BENCHMARKING AND CHANGE MANAGEMENT

What is benchmarking?

Benchmarking has a long history going back to the early days of evolution.
Comparison has always been the essence of winning and being able to react quickly
and appropriately has helped man overcome significant hurdles. Since then
benchmarking has evolved but it is still an integral part of our daily lives.

Benchmarking is an activity that tells you your position or status by comparing

yourself to others. The reason for comparing is to understand where you are today and
what might be some of the areas that you need to improve.

So how is this relevant in BUSINESS?

In business today, it is vital that we compare ourselves to others. Am I making

more money than my competitors? How does my business compare to the rest within
the same industry? Are there others out there that have similar problems? Have they
solved them already? If yes, then what worked for them? Am I at the top of the bottom
of the class? Comparisons are great. However, there is a catch. Only things that are
comparable can be compared. When these comparisons are done correctly, it is called
benchmarking.

So how does BENCHMARKING work?

First you need to

1. Define what you want to benchmark.

For example benchmarking for your financial performance, brand
reputation, staff motivation and etc.

2. Define appropriate comparators.

We call them Key Performance Indicators or KPIs. Some KPIs for
financial performance could be sales, margin, productivity.

3. Ensure that your comparisons are comparable.

We do this by defining segments within a network. For example, it might
not make sense to compare a stone in metropolitan Sydney to a store in regional
NSW. So we could divide (segment) stores based on their location.

4. Gather data in an independent manner and make sure it is consistent.

We do this by automatically collecting and mapping your data into a standard
chart of accounts.
 5. Produced customized and meaningful reports that are not only simple to
understand but show you your improvement over time.

Why BENCHMARK?

To gain better understanding of: sales, margin, staff productivity, expense management
and efficiency.

What will you GAIN?

You can accurately answers the following questions:

1. Where do I stand?
2. How can I improve my business and where should I start?
3. Are the current measures to improve my business working or not?

Types of Benchmarking

There are three types of benchmarking as given below:

I. Internal Benchmarking
Internal benchmarking is a process in which a company or an organization
looks within its own business to try and determine the best practice or
methodology for conducting a particular task. The aim is to find the best practice
available to get the job done with minimum effort or resources. For example,
warehousing and shipping of products from one site of a company, can be
compared to warehousing and shipping of a product from a different warehouse
of the company.
The idea is to benchmark processes across the organization leading to
more efficiency. Another important feature of internal benchmarking is that it
leads to continuous improvement which in turn leads to increased efficiency. The
basic idea is to gain efficiency in all processes throughout the organization
across various verticals.
The idea of internal benchmarking is to identify those divisions of a
business which are doing well, and study their practices, which makes them
more efficient as compared to other sites. Once that is done, internal
benchmarking begins with setting some level of performance metric that a
company wants a certain division of the business to reach.
 II. Competitive Benchmarking
The second type of benchmarking is to improve the performance to the
level of competitors. The competitor’s performance data is collected from
published data. We may wonder as how to get the competitor’s performance
data. When an organization is performing well, they will definitely advertise and
make their performance indicators public. Such data could be collected and
compared with the current performance in the organization. This comparison is
known as competitive benchmarking.

III. Functional Benchmarking

The third type of benchmarking is functional benchmarking. In the first two
types, we were comparing only the processes of similar nature. In the third type
of benchmarking, we will compare the methods of organizations with similar
processes. For instance, there may be two different kinds of service
organizations, one can be a calibration laboratory, where the instruments are
received, calibrated and dispatched. The other type could be a diagnostic centre,
where the tests are conducted on patients.