarking and what it can do for your organisation as well as some of the common pitfalls to avoid.

Why benchmark?

This will be the first and most important question for an organisation entering into any benchmarking exercise. The types of approach to benchmarking are numerous and a clear rationale can help you to decide how best to proceed. Your organisation can use benchmarking to address key questions such as:

How can we seek continuous improvement?
What can we learn from practices and approaches taken by others?
What level of performance are we reaching and what is contributing to this?
Can we build an ongoing relationship with our peers to support our practice?

We have recognised need for change but would like to find out how others have managed this given similar (if not identical) constraints.

Essentially, benchmarking should be seen as a management tool to be tailored to specific needs, not as an end in itself.

What to benchmark?

Once an organisation is clear that benchmarking is the right tool to meet its management need, identification of what information needs to be benchmarked should flow logically from the question 'why?'.

Typically, the success or failure of a benchmarking exercise can be determined at this early point - especially if an organisation cannot define the inputs, outputs and outcomes of its own practices before launching into comparison with others. Without this self-analysis, it can be difficult to establish what information is needed from benchmarking partners. Useful reminders include:

What are the performance measures currently being used & what are they telling you?
Aim for a balance between qualitative and quantitative information and consider who is likely to hold this at each benchmarking partner.
Bald facts & figures tell a limited story - you need to understand the context behind your own and others' performance.
Set timescales for data gathering and build in time for review and consolidation
Be honest & specific - what information is fundamental and what is a 'nice to have'?

Choosing partners

When choosing partners for a specific benchmarking exercise, organisations should remember that one size does not necessarily fit all. Organisations may need to think laterally - external partners don't have to be from the same area or sector. Consider what is being benchmarked and what characteristics might be required - do prospective partners share a geographical/regional make-up? Do their staff have similar skill sets? Are they recognised as high performing in the area to be benchmarked?
Building a network of external benchmarking partners should be seen as a collaborative process - an organisation will need to be open, engender trust and make sure it can answer the inevitable partner question 'what's in it for me?'

To find and secure partners, it can be helpful to consider:

Is your organisation already a member of a benchmarking club? Will this help to get an initial contact?
What will you be sharing with partners? Seek to abide by agreed confidentiality principles - established benchmarking codes of conduct are available.
Be clear when you brief partners about the level of commitment required from them, e.g. time, resources, information and set this out clearly in writing.
Be flexible - think about all possible methods for getting the necessary information. What's already available in an acceptable form? Will use of structured phone/online interviews or surveys make most efficient use of your partners' time?

Six tips on what to avoid when benchmarking:

Planning phase: not spending enough time developing an understanding of your own information & practices to be benchmarked.
Defining information to be collected: asking for vague, poorly defined information, for example, asking "what are your training costs?" without specifying the type of training and the period to which costs apply.
Picking benchmarking partners: picking inappropriate partners, e.g. selecting third parties comparable by factors irrelevant to the information required for benchmarking.
Benchmarking protocols: for example, being imprecise on confidentiality arrangements.
Analysing data: making meaningless or inaccurate comparisons when analysing data (usually due to insufficient variables being taken into account, e.g. only comparing performance indicators without understanding processes behind these).
Sharing data & findings: not enabling benchmarking partners to share information subject to agreed protocols for confidentiality - risks losing good will and openness of partners.

Potential benefits

Benchmarking may be used as a one-off exercise to help address a specific business need, or it can be built into an ongoing performance management and continuous improvement culture.

At its most effective, benchmarking can play a key role in the decision-making process for change right across an organisation and provide both better self-awareness and an understanding of what lessons can be learned from others.

If you have any questions about the subjects covered in this white paper or you would like to find out more about how Oakleigh Consulting could help your organisation, please contact us on 0161 835 4100 or email us.

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