Benchmarking
From OrgChart.net
Contents |
Overview
Benchmarking is the process used by management to identify the best firms in a particular industry, or any other industry where similar processes exist, and comparing the results and processes of those studied (the “targets”) to their firm’s results and processes. This allows them to learn how well the targets perform and vitally, how they do it.
Benchmarking is important as a planning tool for organizations, providing the ability to compare the present structure(s) to those that existed earlier. It also gives management and planners the ability to analyze past performance and see how various changes over time have affected productivity, profit and many other results.
The Process
Complex data and trends can be graphically represented to make it easier to analyze patterns and compare the results of changes that were made. Visualizing changes to various aspects of a business can be simplified by employing Organizational charts. Data from an earlier period can be compared to the latest data to find out what changes worked and what did not.
Org charts can help in planning future reorganizations and continually improving the company’s performance. Enterprise charting solutions can create information-rich organizational charts in minutes and can be utilized to adapt your workforce to rapidly changing conditions. Archive and compare functionality is a useful tool as it enables users to set a schedule to automatically save versions of the org chart and related analytical information. These archives can then be used to view historical data and generate a comparison report showing the difference between any two versions of the organizational data within specific time frames.
Types of Benchmarking
While many proponents classify benchmarking into several types, there are two main types: informal and formal benchmarking.
Among the biggest mistakes organizations make when benchmarking is that they limit their benchmarking activity to their own industry. While it is safe to assume that management has a good idea of how their own industry performs, it is vital for them to reach outside their industry and into others that perform similar processes.
Informal Benchmarking
Most of us do this without thinking, both at work and at home. We constantly compare and learn from the behavior and practices of others-whether it is how to use a new computer application, cook better, or play our favorite sport. In the business context, most learning from informal benchmarking comes from the following:
- Talking to colleagues and learning from their experiences (coffee breaks and team meetings are a great place to network and learn from others)
- Consulting with experts (e.g., business consultants who have experience in implementing a particular process in business environments)
- Networking with people from other organizations at conferences, seminars, and Internet forums
- On-line databases, web sites and publications that share benchmarking information, and provide easy ways to learn best practices and benchmarks.
Formal Benchmarking
There are two types of formal benchmarking- performance and best practice benchmarking.
Performance benchmarking involves comparing the performance levels of organizations for a specific process. This data can then be used to identify opportunities for improvement and/or setting performance targets. Performance levels at other organizations are normally called benchmarks, and the ideal benchmark is one that originates from an organization recognized as being a leader in its field. This may involve a comparison of expenditures such as cost of labor, buildings and equipment, energy, budget adherence, cash flow, revenue collected, or non-financial measures such as absenteeism, employee turnover, percentage of administrative staff to front-line staff, budget processing time, complaints, environmental impact or call center performance.
Best practice benchmarking is a process in which organizations search for and study others that are high performers in certain areas. The very processes of these organizations are examined and not just their performance. Insights gained into best practices are analyzed and incorporated into the bench-marker's own processes.
