Benchmarking has become an organisational catchphrase in recent years, but there is still room for improvement when it comes to doing it properly. A look at benchmarking and how it can lay the foundation for implementing strategy.
Benchmarking can be one of those bywords that upper management throw around occasionally without really having an effect on project management or the wider organisation. But benchmarking is more than just a byword; it’s actually an effective way of examining your projects and/or your organisation. Through comparison to others, you can understand how you’re tracking in the real world.
“Benchmarking is a process of comparing cost, time, quality and what an organisation does compared to other organisations. It can be looking at people, processes and the policies they have. It’s actually saying, what do you currently do? Who is doing it better? And why are they doing it better? And could you do it better as well?” says Neil Macdonald, former general manager of Management Consulting at UXC.
Larry Gould, managing director of Australia-wide Business Training, believes organisations can benchmark against anything they can measure. “It can be within the organisation, it can be against a required standard, it can be against competitors and it can be against an industry average,” he says. “What an organisation needs to do is understand what’s important to them and what they actual want to trap and measure.”
One mistake is to seek to benchmark externally before understanding where you currently sit. Therefore, the first step is to take an internal view to establish a baseline from which to measure your progress.
“Secondly, work out the areas that you think will have the highest pay-off, the highest benefits for the cost you’re going to invest,” suggests Macdonald. Doing this will help organisation avoid the mistake of wanting to benchmark everything. “They might say ‘I want to benchmark the whole procurement process’ rather than saying ‘Are there some obvious bits in the procurement process that we should benchmark?’ You tend to do the whole lot rather than the bit that’s going to give you the high value, high impact area first.”
Gould agrees that organisations should look internally first. “One of the major pitfalls is that people get so carried away with benchmarking against competitors or the industry, they forget it actually tells them a lot about their own organisation,” he remarks. “If they benchmark from one year to another, it will give trends. You need to understand where you’ve travelled from and need to have established acceptable levels. You then measure your performance against those standards.”
He adds: “Benchmarking is threefold: it’s about establishing your trend and understanding the journey you’ve travelled, it’s about understanding and comparing against competitors, and then it’s about understanding and comparing against the industry you’re in.”
Us and them
Lynn Crawford, a director of benchmarking organisation Human Systems International, says benchmarking is really part of the process of improvement and can begin at a project level. “Project managers may look at their project management processes or the success rate of their projects or profitability of their projects, the number of projects they have, the number of resources they have,” she lists.
“Also look at the project management capability of the organisation. You can benchmark individual projects or program, or your overall organisation’s project management, or both, because they are related. Some parts of the organisation do something really well, other parts really badly.”