Change Implementation Techniques for Creating a Sense of Urgency

Technique 2.64 Benchmarking

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Introduction

. Benchmarking involves looking at the very best performers in every aspect of production, with the aim of overtaking them.

. Benchmarking

- provides the chance to see where you stand relative to others (same industry, ie competitive benchmarking, and/or other industries, ie industry benchmarking)

- highlights areas for improvement and is a technique for continuous improvement and quantum leaps.

- replaces management's intuition and guesstimates with hard data and analysis, and focuses the whole process on meeting and exceeding customer expectations

- performance measures are usually either qualitative (expressed in words, such as customers' satisfaction) or quantitative (numbers, such as ROI). Usually the quantitative measures are more 'real' than information with no numbers. At the same time, over-reliance on quantitative measures can result in number chasing, for its own sake. This means people follow rules without thought for the reasons the job is done. Furthermore, there can be manipulation of data and fiddling with figures.

- looks to make changes to the way work is done, not the people who do it

. Benchmarking has an external focus on internal activities to achieve both continuous improvement and quantum leaps. It first analyses current practices to establish an understanding of them, then looks to have external standards or reference points against which to assess them. These points should be the toughest competitors, or other organisations regarded as industry leaders. Benchmarking can be set in any area of an organisation, at any level. The purpose is simple: obtain the competitive edge and better the best

. The Japanese have a word for it (dantotsu) meaning, among other things, "better than the best".

. Benchmarking provides techniques for breaking with the past while still retaining the best of the past

The purposes of benchmarking are to

. Identify best practice, ie who is the best and why?

. Gain a competitive edge

. Better the best

. To exceed customers' (internal and external) expectations

There are 3 components of benchmarking

. Obsession with quality and improvement;

. Creating unified spirit of teamwork throughout the organisation;

. Detecting and rectifying problems using hard data, not feeling or opinions.

Roles, processes and strategies

. The search for best practice concentrates on roles, processes or strategies. Roles are what people do in the company, and refers to effectiveness, ie doing the right thing. Processes are about doing things right, and look at efficiency, ie how the work is carried out. Strategies should be focused on issues critical to the company's performance.

The focus should be on issues which are critical to the particular organisation's success, the points where possible competitive advantage might live

. By comparing performance and financial indicators with others, organisations will identify areas where they are strong and weak. If the weak areas are critical, then efforts to improve are essential.

The typical approach to benchmarking

. This involves tracking the product or order or request for service through to the final output of something valued by a customer. The following questions should be used in the analysis

- who takes part in delivering the product or service?

- why are they involved?

- what are they doing?

- is what they are doing adding value for the customer?

. The answers to these questions can be mapped in a process flow diagram that shows links between the chains of people throughout the organisation. This will identify areas that do not add value and/or cause dysfunctions

. Some of the issues that need to be tackled include

- what cannot be changed owing to legal restrictions or regulations?

- what are the basic requirements for satisfying current customers?

- what current activities are not based on concern for the customer?

- where are the invisible barriers between sections and departments that prevent change?

- as a result of any given the change, who will win and who stands to lose?

- where are you going to use the resources released by abolishing non-value adding work?

- what if our performance turns out to be much worse than we first thought? (Who gets to tell the boss?)

. Remember: when comparing yourself with an outside organisation, there needs to be an exchange of information. The organisation targeted will expect to receive, as well as provide, information.

Process of benchmarking

. This involves

- identifying the central issues surrounding the problem

- working out the base line performance levels and measures

- gathering information outside the organisation

- analysing and benchmarking the results

- changing procedures according to results

Each step always leads back to the question "what's next?"

(source: Kathleen HJ Leibfied et al, 1996)


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