Looking wider for improved performance:
benchmarking

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Most organisations know they need to improve how they develop products and services, service customers, pay suppliers and pay staff.

However, aligning thinking within the organisation on the scale of current issues and a future vision is challenging in the face of differing opinions on what characterises great performance.

The threat of a widening performance gap is very real as top performing organisations aggressively embrace new technology and offshore business models. Benchmarking your organisation’s activities against a relevant peer group both within and outside your industry provides key facts to lead the conversation on closing the gap or extending the advantage.

Set a vision

Why set a vision based on other organisations in your own industry that perform poorly?

Benchmarking can provide a robust basis for functional improvement and enable management to answer these questions with greater confidence:

  • Where are we now?
  • Where do we want to be?

Benchmarking against organisations from structurally similar industries will help to challenge current thinking and encourage an innovative approach to productivity and improvement challenges.

Close the gap

When there are many factors impacting productivity it is hard to know where to start. Benchmarking will provide tangible facts on the source and scale of gaps, and identify the priority problem areas to address. As an example, benchmarking the cost of the finance function shows that the cost gap between the most efficient finance functions and median performers can be between 130% and 230%, depending on industry. This cost gap equates to between $US3-7 million per year for every $US1 billion in revenue1.

Given “great” performance today will undoubtedly become “mediocre” performance in five years, regular benchmarking will provide intelligence on the pace of change in your organisation relative to peers and ensure the performance gap is narrowing.

Drive breakthrough improvement

Today, innovative approaches are needed to achieve a significant step improvement. Benchmarking can provide the catalyst for driving breakthrough improvements, creating momentum and appetite for major change.

The Australian Shared Services Association (ASSA) provides benchmarking studies that have been using a consistent methodology for years and enable participating organisations to see how they have progressed over time. Neil Padley, President of ASSA comments, “Benchmarking is one of the key pillars for improving Shared Services and many other business activities. It should also allow you to network with participants post the study, to develop a deeper understanding of how improvements can be made from actual practitioners."

Organisations that have delivered complex change over time have a noticeable culture of innovation and improvement which utilises open performance measurement and regular benchmarking. Consider how benchmarking can be applied in your organisation to support the improvement agenda.

1APQC, American Productivity & Quality Centre - http://www.apqc.org/

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