What benchmarking is

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(No Transcript)
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What benchmarking is

• Gaining a thorough understanding of your own
  situation first
• Monitoring progress and reviewing results
• Identifying gaps in performance
• Ongoing management process that requires constant
  updating
• Objective providing evidence for decision making
• About finding new ways of doing things
• Regularly comparing performance with the best
  performers that can be found

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What benchmarking is not

• Just competitive analysis
• About league tables
• A one off exercise or bandaid approach
• Copying or catching up
• Spying or espionage
• Industrial tourism
• A fad but a winning business strategy
• A labour cost cutting exercise

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Definition

• Benchmarking is the search for industry best
  practice that leads to superior performance
• - Robert Camp
• The systematic process of comparing an
  organizations products, services and practices
  against those of competitor organizations or
  other industry leaders to determine what it is
  they do that allows them to achieve high levels
  of performance.
• - Society for Human Resources Management

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Goals of our session today

• Introduction to benchmarking
• Types of benchmarking
• How to get started
• The benchmarking cycle
• The phases of benchmarking
• Tips and traps
• If you want to find out more

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Local Government Benchmarking

• Six lead councils, 25 councils throughout
  Australia in 1994
• Seven services tested
• Residential building approvals
• Library lending
• Rates notification and collection
• Payroll
• Fleet maintenance
• Unsealed roads
• Home Care

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Local Government Benchmarking

• Phases Mobilisation, Benchmark subject
  definition, data collection, benchmarking aids
• Value index comprising customer satisfaction,
  quality, response time and unit cost
• Outcomes
• Pilot study
• Practical Guide

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LGPro Benchmarking (2002)

• Developed from previous study
• Used A Practical Guide Benchmarking for Local
  Government
• Eight services
• 31 Victorian councils involved
• Over 100 people from local councils participated

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Understanding environmental performance report
(June 2007)

• Victorian Commissioner for Environmental
  Sustainability benchmarking exercise
• Environmental performance across three sectors
  government, private and community
• Energy, water consumption, office paper, waste,
  transport energy and greenhouse gas emissions
• Baseline for further benchmarking exercises
• Ongoing review of performance against peers and
  competitors

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VPS Shared Services

• Purpose
• To assess the suitability of the delivery of
  corporate processes through a shared services
  model.
• Process
• Baseline and benchmark corporate processes
• Data collection over 4 weeks in September/October
  2007
• Analysis in December 2007
• Preparation of strategic plan for Shared Services
  across VPS early 2008

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VPS Shared Services

• Accommodation facilities management
• Library management
• Finance
• Asset management
• Human resources
• Fleet management

• Contact centres
• Licensing and permits
• Procurement
• ICT network, server operations, desktop
  services, applications development, maintenance
  and support services

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Demystifying some terms

• best practice or best-in-class
• Not essential to find the absolute best
  practice
• Good or superior practice is sufficient
• 2. apples with apples
• Every organisation is different even in the same
  industry
• Use a standardised approach for performance
  reporting to overcome this
• Clearinghouse
• Victorian Commissioner for Environmental
  Sustainability benchmarking exercise

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Origins of benchmarking

• 1907 BHP allegedly benchmarked steelmaking
  processes with other steel makers in Europe
• In 1979 Xerox in USA compared its products with
  Fuji-Xerox in Japan
• In the early 1980s Xerox established a
  benchmarking program to learn
• logistics lessons from a mail order sporting
  goods business
• how to use self-directed warehouse teams from a
  photographic film manufacturer

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Benchmarks vs Benchmarking

• Benchmarking is about comparing processes
• Benchmarks are yardsticks
• Benchmarks give you a measure of performance gaps
  for comparisons
• Benchmarks will not provide you with the reasons
  for superior performance

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Principles of benchmarking

• Scoping know what you want to improve
• Identifying good practices in those areas
• Learning from other organisations that
  demonstrate good practices. Ask the questions
  
• What are they achieving? and
• How are they achieving it?
• Adapting the key insights and incorporating the
  learning into your own process

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Where and when to benchmark

• Get answers to these questions before you start
  benchmarking
• Do you have the commitment of your Secretary and
  Executive Directors?
• Is your organisation prepared to commit the
  necessary resources in people and time?
• Are your employees sufficiently multi-skilled to
  cover for staff involved in a benchmarking
  exercise?
• Are your employees experienced team players?

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Where and when to benchmark contd. .

• Does your team have the knowledge, tools and
  skills to analyse business processes?
• Have staff received training in benchmarking?
• Are people in your organisation willing to make
  changes?
• Do not conduct a benchmarking study when your
  organisation is restructuring

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Why benchmark?

• Provides realistic and achievable targets
• Challenges operational complacency
• Creates an atmosphere conducive to continuous
  improvement
• Helps to identify weak areas
• Employees can visualise the improvement which can
  motivate change
• Confirms the need for change

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Benefits of benchmarking

• Gives you a better understanding of your current
  position
• Develops realistic stretch goals
• Leads to improved performance measurement
• Creates a positive attitude towards change
• Encourages people to work in partnership with
  others
• Enhances productivity

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Types of benchmarking

• Internal
• Look at your own internal processes
• External
• Analyse outside organisations that are known to
  be best-in-class
• Types of external benchmarking
• Process Same process
• Industry or Functional Those delivering
  comparable processes or in comparable
  circumstances
• Competitive Competitors or those you often
  compare yourself with
• Strategic Those with successful strategies for
  delivering similar services

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Internal

• Good starting point
• Advantages
• Access to sensitive information and data is
  easier
• Standardised data readily available
• Fastest and cheapest
• Disadvantages
• Real innovation may be lacking
• Best-in-class more likely to be found through
  external benchmarking
• Example
• ABS Auto services, Melbourne
• Local government traffic management study

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Process

• Focus on excellent work processes wherever they
  exist, in different organisations or industries
• Advantages
• May reveal best-in-class practices
• Achieve improvements in key processes to obtain
  quick benefits
• Disadvantages
• Difficult
• Requires lateral thinking
• Requires senior management commitment
• Expensive
• Examples
• CSR concrete VS Dominos Pizza
• Pillow manufacturer VS Breakfast cereal company

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Industry or Functional

• Benchmarking against leaders in an industry or
  in a function, such as HR, finance
• Advantages
• Easy to obtain willing partners
• Can lead to innovation and dramatic improvements
• Disadvantages
• Cost
• Most popular companies for benchmarking may limit
  access
• Examples
• Local government HR study recruitment, training,
  induction
• Licensing license applications, renewals,
  enforcement

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Competitive

• Benchmarking against your direct competitors in
  the same market
• Use trade associations or third parties to
  protect confidentiality (clearinghouses)
• Advantages
• Directly comparable with your own organisations
  processes, products and services
• Disadvantages
• Difficult to obtain benchmarking data
• You must abide by trade practices laws
• Examples (hypothetical)
• Coca Cola VS Pepsi
• Ford VS Holden

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Strategic

• Realign business strategies that have become
  inappropriate
• Useful when businesses need to improve overall
  performance
• Used to consider high level aspects such as
• Core competencies
• Developing new products and services
• Improving capability to deal with changing
  external environment
• Disadvantages
• Changes may take a long time to implement and
  materialise
• Benchmarking Partners
• Those with successful strategies for delivering
  similar services
• National Biodiversity Strategy benchmarking study
  (Australia)

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How to get started

• Select a process to benchmark
• Select a benchmarking team
• Train the benchmarking team
• Understand your own processes first
• Establish a baseline to check trends and wins

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The Benchmarking Cycle
Adapted from Local Government Practical Guide,
1995 and APQCs Passport to Success Series
Benchmarking, 2001
d from Benchmarking for Local Government, 1995
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PLAN
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1. Identify services to benchmark

• What activities or services would benefit most
  from benchmarking?
• Conduct a management systems evaluation
• Conduct an organisational self assessment
• Benchmarking can be applied to a number of
  activities and services

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2. Establish benchmarking team

• Involve staff who deliver the service they are
  local experts
• Form a small team of key staff to examine the
  process and do the benchmarking
• Involve support staff eg Finance to help with
  cost analysis
• Provide training in benchmarking and process
  analysis

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The benchmarking team

• Senior Responsible Owner
• Sets the initial scope of the project
• Obtains the necessary approvals
• Builds and maintains commitment
• Program Team
• Performs detailed analysis of a business process
• Helps to identify partners
• Analyses findings and designs improvement
  projects
• Visit Team
• Formed from members of Program Team
• Conducts the benchmarking visit

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Knowledge and skills needed

• Knowledge of the benchmarking process
• Knowledge in the process/service area of interest
• Skills in data collection and analysis
• Skills in questionnaire design and analysis
• Interpersonal and communication skills

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COLLECT
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3. Document current processes

• Define the scope of the process to be
  benchmarked. Use a process map
• Analyse the existing process steps
• Measure existing performance
• Establish a baseline for all performance measures

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Benchmarking Tools

• Process mapping or flow charting
• Force Field analysis
• Fishbone diagram
• Root Cause Analysis
• Pareto chart
• Six hat thinking
• Lateral thinking
• Refer to VPS CIN web site

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4. Establish benchmarking partners

• Research publicly available sources
• Contact professional organisations
• Network
• Identify any organisations that have similar
  processes
• Identify any known best practice organisations

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Partners Activities or Processes

• Activity or Process
• Management of short stay accommodation
• Fast turnaround of transport vehicles, eg
  aircraft
• Security of information and customer details
• Customer service and customer satisfaction
• Billing and collections

• Sectors or Industries
• Hotel, hospital, tourist industry
• Formula One car racing pit stop
• ATO, Medicare, banking and building societies
• McDonalds, Virgin airlines, department stores
• Utilities, Rates notices

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The site visit before

• Do as much desk research as possible
• Assign roles to each member of the visit team
  note taker, observer, interviewer
• Prepare a structure for the visit
• Send questionnaire to partner before visit

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The site visit during

• Ask questions that you would be willing to answer
  about your own organisation
• Be prepared to offer equivalent information in
  return for information you receive
• Offer a reciprocal visit and tour
• Document thoughts for later action

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The site visit after

• Debrief as soon as possible after the visit
• Write a thank you letter and send a copy of the
  visit report
• Follow through on all commitments
• Compare current operations with findings
• Identify opportunities for improvement
• Develop an action plan

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ANALYSE
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5. Analyse differences

• Set new performance targets
• Can you eliminate or simplify parts of your
  process?
• How can waste and delays be minimised or
  eliminated?
• Are there barriers to improvements?
• Can any of your activities be performed faster,
  cheaper or to a better quality?

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6. Identify best practices

• Are there any methods that would work well for
  you?
• What impact would your changes have on others?
• Develop a communications plan
• Ensure all your stakeholders are consulted

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ADAPT
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7. Initiate improvement actions

• Involve the team when making changes
• Develop an implementation strategy
• Engage key stakeholders
• Link changes to the corporate strategy
• Document changes
• Implement training

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8. Monitor improvement, re-benchmark

• Monitor implementation
• Re-benchmark the service or process periodically
• Are there other organisations to benchmark?
• How can the benchmarking process be improved?
• Adopt benchmarking across the organisation

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Benchmarking Pitfalls

• Own process is not understood well enough
• No champion or senior management ownership
• Insufficient skills and expertise
• Poor planning
• Culture resistant to change
• Failure to involve process owner a change
  imposed is a change opposed

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Tips for successful benchmarking

• Set clear objectives
• Allocate sufficient resources
• Train appropriately
• Know your own processes first before approaching
  others
• Look for best practices not best numbers

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Exploding the myths

• How will you answer the sceptics?
• Benchmarking is too expensive
• Management does not understand/will not support
• You can benchmark only with the best
• Partners do not exist outside my industry
• Benchmarking is only for the top end of town

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Biggest problems with implementation

• Acceptance of results by senior executives
• Lack of human resources to implement changes
• Lack of financial resources to implement changes
• Communicating results
• Source The Benchmarking Exchange Survey, Quality
  Progress, August 2003

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In 50 words or less

• The Internet has facilitated benchmarking and
  revolutionised process improvement projects
• Getting senior executive commitment is critical
• Communicating with your stakeholders throughout
  the benchmarking project is an important step
• Process improvement is continuous and can
  generate significant returns
• Source Best Practices in Process Improvement,
  Tom Dolan, Quality Progress, August 2003

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Code of Conduct

• International Benchmarking Code of Conduct
  ensures that each benchmarking study is conducted
  legally and ethically in an atmosphere of trust
  and cooperation.
• Preparation
• Do your homework be prepared from the start
• Understand the process and the organisation you
  plan to benchmark
• Use data for making improvements

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Code of Conduct contd.

• Exchange
• Establish ground rules up front to avoid later
  misunderstandings
• Be willing to exchange the same level of
  information that you seek
• Follow the chain of command seek permission
  from senior management

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Code of Conduct contd

• Legality
• Avoid discussing sensitive data
• Adhere to competition guidelines
• If you agree to share proprietary information,
  make sure all parties sign a non disclosure
  agreement
• Confidentiality
• Treat any benchmarking exchange confidentially
  unless you get your partners written permission,
  do not share partners names with others as per
  Privacy laws
• Treat the other person(s) as the other person(s)
  would want to be treated

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Where to next?

• More Nuts and Bolts of Benchmarking workshops
• Establish VPS Benchmarking Community of Interest
• Form Benchmarking Teams across VPS and conduct
  benchmarking projects simultaneously
• VPS Clearinghouse in a central agency?

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If you want to find out more

• American Productivity Quality Center (1993) The
  Benchmarking Management Guide, Productivity
  Press, Portland.
• American Productivity Quality Center (2001)
  Benchmarking A Guide for your journey to
  best-practice processes, APQCs Passport to
  Success Series, Houston.
• Bogan, C. E. and English, M.J. (1994)
  Benchmarking for best practices winning through
  innovative adaptation, McGraw-Hill, New York.
• Camp, R. C. (1989) Benchmarking The search for
  industry best practices that lead to superior
  performance, ASQC Quality Press, Milwaukee.

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If you want to find out more

• Commonwealth of Australia (2001) A Practical
  Guide Benchmarking for local government, AGPS,
  Melbourne.
• Evans, A., (1994) Benchmarking Taking Your
  Organization Towards Best Practice, The Business
  Library, Melbourne.
• Keelhey, P., Medline, S. M. and MacBride, S. A.
  (1996) Benchmarking for best practices in the
  public sector achieving performance
  breakthroughs in federal, state, and local
  agencies, Jossey-Bass, San Francisco.
• McNair, C. J. and Leibfried, K. H. J. (1992)
  Benchmarking A Tool for Continuous Improvement,
  Harpers Business, New York.

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If you want to find out more

• Patterson, J. G. (2004) Benchmarking Basics
  Looking for a better way, Viva Books, New Delhi.
• Spendolini, M. J. (1992) The benchmarking book,
  The American Management Association, New York.
• Williams, S. E. (1994) Benchmarking in Local
  Government, Alpha Publications, Melbourne.
• Williams, S. E. (1998) National Australian Local
  Government Benchmarking Project, Robert C Camp,
  (editor), Global Cases in Benchmarking Best
  Practices From Organizations Around the World,
  ASQ Quality Press, Milwaukie.

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Follow up

• CONTACT Sue Williams
• Strategic Evaluation Manager
• Department of Sustainability and Environment
• Level 13, 8 Nicholson Street
• East Melbourne VIC 3002
• t 03 9637 8754
• f 03 9637 9558
• e susan.williams_at_dse.vic.gov.au