Operations: Benchmarking

Benchmarking your organisation’s performance against others at home or internationally could see your business flourish.

Benchmarking, or the process of comparing your performance against another’s and learning from that in order to improve what you do (and how you do it), can be a very effective organisational improvement technique; in fact at an informal level, it is an activity the vast majority of us do for a lot of the time. Most benchmarking is of this nature (almost 70 per cent according to a recent survey of leading businesses worldwide). 

The detailed nature of how to carry out benchmarking is beyond the scope of this article but suffice it to say, benchmarking can act as a useful driver for change—for example, a performance benchmarking exercise that identifies an organisation’s unit costs are twice what they should be will be a strong motivation for a management team to take remedial action. I contend though that benchmarking is at its most powerful when it is used, as is the case with ‘best practice benchmarking’, to identify superior performance that, suitably adapted, can be implemented within one’s own organisation.

The old adage ‘You can learn from anyone if you’re open-minded enough’, is nowhere more valued than in the world of benchmarking. Organisational, industry and sector boundaries are not recognised as limitations to learning by the seasoned benchmarking professional: they know that the only limits are those in the minds of the benchmarking team. Limiting your horizons places constraints on the improvements you can make, so they should be as distant as possible. There are even occasions when geographical and national boundaries should be ignored as limitations in the relentless pursuit of performance improvement.

Benchmarking internationally does however involve its own unique challenges, and these should not be ignored if comparing performance across national boundaries is to be effective. While tangible differences like time zones and working practices are important, the most critical difference that must be factored into any learning that arises from an international benchmarking exercise is that of culture: a best practice that works in one country may not work in another, unless of course it is subject to significant adaptation. This is the key to successful benchmarking (whether across or within national boundaries)—it is vital that when adopting a best practice, you ensure that it is adapted fully to your organisation. And the skill of successful adaptation is one that should not be underestimated.

The idea of international benchmarking has been around for some time. In the 19th century, when the West was developing its interests in the Far East, many Far East countries used that opportunity to learn and improve what they were doing in a variety of fields. For example, it was during that time that Japan modelled its army on that of the Prussians and its navy on the British.

Learning through benchmarking happens in both directions, and there are many examples of Eastern business methods, such as lean and kaizen, being introduced in the West. Less well publicised is the introduction of Eastern management approaches within the West. An example of this was in 2010 when Harvard Professor Bill George teamed up with a Tibetan Buddhist meditation master, Yongey Mingyur Rinpoche, to explore the concept of mindful leadership—that is, the development of strong and effective leaders through better self-awareness and self-compassion.

This growing emphasis on the importance of EQ, or emotional intelligence, and therefore its need for improvement, can be seen in many areas of leadership including that of the emerging concept of organisational project management. The UK’s Best Practice Club is working with Kingston University and MontyDog Consulting on this subject, in order to promote it as part of Kingston University’s new MSc in the subject.

Best practice study tours are a popular method for engaging with host organisations in other countries and, if professionally facilitated, they can be very effective in introducing improvements into the delegate organisations. The Singapore Productivity Association (SPA) is an example of a membership network that recognises very few, if any, geographical boundaries in its search for best practice. In the last three years, it has brought two parties of public and private sector delegates to the UK, facilitated by the Best Practice Club, to take part in an international best practice study tour. The focus for the first tour was innovation and how to harness it; the focus of the second tour was customer strategies.

Much learning took place during each visit and a great deal more has taken place since—one of the key benefits of a study tour, particularly one which crosses international boundaries, is that the participants get to meet many different people. Business relationships formed during a fairly intensive and short period of time often continue to flourish afterwards for some time to come.

The key to remember in any benchmarking exercise, particularly an international one, is to keep a very open and inquisitive mind, ensuring that you are not afraid to identify best practice, wherever it is, and adapt it to suit your particular organisation’s culture. And finally, keep benchmarking—the first sign of complacency is a lack of benchmarking activity, and as soon as an organisation becomes complacent, it stops improving.

Ray Wilkinson is director of The Best Practice Club, which provides benchmarking and learning opportunities for large organisations through personalised service support and a self-administered knowledge management portal. www.bpclub.com