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Process Improvement: Creating Benchmarks

By Gary Naples

Great boxing champions don’t become winners without carefully studying their opponents. The same goes for great business owners. To maximize your business potential, always keep an eye on the competition.

During a break in a training session I was conducting, I was asked by an attendee, “What is the best way to measure a business’s performance against others in order to learn from their successes?” Specifically, he wanted to benchmark some of his processes against high-performing operations he was already somewhat familiar with. As a result of the benchmarks, his goal was to target areas for improvement. However, he was at a loss as how to proceed.

This is not an uncommon dilemma for many. A sound method for comparing your performance and processes to other operations, even your competition, eases the task of refining your own. Process improvement must be a continuous endeavor. Why reinvent the wheel?
Here is a method I developed and introduced in my book Beyond the Numbers: Managing the Assets of an Automobile Parts Business. I’ve used it myself and it’s worked well for me. I’ve also had positive feedback from others who have tried it.

• Outcome or performance: This is what you hope to gain by your decision to benchmark. You either have a problem or problems for which you want solutions or you want to compare your performance to industry standards or the performance of industry leaders.

• Data gathering: During this stage, you search for comparative organization(s) that will provide the best possible benchmarks. The businesses should be either within or outside your industry and they should be top performers and leaders.

• Analysis: In this stage, you study the organization(s) you have selected to determine what they do differently to stand out among others. Also, you will analyze your own methods and practices and compare them to the benchmarks. Depending on the extent of your program, this stage can be very time-consuming. However, those managers who invest the time and effort generally reap favorable returns.

• Implementation: This is the most difficult stage. You must decide what specific actions to take that will allow you meet or exceed the benchmark. Benchmarking will assist you only in recognizing symptoms and areas of weakness. It is the responsibility of you and/or your company to determine the corrective actions necessary. Unfortunately, this is the point at which failure is most prevalent. Successfully implementing change requires all of the following elements:
• Communication: After benchmarking, the information is communicated to any employees involved in the implementation of the new strategy.

• Establishment of goals: Decide what changes will be necessary, in accordance with the benchmark research, to reach your newly established goals.

• Creation and implementation of detailed action plans: Specific action plans are developed for each objective. Obtaining buy-in from every affected person in the organization is important. Depending on the plan of action, full organizational support may be required. Action plans must also include completion deadlines and assigned accountability at every level of the plan.

• Monitoring progress: Based on the new level of performance, data is collected and reviewed. Any necessary adjustments are made to methods and procedures if established goals are not being met.

You can initiate a planned and logical benchmarking program by clicking here and using the questions as your guide. The questions correlate to the four stages previously outlined and is further illustrated by the accompanying diagram.

In some cases the questions may seem relatively easy to answer, but they require in-depth thinking and the ability to effectively analyze the needs of your operation. The outcome depends on how well you know your business’s processes, procedures, and practices to the minutest detail.

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