What Is Benchmarking?

Benchmarking is a performance measurement tool used in conjunction with other improvement initiatives to measure comparative operating performance and identify Best Practices.

Benchmarking: A Practical Definition

Benchmarking has become a "top management issue" as it provides objectively developed information that helps executives to know "where they stand" versus competitors or other leading companies. It can also be used to compare top performers in any job class with other incumbents.

Benchmarking provides information-containing insight in the gaps to achieve desired goals and objectives. The standards build the basis for recommendations on changes and improvements to sales strategies, employee selection process, investments, and the like—to "close the gap."

Most companies want to be a step higher than they are—and fear they may be a step lower. Benchmarking can be the vehicle to better understand differences in performance, "Best Practices," and trends as well as to convince and commit management to action. Taken in total, benchmarking helps the executive to focus on what should be done and then take the right strategic (and operational) decisions.

Benefits of Benchmarking

Insight into the “best of your best”
New targets
New ways
Projection of future
Provides areas of focus and opportunities
Breaks down "we do it best" syndrome

Benchmarking Action Plan

1. To Benchmark a position

Select managers and position incumbents with knowledge of position
Have each person respond to the Work Environment instrument
Run reports for analyzing and comparison
Chart results
If the results are not similar, meet, discuss and complete a new instrument as a group
If the results are similar, make slight adjustments as necessary
Run master report for comparison purposes
The result is a component of the selection process

2. To Benchmark for behavior

Run DISC Sales Version on top and bottom performers
Compare top and bottom behaviors
Identify top and bottom performers' patterns
Chart results
Compare to Work Environment Master Report
Identify top performers' patterns
Determine whether the top performers have similar patterns
Result is another component of the selection process

3. To Benchmark for values

Have each person respond to the Personal Interests, Attitudes and Values, (PIAV) instrument
Run reports for analyzing and comparison
Chart results
Identify the top and bottom performers' patterns
The differences are another component of the selection process

4. To increase the performance and success of existing sales team

After completing the steps outlined above, have all individuals in the top 50% of the sales force complete the Sales Strategy Index (SSI)
Using the personalized reports and the Coach for Sales Success manuals, develop a personalized Success Program for each individual
After completion of the Coaching program, have them re-take the SSI to measure their improvement

5. Deliverables

SSI reports on the 20 top and bottom performers
Work Environment Reports on the 20 top performers
Personal Interest, Attitudes and Values Reports on the 20 top performers
Summary report outlining the profiles of your top performers and a hiring action plan to be followed to increase your hiring success

Ten Steps of Benchmarking

Benchmarking is a method of comparison against some standard of excellence. It was pioneered by Xerox Corporation in the 1970s, as part of their response to international competition in the photocopier market, and originated from reverse engineering of competitors' products. Its scope was then enlarged to include business services and processes. Xerox now benchmarks nearly 240 performance elements although, when they started benchmarking several years ago, considerably fewer elements were benchmarked. Benchmarking of business processes is usually done with top performing companies in other industry sectors. This is feasible because many business processes are essentially the same from sector to sector.

A benchmarking team usually consists of 6 people but may include more. A leader is assigned and takes "ownership" of the project. Investigations take from one to 12 months and can involve one company or a consortium of many companies. Comparing performance levels is only the preliminary phase of benchmarking. The bulk of the effort involves an analysis of how and why these performance levels are achieved.

The Ten Steps Are:

1. Identify what is to be benchmarked; it can be a service, process, or practice.

2. Identify the organization(s) you want to benchmark against. It can be other operating units within the company, competitors or unrelated companies. However, they should be a leader or "best in class" in the area being benchmarked.

3. Determine the data collection method and collect data; measurements must be chosen to provide a meaningful comparison; collection usually involves in-person meetings and site visits of areas being benchmarked.

4. Determine current performance levels; this includes identifying gaps between your organization and your benchmarking partners.

5. Determine future performance levels; forecast the expected improvements of benchmarking partners so that goals set for the improvement program will not become quickly outdated.

6. Communicate the benchmark findings and gain acceptance from senior management and employees who will be asked to make improvements; present the methodology, findings and strategy for improvements.

7. Establish objectives; after concurrence on findings and strategy, the team presents final recommendations on goals and how the organization must change to attain them.

8. Develop action plans for each objective; they should be designed to gain the required support within the organization.

9. Implement specific actions and monitor process; this includes collecting data on new levels of performance; using problem-solving teams to investigate problems; and adjusting the improvement process if goals are not being met.

10. Recalibrate benchmarks; benchmarks are re-evaluated and updated, based on the most recent performance data.

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