The expression benchmarking has become one of the fashionable words in current management discussion. The term first appeared in the United States in the 1970s but has now gained world wide recognition. But what exactly does it mean and should your company be practicing it?
One straightforward definition of benchmarking comes from Chris Tether managing director of a New Zealand-based consultancy firm specializing in this area. “Benchmarking involves learning about your own practices, learning about the best practices of others, and then making changes for improvement that will enable you to meet or beat the best in the world.” The essential element is not simply imitating what other companies do but being able to adapt the best of other firms’ practices to your own situation.
Instead of aiming to improve only against previous performance and scores, companies can use benchmarking to inject an element of imagination and common sense into their search for progress. It is a process which forces companies to look closely at those activities which they may have been taking for granted and comparing them with the actives of other world-beating companies. Self-criticism is at the heart of the process although in some cases this may upset managers who are reluctant to question long established practices.
The process of identifying best practice in other companies does not just mean looking closely at your competitors. It might also include studying companies which use similar processes to your own, even though they are producing different goods. The point is to look at the process rather than the product. For example, Italian computer company Arita wanted to improve the quality of its technical manuals and handbooks. Instead of looking at manuals produced by other computer companies, Arita turned to a publisher of popular handbooks such as cookery books, railway timetables and car repair manuals. As Arita’s Technical Director Claudio Benclii says, “All of these handbooks are communicating complex information in a simple way - exactly what we are aiming to do. And in many cases they succeed far better than any computer company.”
There is some disagreement between benchmarking specialists as to the best methods to follow when starting a benchmarking exercise in your firm. Everyone agrees that the process must have the full approval of senior management but that it is best carried out by a comparatively small team. Some consultants feel this should be as small as three people but most favor a team of between five and eight at least one of whom should have some prior knowledge of the benchmarking process. In practice this often means bringing in an outside consultant – at least at the beginning. Once the team is assembled there can be anything from three to five formal stages in the process different approaches but whatever the exact technique benchmarking can only work if everyone in the company from top to bottom is committed to change.
15. According to the writer, benchmarking must always involve
A. changing your activities on the basis of new information.
B. Copying exactly what your competitors do.
C. Identifying the best company in your market.
D. Collaborating with other companies in the same field.
16. Some managers may resist benchmarking because
A. it takes their activities for granted.
B. It makes them examine the way they work.
C. It makes others question their efficiency.
D. It gives them a lot of extra work.
17. What sort of companies should you compare yours with?
A. those producing similar goods
B. those communicating most effectively
C. those using similar processes
D. those leading the domestic market
18. Anita found that a publishing company could
A. make more money than a computer firm.
B. Produce technical manuals for them
C. Show them how to improve their own manuals
D. Help them move into new markets
19. Benchmarking specialists agree that in order to succeed there must be
A. a team of no more than three people
B. total support from top managers
C. a fixed timetable for the process
D. an outside consultant it the team
20. What is the writer’s purpose in writing this article?
A. to recommend the process of benchmarking
B. to criticize firms that do not carry out benchmarking
C. to give tactual information about benchmarking
D. to explain why benchmarking does not suit every firm
Useful Words and Expressions:
Benchmarking; world-beating; assemble; be committed to;
Have you ever noticed the following sentences in your reading? If not, read them through and pay attention to the bold parts.
16. Self-criticism is at the heart of the process although in some cases this may upset managers who are reluctant to question long established practices.
17. It might also include studying companies which use similar processes to your own, even though they are producing different goods. The point is to look at the process rather than the product.
18. All of these handbooks are communicating complex information in a simple way - exactly what we are aiming to do. And in many cases they succeed far better than any computer company.”
19. Everyone agrees that the process must have the full approval of senior management but that it is best carried out by a comparatively small team.
Benchmarking can only work if everyone in the company from top to bottom is committed to change.
Additional Reading Material:
Who's best? How good are they? How do we get that good? What is Benchmarking?
Benchmarking is the process of determining who is the very best, who sets the standard, and what that standard is. In baseball, you could argue that seven consecutive World Series Championships made the New York Yankees the benchmark. If we were to benchmark "world conquest", what objective measure would we use to compare Julius Caesar to Adolph Hitler; Gengis Khan to Napoleon? Which of them was the epitome, and why?
We do the same thing in business. Who is the best sales organization? The most responsive customer service department? The leanest manufacturing operation? And how do we quantify that standard?