Tool 17: Benchmarking

AKA

Comparative Benchmarking

Classification

Data Collecting (DC)

Tool description

Benchmarking, made popular by Robert C. Camp, is a data collection method that identifies and measures similar processes, products, and services against those of organization, considered best-in-class. All benchmarking projects, inside or outside the organization, generally collect and compare strategic, performance, or process benchmarks for the purpose of identifying gaps in performance and establishing gap-closing action plans.

Typical application

• To identify areas that require process improvement.

• To verify and measure an organization's performance against that of the competition.

• To research trends and performance data of similar organizations for the purpose of developing strategic action plans.

Problem-solving phase

→	Select and define problem or opportunity
→	Identify and analyze causes or potential change
	Develop and plan possible solutions or change
	Implement and evaluate solution or change
→	Measure and report solution or change results
	Recognize and reward team efforts

Typically used by

1	Research/statistics
	Creativity/innovation
	Engineering
	Project management
	Manufacturing
4	Marketing/sales
	Administration/documentation
	Servicing/support
2	Customer/quality metrics
3	Change management

links to other tools

before

• Data collection strategy

• Idea Grid

• Interview technique

• Surveying

• Customer Needs Table

after

• Action plan

• Activity cost matrix

• Information Needs Analysis

• Force Field Analysis (FFA)

• Competency Gap

Notes and key points

• Quantitaive and qualitative data is collected in a benchmarking project as shown in the example. A different version of the benchmarking process can be illustrated.

  

  Recommendation: An action plan for closing any existing gap should also consider the competitor's trendline in order to reach at least parity at some future date (goal).

Step-by-step procedure

• STEP 1 First, the benchmarking team identifies processes to benchmark that are of great importance to the customer and the organization. See example Training and Development Services.

• STEP 2 Similar organizations are targeted and selected on the basis of their excellence in certain fields.

• STEP 3 Partnerships are formed with selected organizations. A set of common operational definitions is developed for processes, key characteristics, and metrics.

• STEP 4 Desired benchmark data is collected (exchanged), using various data collection methods such as interviews, surveys, historical files, and other methods.

• STEP 5 Collected benchmarks are analyzed and best-in-class performance data identified.

• STEP 6 A gap analysis is performed and priorities established for certain identified areas in need of improvement.

• STEP 7 Finally, an action plan is developed to close the performance gaps.

Example of tool application

Training and Development Services

Quantitative (Numeric) Total no. of employees Total no. of T&D trainers Total T&D budget (actual) Total student hrs Total hrs of trainer platform time Total trainer hrs available Total student hrs Total T&D students Qualitative (Processes) Training of employees inside vs. outside (cost) [1] Utilizing inside trainers vs. outside trainers [1] Develop courses inside vs. purchase from outside Cross-training activity—percent backup for courses	Year xxxx	This Co.	Co.A	Co.B	Co.C	Co.D
	Efficiency ratio	2367:1	1230:1	80:1	488:1	667:1
	$/Student hr.	$12.50	$36.23	$13.60	$45.16	$22.17
	%Platform time	54%	NA	20%	NA	40%
	Hrs/student	28	40	208	51	8
	Effectiveness ratio	1:1.59	NA	1:2	NA	1.10:1
	Expertise%	100%	95%	73%	98%	100%
	Expertise%	90%	95%	80%	95%	20%
	Flexibility%	100%	100%	100%	100%	67%
[1]Notes: Benchmarks B–C (self-sufficiency) NA = No Benchmark data available