QUESTION: Benchmarking is a practice used by companies to support continuous improvement. What factors should be considered when implementing a benchmarking program?
ANSWER: Successful benchmarking requires good preparation. When a benchmarking program is well implemented, the company can achieve basic business process improvement and parallel growth of financial results.
For HR, success in benchmarking can reduce administrative errors, decrease benefits process cycle time, enhance recruiting practices, and improve employee satisfaction.
First, determine the focus of the program. What are the key components, processes, success factors, industry nuances, and economic factors that require comparative analysis? Decide whether internal or external scrutiny, or both, is best to meet the company' s objectives.
Set goals - what will be accomplished upon conclusion of the data collection phase of the benchmarking process? Have a vision of what you hope to accomplish. Ask yourself: Why are you choosing your benchmark targets - what are the gaps in performance between the current state of the operation and the future desired condition?
Determine your measurements - what are the standards, what are the metrics, and what will ultimately determine success of the program? Collect the data by visiting departments, facilities, and research groups and contacting academics.
Then implement your plans and follow-up progress. Be sure to communicate the process - and the results.
Many factors can influence the success of a benchmarking program:
- Correlate the program to the company mission. Make sure that the benchmarking initiative does not compete with individual departmental initiatives. Does the plan meet the overall objectives of the company? Don' t arbitrarily look for best practices.
- Make sure the program is culturally appropriate. Is the information the right fit for your organization? Can support be gained for the benchmarking initiatives?
- Have specific objectives. Objectives of the program might include analysis of the business or understanding the competition.
- Promote change. Ask: How will the company use the information acquired during the process? Will the company support change or resist? Careful consideration of organizational readiness to implement the findings should drive the decision to implement benchmarking.
Benchmarking in Your Backyard
Internally centered benchmarking examines processes and operations within the company itself. Start by focusing on a process that may vary significantly across an organization, such as the delivery of health care coverage to employees. Which plan has the best coverage, fastest claims processing, lowest utilization and cost? Identification of the internal best practice can help an organization implement validated ideals across locations and divisions.
Disadvantages of Internal Benchmarking:
- Data collected is limited by the size of the company.
- Reaching conclusions may be biased by limited information.
- Interdepartmental similarities may be substantial.
- Best practices may be relatively weak compared with external standards.
- Internal benchmarking is a good introduction to benchmarking
- Little or no resistance to the process should be experienced
- Enhances communication between departments
- Uses consistent methods of data collection
- Data discovered should be easily comparable
- No breach of confidentiality to the outside world
Finally, communicate the success of your program, and others will benchmark you!
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