Benchmarking

Benchmarking is a way to go backstage and watch another company’s performance from the wings, where all stage tricks and hurried realignments are visible.

In Joseph Juran’s 1964 book Managerial Breakthrough, he asked the question:

What is that organizations do that gets results so much better than ours?

The answer to this question opens door to benchmarking, an approach that is accelerating among many firms that have adopted the total quality management (TQM) philosophy.

The Essence of Benchmarking

The essence of benchmarking is the continuous process of comparing a company’s strategy, products, and processes with those of the world leaders and best-in-class organizations.

The purpose is to learn how they achieved excellence and then set out to match and even surpass it. The justification lies partly in the question: “Why reinvent the wheel if I can learn from someone who has already done it?” However, Benchmarking is not a panacea that can replace all other quality efforts or management processes.

Levels of Benchmarking

1. Internal benchmarking (within the company)
2. Competitive or strategic benchmarking (Industry and competitors)
3. Benchmarking outside the industry.

What benefits have been achieved by the organizations that have successfully completed their benchmarking programs?

There are three sets of benefits:

1. Cultural Change
2. Performance Improvement
3. Human Resources

(A) Cultural Change: Benchmarking allows organizations to set realistic, rigorous new performance targets, and this process helps convince people of the credibility of these targets. It helps people to understand that there are other organizations that know and do jobs better than their own organization.

(B) Performance Improvement: Benchmarking allows the organization to define specific gaps in performance and to select the processes to improve. These gaps provide objectives and action plans for improvement at all levels of the organization and promote improved performance for individual and group participants.

(C) Human Resources: Benchmarking provides the basis for training. Employees begin to see the gap between what they are doing and what best-in-class are doing. Closing the gap points out the need for personnel to be trained to learn techniques of problem-solving and process improvement.

What theoretical model would you suggest to implement a benchmarking program?

Organizations that benchmark, and adapt the process to best fit their own needs and culture. Although a number of steps in the process may vary from organization to organization, the following six steps contain the core techniques:

• Decide what to benchmark.
• Understand the current performance of your organization.
• Do proper planning of what, how, and when of benchmarking endeavor.
• Study others well (the practices or system you wish to benchmark)
• Gather data and learn from it.
• Use the findings.