Drawbacks of Benchmarking with other organizations

While Benchmarking is undoubtedly an important tool in facilitating “best practice” into your organization (for more information on the background to the process check out our article on Introduction to Benchmarking) there are plenty of pitfalls which if your not careful can result in your benchmarking activity being unsuccessful.

In this article we’ll look at 5 common problems with benchmarking with other organizations.

1 – Comparing like for like

One of the major problems for benchmarking across multiple organizations is ensuring that you compare like for like. It’s important that you remove any subjectivity and look to compare processes and metrics that are easily measurable and with quantifiable data and results at both ends.

2 – Open book review

Unsurprisingly benchmarking organizations within your own business sector can be complex due to the unwillingness to share data for fear of impacting competitiveness. This is a very real issue and can often lead to benchmarking activities underperforming as there is an unwillingness to share best practice. This is one of the prime reasons why many organizations opt to either utilize industry organizations/associations or benchmark outside of the industry.

3 – How best practice is best practice

Remembering the primary reason for benchmarking is to facilitate the movement of best practice into your organization it goes without saying that you need to be really sure that best practice is best practice – a smaller sample group, incorrect measures, an inability to capture the process enabler can all result in a failure to either incorrectly establish best practice

4 – Single Business or industrial sector Benchmarking

Too many companies fail to establish the correct organization to benchmark with – remember it’s all about best practice – selecting any old company simply wont do – one consideration is whether to benchmarking against a single business or an industrial association or group. The latter may offer a better approach as they are more likely to provide an industry sector understanding of best practice and most likely have established benchmarking initiatives.

5 – Finding the “best practice driver”

Finding the activity that results in best practice can be difficult – from initially establishing – through use of metrics – better performance the next step is to find out (through a process/system etc) what is causing it. This can be more difficult than it sounds and can require thorough analysis of the process – getting it wrong can lead to two specific problems – the cause of the best practice is incorrectly established and secondly if transferred into the organization will fail to deliver the expected improvements.

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  5. Introduction to Benchmarking