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What benchmarking is

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Gaining a thorough understanding of your own situation first ... Bogan, C. E. and English, M.J. (1994) Benchmarking for best practices: winning ... – PowerPoint PPT presentation

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Title: What benchmarking is


1
(No Transcript)
2
What benchmarking is
  • Gaining a thorough understanding of your own
    situation first
  • Monitoring progress and reviewing results
  • Identifying gaps in performance
  • Ongoing management process that requires constant
    updating
  • Objective providing evidence for decision making
  • About finding new ways of doing things
  • Regularly comparing performance with the best
    performers that can be found

3
What benchmarking is not
  • Just competitive analysis
  • About league tables
  • A one off exercise or bandaid approach
  • Copying or catching up
  • Spying or espionage
  • Industrial tourism
  • A fad but a winning business strategy
  • A labour cost cutting exercise

4
Definition
  • Benchmarking is the search for industry best
    practice that leads to superior performance
  • - Robert Camp
  • The systematic process of comparing an
    organizations products, services and practices
    against those of competitor organizations or
    other industry leaders to determine what it is
    they do that allows them to achieve high levels
    of performance.
  • - Society for Human Resources Management

5
Goals of our session today
  • Introduction to benchmarking
  • Types of benchmarking
  • How to get started
  • The benchmarking cycle
  • The phases of benchmarking
  • Tips and traps
  • If you want to find out more

6
Local Government Benchmarking
  • Six lead councils, 25 councils throughout
    Australia in 1994
  • Seven services tested
  • Residential building approvals
  • Library lending
  • Rates notification and collection
  • Payroll
  • Fleet maintenance
  • Unsealed roads
  • Home Care

7
Local Government Benchmarking
  • Phases Mobilisation, Benchmark subject
    definition, data collection, benchmarking aids
  • Value index comprising customer satisfaction,
    quality, response time and unit cost
  • Outcomes
  • Pilot study
  • Practical Guide

8
LGPro Benchmarking (2002)
  • Developed from previous study
  • Used A Practical Guide Benchmarking for Local
    Government
  • Eight services
  • 31 Victorian councils involved
  • Over 100 people from local councils participated

9
Understanding environmental performance report
(June 2007)
  • Victorian Commissioner for Environmental
    Sustainability benchmarking exercise
  • Environmental performance across three sectors
    government, private and community
  • Energy, water consumption, office paper, waste,
    transport energy and greenhouse gas emissions
  • Baseline for further benchmarking exercises
  • Ongoing review of performance against peers and
    competitors

10
VPS Shared Services
  • Purpose
  • To assess the suitability of the delivery of
    corporate processes through a shared services
    model.
  • Process
  • Baseline and benchmark corporate processes
  • Data collection over 4 weeks in September/October
    2007
  • Analysis in December 2007
  • Preparation of strategic plan for Shared Services
    across VPS early 2008

11
VPS Shared Services
  • Accommodation facilities management
  • Library management
  • Finance
  • Asset management
  • Human resources
  • Fleet management
  • Contact centres
  • Licensing and permits
  • Procurement
  • ICT network, server operations, desktop
    services, applications development, maintenance
    and support services

12
Demystifying some terms
  • best practice or best-in-class
  • Not essential to find the absolute best
    practice
  • Good or superior practice is sufficient
  • 2. apples with apples
  • Every organisation is different even in the same
    industry
  • Use a standardised approach for performance
    reporting to overcome this
  • Clearinghouse
  • Victorian Commissioner for Environmental
    Sustainability benchmarking exercise

13
Origins of benchmarking
  • 1907 BHP allegedly benchmarked steelmaking
    processes with other steel makers in Europe
  • In 1979 Xerox in USA compared its products with
    Fuji-Xerox in Japan
  • In the early 1980s Xerox established a
    benchmarking program to learn
  • logistics lessons from a mail order sporting
    goods business
  • how to use self-directed warehouse teams from a
    photographic film manufacturer

14
Benchmarks vs Benchmarking
  • Benchmarking is about comparing processes
  • Benchmarks are yardsticks
  • Benchmarks give you a measure of performance gaps
    for comparisons
  • Benchmarks will not provide you with the reasons
    for superior performance

15
Principles of benchmarking
  • Scoping know what you want to improve
  • Identifying good practices in those areas
  • Learning from other organisations that
    demonstrate good practices. Ask the questions
  • What are they achieving? and
  • How are they achieving it?
  • Adapting the key insights and incorporating the
    learning into your own process

16
Where and when to benchmark
  • Get answers to these questions before you start
    benchmarking
  • Do you have the commitment of your Secretary and
    Executive Directors?
  • Is your organisation prepared to commit the
    necessary resources in people and time?
  • Are your employees sufficiently multi-skilled to
    cover for staff involved in a benchmarking
    exercise?
  • Are your employees experienced team players?

17
Where and when to benchmark contd. .
  • Does your team have the knowledge, tools and
    skills to analyse business processes?
  • Have staff received training in benchmarking?
  • Are people in your organisation willing to make
    changes?
  • Do not conduct a benchmarking study when your
    organisation is restructuring

18
Why benchmark?
  • Provides realistic and achievable targets
  • Challenges operational complacency
  • Creates an atmosphere conducive to continuous
    improvement
  • Helps to identify weak areas
  • Employees can visualise the improvement which can
    motivate change
  • Confirms the need for change

19
Benefits of benchmarking
  • Gives you a better understanding of your current
    position
  • Develops realistic stretch goals
  • Leads to improved performance measurement
  • Creates a positive attitude towards change
  • Encourages people to work in partnership with
    others
  • Enhances productivity

20
Types of benchmarking
  • Internal
  • Look at your own internal processes
  • External
  • Analyse outside organisations that are known to
    be best-in-class
  • Types of external benchmarking
  • Process Same process
  • Industry or Functional Those delivering
    comparable processes or in comparable
    circumstances
  • Competitive Competitors or those you often
    compare yourself with
  • Strategic Those with successful strategies for
    delivering similar services

21
Internal
  • Good starting point
  • Advantages
  • Access to sensitive information and data is
    easier
  • Standardised data readily available
  • Fastest and cheapest
  • Disadvantages
  • Real innovation may be lacking
  • Best-in-class more likely to be found through
    external benchmarking
  • Example
  • ABS Auto services, Melbourne
  • Local government traffic management study

22
Process
  • Focus on excellent work processes wherever they
    exist, in different organisations or industries
  • Advantages
  • May reveal best-in-class practices
  • Achieve improvements in key processes to obtain
    quick benefits
  • Disadvantages
  • Difficult
  • Requires lateral thinking
  • Requires senior management commitment
  • Expensive
  • Examples
  • CSR concrete VS Dominos Pizza
  • Pillow manufacturer VS Breakfast cereal company

23
Industry or Functional
  • Benchmarking against leaders in an industry or
    in a function, such as HR, finance
  • Advantages
  • Easy to obtain willing partners
  • Can lead to innovation and dramatic improvements
  • Disadvantages
  • Cost
  • Most popular companies for benchmarking may limit
    access
  • Examples
  • Local government HR study recruitment, training,
    induction
  • Licensing license applications, renewals,
    enforcement

24
Competitive
  • Benchmarking against your direct competitors in
    the same market
  • Use trade associations or third parties to
    protect confidentiality (clearinghouses)
  • Advantages
  • Directly comparable with your own organisations
    processes, products and services
  • Disadvantages
  • Difficult to obtain benchmarking data
  • You must abide by trade practices laws
  • Examples (hypothetical)
  • Coca Cola VS Pepsi
  • Ford VS Holden

25
Strategic
  • Realign business strategies that have become
    inappropriate
  • Useful when businesses need to improve overall
    performance
  • Used to consider high level aspects such as
  • Core competencies
  • Developing new products and services
  • Improving capability to deal with changing
    external environment
  • Disadvantages
  • Changes may take a long time to implement and
    materialise
  • Benchmarking Partners
  • Those with successful strategies for delivering
    similar services
  • National Biodiversity Strategy benchmarking study
    (Australia)

26
How to get started
  • Select a process to benchmark
  • Select a benchmarking team
  • Train the benchmarking team
  • Understand your own processes first
  • Establish a baseline to check trends and wins

27
The Benchmarking Cycle
Adapted from Local Government Practical Guide,
1995 and APQCs Passport to Success Series
Benchmarking, 2001
d from Benchmarking for Local Government, 1995
28
PLAN
29
1. Identify services to benchmark
  • What activities or services would benefit most
    from benchmarking?
  • Conduct a management systems evaluation
  • Conduct an organisational self assessment
  • Benchmarking can be applied to a number of
    activities and services

30
2. Establish benchmarking team
  • Involve staff who deliver the service they are
    local experts
  • Form a small team of key staff to examine the
    process and do the benchmarking
  • Involve support staff eg Finance to help with
    cost analysis
  • Provide training in benchmarking and process
    analysis

31
The benchmarking team
  • Senior Responsible Owner
  • Sets the initial scope of the project
  • Obtains the necessary approvals
  • Builds and maintains commitment
  • Program Team
  • Performs detailed analysis of a business process
  • Helps to identify partners
  • Analyses findings and designs improvement
    projects
  • Visit Team
  • Formed from members of Program Team
  • Conducts the benchmarking visit

32
Knowledge and skills needed
  • Knowledge of the benchmarking process
  • Knowledge in the process/service area of interest
  • Skills in data collection and analysis
  • Skills in questionnaire design and analysis
  • Interpersonal and communication skills

33
COLLECT
34
3. Document current processes
  • Define the scope of the process to be
    benchmarked. Use a process map
  • Analyse the existing process steps
  • Measure existing performance
  • Establish a baseline for all performance measures

35
Benchmarking Tools
  • Process mapping or flow charting
  • Force Field analysis
  • Fishbone diagram
  • Root Cause Analysis
  • Pareto chart
  • Six hat thinking
  • Lateral thinking
  • Refer to VPS CIN web site

36
4. Establish benchmarking partners
  • Research publicly available sources
  • Contact professional organisations
  • Network
  • Identify any organisations that have similar
    processes
  • Identify any known best practice organisations

37
Partners Activities or Processes
  • Activity or Process
  • Management of short stay accommodation
  • Fast turnaround of transport vehicles, eg
    aircraft
  • Security of information and customer details
  • Customer service and customer satisfaction
  • Billing and collections
  • Sectors or Industries
  • Hotel, hospital, tourist industry
  • Formula One car racing pit stop
  • ATO, Medicare, banking and building societies
  • McDonalds, Virgin airlines, department stores
  • Utilities, Rates notices

38
The site visit before
  • Do as much desk research as possible
  • Assign roles to each member of the visit team
    note taker, observer, interviewer
  • Prepare a structure for the visit
  • Send questionnaire to partner before visit

39
The site visit during
  • Ask questions that you would be willing to answer
    about your own organisation
  • Be prepared to offer equivalent information in
    return for information you receive
  • Offer a reciprocal visit and tour
  • Document thoughts for later action

40
The site visit after
  • Debrief as soon as possible after the visit
  • Write a thank you letter and send a copy of the
    visit report
  • Follow through on all commitments
  • Compare current operations with findings
  • Identify opportunities for improvement
  • Develop an action plan

41
ANALYSE
42
5. Analyse differences
  • Set new performance targets
  • Can you eliminate or simplify parts of your
    process?
  • How can waste and delays be minimised or
    eliminated?
  • Are there barriers to improvements?
  • Can any of your activities be performed faster,
    cheaper or to a better quality?

43
6. Identify best practices
  • Are there any methods that would work well for
    you?
  • What impact would your changes have on others?
  • Develop a communications plan
  • Ensure all your stakeholders are consulted

44
ADAPT
45
7. Initiate improvement actions
  • Involve the team when making changes
  • Develop an implementation strategy
  • Engage key stakeholders
  • Link changes to the corporate strategy
  • Document changes
  • Implement training

46
8. Monitor improvement, re-benchmark
  • Monitor implementation
  • Re-benchmark the service or process periodically
  • Are there other organisations to benchmark?
  • How can the benchmarking process be improved?
  • Adopt benchmarking across the organisation

47
Benchmarking Pitfalls
  • Own process is not understood well enough
  • No champion or senior management ownership
  • Insufficient skills and expertise
  • Poor planning
  • Culture resistant to change
  • Failure to involve process owner a change
    imposed is a change opposed

48
Tips for successful benchmarking
  • Set clear objectives
  • Allocate sufficient resources
  • Train appropriately
  • Know your own processes first before approaching
    others
  • Look for best practices not best numbers

49
Exploding the myths
  • How will you answer the sceptics?
  • Benchmarking is too expensive
  • Management does not understand/will not support
  • You can benchmark only with the best
  • Partners do not exist outside my industry
  • Benchmarking is only for the top end of town

50
Biggest problems with implementation
  • Acceptance of results by senior executives
  • Lack of human resources to implement changes
  • Lack of financial resources to implement changes
  • Communicating results
  • Source The Benchmarking Exchange Survey, Quality
    Progress, August 2003

51
In 50 words or less
  • The Internet has facilitated benchmarking and
    revolutionised process improvement projects
  • Getting senior executive commitment is critical
  • Communicating with your stakeholders throughout
    the benchmarking project is an important step
  • Process improvement is continuous and can
    generate significant returns
  • Source Best Practices in Process Improvement,
    Tom Dolan, Quality Progress, August 2003

52
Code of Conduct
  • International Benchmarking Code of Conduct
    ensures that each benchmarking study is conducted
    legally and ethically in an atmosphere of trust
    and cooperation.
  • Preparation
  • Do your homework be prepared from the start
  • Understand the process and the organisation you
    plan to benchmark
  • Use data for making improvements

53
Code of Conduct contd.
  • Exchange
  • Establish ground rules up front to avoid later
    misunderstandings
  • Be willing to exchange the same level of
    information that you seek
  • Follow the chain of command seek permission
    from senior management

54
Code of Conduct contd
  • Legality
  • Avoid discussing sensitive data
  • Adhere to competition guidelines
  • If you agree to share proprietary information,
    make sure all parties sign a non disclosure
    agreement
  • Confidentiality
  • Treat any benchmarking exchange confidentially
    unless you get your partners written permission,
    do not share partners names with others as per
    Privacy laws
  • Treat the other person(s) as the other person(s)
    would want to be treated

55
Where to next?
  • More Nuts and Bolts of Benchmarking workshops
  • Establish VPS Benchmarking Community of Interest
  • Form Benchmarking Teams across VPS and conduct
    benchmarking projects simultaneously
  • VPS Clearinghouse in a central agency?

56
If you want to find out more
  • American Productivity Quality Center (1993) The
    Benchmarking Management Guide, Productivity
    Press, Portland.
  • American Productivity Quality Center (2001)
    Benchmarking A Guide for your journey to
    best-practice processes, APQCs Passport to
    Success Series, Houston.
  • Bogan, C. E. and English, M.J. (1994)
    Benchmarking for best practices winning through
    innovative adaptation, McGraw-Hill, New York.
  • Camp, R. C. (1989) Benchmarking The search for
    industry best practices that lead to superior
    performance, ASQC Quality Press, Milwaukee.

57
If you want to find out more
  • Commonwealth of Australia (2001) A Practical
    Guide Benchmarking for local government, AGPS,
    Melbourne.
  • Evans, A., (1994) Benchmarking Taking Your
    Organization Towards Best Practice, The Business
    Library, Melbourne.
  • Keelhey, P., Medline, S. M. and MacBride, S. A.
    (1996) Benchmarking for best practices in the
    public sector achieving performance
    breakthroughs in federal, state, and local
    agencies, Jossey-Bass, San Francisco.
  • McNair, C. J. and Leibfried, K. H. J. (1992)
    Benchmarking A Tool for Continuous Improvement,
    Harpers Business, New York.

58
If you want to find out more
  • Patterson, J. G. (2004) Benchmarking Basics
    Looking for a better way, Viva Books, New Delhi.
  • Spendolini, M. J. (1992) The benchmarking book,
    The American Management Association, New York.
  • Williams, S. E. (1994) Benchmarking in Local
    Government, Alpha Publications, Melbourne.
  • Williams, S. E. (1998) National Australian Local
    Government Benchmarking Project, Robert C Camp,
    (editor), Global Cases in Benchmarking Best
    Practices From Organizations Around the World,
    ASQ Quality Press, Milwaukie.

59
Follow up
  • CONTACT Sue Williams
  • Strategic Evaluation Manager
  • Department of Sustainability and Environment
  • Level 13, 8 Nicholson Street
  • East Melbourne VIC 3002
  • t 03 9637 8754
  • f 03 9637 9558
  • e susan.williams_at_dse.vic.gov.au
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