As you may have heard from us a few times, benchmarking is a top tool used by leadership teams to support decision making. So, to dig into that topic, APQC surveyed over 200 professionals—across functional boundaries—to understand their benchmarking challenges.
Benchmarking plays a vital role in many organizations, ranging from developing a business case to pinpointing improvement opportunities or identifying new ways to execute a process or tackle a problem. Unfortunately, even though benchmarking helps drive better decision making, organizations typically conduct benchmarking in an ad hoc fashion.
Why Organizations Struggle With Benchmarking
According to the recent survey, there are five key challenges when it comes to effective benchmarking.
Challenge 1: Identifying the Right Benchmarks and Sources.
Leverage a process framework like APQC’s Process Classification Framework (PCF) to identify the common measures associated with identifying best fit benchmarks. Process frameworks not only outline major processes and sub-processes, they also typically include common performance measures. You can then take measurements and compare your performance with norms in trusted benchmarking data based (e.g., APQC’s Open Standards Benchmarking database) or in your own organization. If the sources of your issues are not identifiable at this point, you can still benchmark to gain a general idea of what the roots of your performance weaknesses might be and how organizations are approaching similar processes.
Challenge 2: Finding Best-Practice Organizations to Compare With.
Organizations can use an array of approaches from looking at open publications and publicized best practices to leveraging organizations that specialize in best practices with criteria testing matrix to find potential best-practice organizations.
Challenge 3: Articulating the Value Proposition for Benchmarking.
Benchmarking is the process of comparing and measuring your organization against others to gain information on philosophies, practices, and measures that help your organization take action to improve its performance. There are a variety of reasons that organizations benchmark, including:
- improving profits and effectiveness,
- accelerating and managing change,
- setting stretch goals,
- achieving breakthroughs or innovations, and
- gaining a new perspective.
Once you have defined the purpose of your benchmarking efforts, you need to develop a business case with clearly articulated desired outcomes. To ensure the business case is successful, you should outline the value in terms of performance measures that management cares about (e.g., revenue, cost, risk, or customer and employee satisfaction.) If possible, also provide substantive examples of previous benchmarking successes (internally or externally.)
Challenge 4: Guiding How to Use Benchmarks to Support Decision Making.
Organizations tend to use benchmarking to pull data points or identify gaps for tactical activities such as building a business case for specific projects. However, decision makers should also use benchmarks to provide inspiration for new ways of doing things, context for performance measures, and trends for strategic planning and project development.
For example, organizations can conduct performance benchmarking to gather data that informs decision making around the execution of a process or activity, content for establishing and tracking goals, and prioritizing improvement opportunities. Some organizations even use benchmarks as part of their performance dashboards, so decision makers always have the context of their performance in comparison to their industry.
In another example, organizations use practice benchmarking to create insights into where and how performance gaps occur and best practices that the organization can apply to other areas.
Challenge 5: Planning and Scoping Benchmarking Activities.
To successfully manage a benchmarking project (both performance and practice), organizations need to clearly articulate its scope. This includes a problem statement, processes involved, gaps, assumptions, and an overall goal. Using a clear project scope will help the benchmarking team avoid scope creep and ensure the benchmarking project is focused on a clearly defined series of processes, while ensuring measures of success are outlined at the beginning.
For more information on overcoming these challenges and optimizing your benchmarking efforts, check out our Benchmarking Basics.
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