Business Benchmarking Part 2: The Practical Approach for Applying To Your Business

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9th December 2021

As business owner or leader, the main objective is to build a strategic approach to ensure your business is successful and sustainable.

With all the moving parts in any business, it’s safe to say that it’s easy to feel overwhelmed. From your organisational systems and processes right through to your services, and even to handling your customers, all of these aspects are all critical elements to get right

With that being said, any business will benefit from a culture that continually and respectfully tests the status quo; how actually apply the ‘work smarter not harder’ approach and use strategic management tools to assist in overcoming business challenges.

The hard questions must be asked:

  • How do we maintain and sustain?
  • What are our competitors doing and why are the successful or otherwise?
  • Why is it important for us to apply the best practices in the industry?

By asking these types of questions, you are actually applying a method of benchmarking, and this will serve as a driving tool in any endeavors for success.

 

Why Benchmarking?

As we outlined in our last article, benchmarking refers to an organisation’s ability and capability to grow sustainably. This is the process of evaluating the successful strategies and tactics that you may already apply and how it measures up to that of any competitors or similar organisations.

The procedures and protocols that others apply can serve as valuable insight for you to understand what works and what doesn’t. This aids your organisation to incorporate strategic planning, for you to achieve the success that you envision.

The idea of benchmarking encompasses the concept of competition, globalisation, and changes that are constantly occuring within your industry.

The following are the key performance indicators of benchmarking:

  • Efficiency of process
  • Productivity and effectiveness of people and equipment
  • Resource optimisation
  • Growth Targets and Rate
  • Margin and volume
  • Innovation

 

The “How To” – A Practical Approach to Benchmarking

The act of benchmarking helps your business identify and create innovative solutions within a business. By measuring your status, prioritising and apply strategic, technical, and practical improvements to the current policies and procedures, you set the plan for growth and a sustainable future.

Firstly, it is critical for you to have a thorough understanding of your own guidelines before undertaking a benchmarking strategy.

Once you have the data in from the benchmarking survey it is time to think about where to start with your business improvement.  This isn’t always obvious so we’ve outlined 12 basic steps that should be tailored to your own company policies, resource availability and the relevant project or process:

  1. Understand the company’s existing performance gaps to help you decide what needs attention.
  2. Acquire the buy in from your executive leadership team. This is critical in eliminating roadblocks, applying appropriate resources and accelerating the process.
  3. Document your objectives and scope as you would for any successful strategy.
  4. Assign an accountability champion to the project
  5. Document the current process. Without up-to-date knowledge of the current process:
    1. there is no ability to measure success.
    2. the project can lose focus, intention and/or depth.
  6. Agree on the core system of measurement
  7. The measurement should be documented. Specifically:
    1. What is being measured
    2. Classify the elements of measure including what should not be measured
    3. Note Examples
  8. Unanimously agree on
    1. gaps of low performance
    2. the impact to key stakeholders
    3. prioritise – select a maximum of three initiatives at a time
  9. Design a review and reporting method
    1. Review milestones with crystal focus on KPI’s for excellence
    2. Minimise complexity
    3. Outlines the strategy, objectives and resource allocation
  10. Apply the learnings to performance gaps.
  11. Communicate regularly to key stakeholders to maintain support and accountability
  12. Be clear when to adjust and recalibrate activity.

 

The Bottomline

The idea of maintaining a competitive edge and become a leader in the marketplace may feel overwhelming and unachievable. With benchmarking, you can have greater confidence that your business is set to consistently improve its efficiency, effectiveness in being viable and sustainable.

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