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The Misuse of Bench-marking as a Management Tool?

I believe everyone would like to be the best in everything. Unfortunately due to scarcity of resources we can’t be everything. But is it true that benchmarking can really improve performance. But when does it go horribly wrong?

Reflecting…!

Back in my elementary years I clearly remember how eager and curious we were for exchange visits to neighboring schools. Be it for sports, discussion or even other social issues. It’s really meant much for us then.  Similarly, I believe that organizations engage benchmarking to kill the curiosity and increase their market share. It’s basically like copying the best practices. Most people are curious to see and experience new and different things in life. Hoping to be the very best!!!

What is Benchmarking?

There is no single benchmarking process that has been universally adopted.

However, the most accepted definition is that Benchmarking is the process of comparing one's business processes and performance metrics to industry bests or best practices from other companies. Dimensions typically measured are quality, time and cost.

The management are able to identify the best firms in their industry, or in another industry where similar processes exist, and compares the results and processes of those studied (the "targets") to one's own results and processes. In this way, they learn how well the targets perform and, more importantly, the business processes that explain why these firms are successful.

Organizations to develop plans on how to make improvements or adapt specific best practices, usually with the aim of increasing some aspect of performance. Benchmarking may be a one-off event, but is often treated as a continuous process in which organizations continually seek to improve their practices.

Benchmarking can be internal (comparing performance between different groups or teams within an organization) or external (comparing performance with companies in a specific industry or across industries).

Specifically, benchmarking focuses on process, performance and strategic.

In 2008, a comprehensive survey by the Global Benchmarking Network on over 450 organizations responded from over 40 countries. The results showed that informal Benchmarking (68%). Performance Benchmarking was used by 49% and Best Practice Benchmarking by 39%.

The evidence points to that a benchmark can be an incredibly powerful tool for corporate responsibility practitioners to understand and improve their performance. When done correctly, it can enable businesses to learn from each other and make smarter decisions.

Pitfalls of benchmarking

There are instances when benchmarking horribly goes wrong. There are a number of mistakes committed or omitted by organizations when conducting it. They include but not limited to:

Misuse of Cost and Time Factor:

The most contentious issue about benchmarking is the costing and timing. The cost of benchmarking can substantially be reduced through utilizing the many internet resources that have sprung up over the last few years. These aim to capture benchmarks and best practices from organizations, business sectors and countries to make the benchmarking process much quicker and cheaper.

Lack of Management Support:

To be successful in benchmarking, use this advice. Be sure that the benchmarking team has the sponsorship of a senior manager. Otherwise there is no guarantee of action on the team's recommendations. Allocation of resources to implement the findings will squarely depend on the support of senior management. Seemingly, management need to remain objective in supporting this exercise.

Choice of Comparison Group:

Organizations if not careful are likely to compare apples to oranges. And really there is such a thing as a bad benchmark. Selection of a peer group is critical; is often at the heart of the problem. The golden rule is to evaluate you organization based on the best in the industry. This is how you gain value, gain greater insights and learn more. Otherwise, you end up comparing two different things—comparing apples to oranges leading to average or below average performance.

Unclear Objectives or Motives:

There are instances where organizations embark on benchmarking without a clear purpose. Having a clear purpose and objective facilitate collecting valid information and from whom to compare yourself against. The ultimate question should be what you want to learn and achieve?

Disseminate the findings rather than sharing:

The benchmarking team carries the work on behalf of the organization. It will be a total waste of time and resources conducting a benchmark assessment simply to let the findings sit on a shelf (or an inbox). Sharing the findings neither doesn’t really just the course. Many suffer from the poor reading culture. Therefore, through the support from senior management, the benchmarking team should use various platforms to disseminate the findings for action to the senior management, department and wider stakeholders.

Wrong Choice of Benchmarking Team:

Benchmarking is not a reward exercise for loyal employees. The management should understand this is a performance improvement initiative. The selected team members should own or work with the process being benchmarked. They need to understand the vision and mission statements of their organization. This is not a copy and paste endeavor. They should be in a position to champion a feasible, do-able project based on the findings.

Benchmarking Is Not Instant Coffee:

The good intention of benchmarking is for companies to innovate and customize their findings. However, the pitfalls come with need to imitate what the superior organizations are doing. We must acknowledge that the market leaders have invested much into their processes and systems. Therefore, a blind imitation is likely to lead to downfall. There are no miracles with benchmarking.

In Summary, the success of benchmarking exercise is informed by setting a clear objective, organisations and processes your are learning fro and disseminating and taking action of the findings. A benchmark allows a company to understand the market and inspire fresh ideas to improve performance, but it is up to the company to apply this knowledge.

Benchmarks can be great ammunition to build the case internally to do more. Avoiding the issues raised will be a first step to the success of benchmarking exercise.

Anyone can make benchmarking errors, and everyone can learn from them.

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Last modified on Sunday, 06 December 2015 16:36
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