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com
Benchmarking is the practice of being humble enough to
admit that someone else is better at something and wise
enough to try and learn how to match and even surpass
them at it.

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Benchmarking - is the process of determining who is the
very best, who sets the standard, and what that standard is.
organizations evaluate various aspects of their
processes in relation to best practice

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Benchmarking is a powerful management tool because it
overcomes paradigm blindness
Benchmarking gets people out of their comfort zones and
generates closed loop change processes

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Benchmarking the Japanese way
I. People
Employee selection based on potential
Importance of the individual
Lifetime employment
Company loyalty
II. Work style
Top management involved in quality
Job rotation
Very important to have an inquiring mind
Attitude to Excel under challenge

III. Product Quality IV. Customers

Zero defect policy Global reach
Quality supersedes production Attention to detail
Just in Time inventory Market research
Company takes interest in development
of suppliers

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The Xerox story
 Invented as a formal process by Rank Xerox
 Benchmarking initiative taken as a part of its ‘Leadership
Through Quality’ program.
 The program encouraged Xerox to find ways to
reduce their manufacturing costs.

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The key findings by Xerox
 Twice as long as its japanese competitors to bring a
product to market
 Five times the number of engineers,
 Four times the number of design changes
 Three times the design costs...

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all the Japanese copier companies put together had only
1,000 suppliers, while Xerox alone had 5,000.
Cooperation between the company and the vendor
extended to just-in-time production scheduling,

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Outcome
Highly satisfied customers for its copier/duplicator and
printing systems increased by 38% and 39% respectively
Customer satisfaction with Xerox's sales processes
improved by 40%, service processes by 18% and
administrative processes by 21%...

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Steps for benchmarking
Identify your problem areas
Identify organizations that are leaders in these areas
Scope definition
Determine measurement methods, units, indicators and data
collection method
Data collection
Analysis of the discrepancies
Present the results and discuss implications / improvement
areas and goals
Make improvement plans or new procedures
Monitor progress and plan ongoing benchmark

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 World Class
Recognized as the best.
Benchmarking :- Benchmarked by others even in other sectors
Stages of improvement
Best in Class
Exceeds customer expectations,outperforms
all competitors and has clear competitive edge

Efficient
Meets all internal requirements for cost margins,
asset utilization,cycle-time and measures of excellence

Effective
Satisfies all customer requirements

Incapable
Is ineffective , inefficient and at the risk of failing.
Needs major redesign
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24/7
Staff are benchmarked in five key areas: productivity,
cost and structure, compensation and benefits, hiring, and
retention.
It is the first Indian BPO company to get an ISO 9002
certification and in December 2001 was awarded with
COPC-2000 certification by COPC (Customer
Outsourcing Performance Centre), an authority in contact
centre operations.

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LEVELS OF BENCHMARKING
Strategic Benchmarking - using best practices to
develop corporate, program, product strategies and results.
Operational Benchmarking - assessing and
implementing the best practices of industry or public
service leaders to improve processes to the extent possible
to meet organizational goals.

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Types of Benchmarking

1. Internal benchmarking -benchmark within a

corporation, for example between business units

2. Competitive benchmarking - benchmark performance

or processes with competitors

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3. Functional benchmarking -benchmark similar processes
within an industry

4. Generic benchmarking - comparing operations between

unrelated industries

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5. Collaborative
benchmarking - carried
out collaboratively by
groups of companies
(e.g. subsidiaries of a
multinational in different
countries or an industry
organization).

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VERIZON
Energy Star benchmarking - dramatically reduce energy
costs while reducing pollution - top Energy Star company
in the telecommunications industry
Compensation
Process benchmarking of software engineering models
and the processes followed for CMMI certification

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Energy use benchmarking
Energy-use benchmarking process for the company's
central office buildings
Identify efficient energy-use administrative buildings
Buildings audited for energy use - receive a score
between 0 and 100, based on how efficiently the
building uses electricity
Score of 75 or higher - eligible to apply for the energy
star label
Saved millions of dollars in energy costs annually

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 COMPENSATION
Benchmarks compensation programs against two peer
groups - companies that Verizon competes with for
executive talent
Market peer group - similarly sized, multinational
companies regardless of industry. eg., 3M, AT&T,
Cisco Systems, Coca Cola, Ford
Industry peer group - companies that provide
wireline, wireless and broadband communication
services. eg., AT&T , BellSouth, Time Warner

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COMPENSATION
Annually benchmarks and reviews verizon’s total
compensation and component pay levels (base
salary, short- and long-term incentive
opportunities)
Overall compensation – market and industry peers
Short & long-term incentive programs and
individual compensation – industry peers

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Cost of benchmarking
There are costs to benchmarking, although many
companies find that it pays for itself. The three main types
of costs are:
Visit costs.
Time costs
Benchmarking database costs

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Limitations of benchmarking

Tough process
Time-consuming and expensive.
'they are different from us' syndrome
Comparing with 'best in class' -ideally be done on a
continuous basis

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COMMON MISTAKES
 Confusing benchmarking with participating in a
survey
Thinking there are pre-existing "benchmarks" to be
found
Forgetting about service delivery and customer
satisfaction
The process is too large and complex to be
manageable
Confusing benchmarking with research

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Contd…
Misalignment
Picking a topic that is too intangible and difficult to
measure
Not establishing the baseline
Not researching benchmarking partners thoroughly
Not having a code of ethics and contract agreed with
partners

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How to improve??
You can keep costs down by doing benchmarking in
degrees and by defining very narrow areas to explore
With careful planning, the benchmarking costs can be
kept to a minimum.
To benchmark effectively, one must team up with
companies in ones own industry whose processes are
analogous

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INFOSYS – Financial policy
Return of capital should be two times the cost of
capital and three times the invested capital, excluding
cash – earned 3.2 times and 4.8 times respectively
Benchmark of 30% operating cash flows - earned
31.5%
Days of the sales outstanding benchmark was 60 -
achieved 47

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INFOSYS – PERFORMANCE
Measure response times and throughput for different
workload intensities to use as a standard for
comparison and to understand scalability of system
components
Benchmark consists of a workload model and
associated performance measures - used as a standard
to compare the performance of other systems or
workloads in a specific domain

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CONCLUSION
• Opens organisation to new ideas, tools ans methods to
improve effectiveness

“The knowledge you gain is well

worth the investment you make.”

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