BENCHMARKING FOR COMPETITIVE ADVANTAGE –

STRIVING FOR WORLD CLASS PROJECT MANAGEMENT

PRACTICES
André Knipe

Acting Manager: Institute for Public Management Development, Technikon SA

P O Box 465, Paardekraal 1752
Tel. (011) 471-2357, Fax. (011) 471-3568, Email. anknipe@hotmail.com

ABSTRACT

Benchmarking for competitive advantage is critical for all organisations striving towards the
implementation of world class project management practices. In this paper, the following aspects
will be discussed with a view of assisting organisations to continuously improve the performance of
their project management practices by:
• Designing an effective benchmarking strategy
• Defining the objective of each benchmarking initiative right from the start to avoid the
unnecessary use of resources and to ensure that organisational objectives are met
• Planning the benchmarking project
• Finding the right benchmarking partner to share best practices with
• Implementing the benchmarking project
• Structuring results in a user-friendly manner to ensure that maximum strategic benefit is
achieved through benchmarking exercises

1 INTRODUCTION

No matter how good your organisation is, or how well regarded your products and/or services are,
you cannot stop improving. You cannot stand still. When you do, you really are not standing still;
you are slipping backward, because your competition is constantly improving.

One of the best ways to keep improving your organisation is to benchmark. Benchmarking is a
systematic way to identify superior products, services, processes, and practices that can be adopted
by or adapted to your organisation to reduce costs, decrease cycle times, increase reliability, cut
inventories, and provide greater satisfaction to your customers. The purpose of the workshop is to
provide you with specific information, suggestions, guidelines, and checklists to help you start,
maintain, and wrap up a benchmarking project.

H. James Harrington started benchmarking the benchmarking process in the late 1960s, and this
database has expanded rapidly. In recent times, process benchmarking has become the "in" thing to
do. This workshop has been compiled using best practices in the benchmarking process, including
award-winning benchmarking organisational approaches.

If this is your first benchmarking experience, prepare for some major surprises. In contrast to
continuous improvement gains of 10 to 20 percent per year, benchmarking can result in
improvements of up to 2000 percent in the same period! The average benchmarking process will
reduce cost, cycle time, and error rates by 20 to 60 percent. If you do not believe this, ask Xerox,
IBM and Ford Motor Company. They are all believers in, and users of, the benchmarking process.

Paper presented at African Rhythm Project Management Conference 22 – 24 April 2002, Johannesburg, South Africa
Hosted by: Project Management Institute of South Africa (PMISA): www.pmisa.org.za ISBN Number: 0-620-28853-1
Research has shown a statistical correlation between organisations that benchmark and their
performance (profit, productivity and quality). Benchmarking is one of the few management
practices that can be statistically validated as being a key driver for improvement in the best
organisations.

However, everyone agrees that benchmarking is hard work. But now you have a guide that should
greatly simplify the total process. With this information as a tool, the benchmarking process will not
run you; you will run it.

2 BACKGROUND TO BENCHMARKING

Simply meeting or beating the competition in today's competitive market will not result in the level
of improvement necessary to remain competitive. Organisations must achieve quantum
improvements in productivity, quality, reliability, and responsiveness to drive down costs and keep
customers satisfied.

If one uses the analogy of a F1 Grand Prix you may argue that we are all in the race, but most
organisations (teams) don't know, and many don't really care about, where they are positioned on
the track. They look around and see a competitor in the car behind them and take comfort in
believing they are in the lead, not realising the competitor is about to lap them! If the organisation's
pit crew (employees) gets the word to the driver (management) that the organisation is behind, what
action should the driver take? Should the organisation do one or more of the following?

• Standardise processes
• Re-engineer processes
• Retrench
• Redesign processes
• Develop new systems
• Set up service centres
• Buy new technology
• Downsize
• Centralise
• Train employees
• Decentralise
• Outsource
• Replace the CEO
• Change management
• Reorganise
• Automate
• Use more information technology
• Declare insolvency

The most common mistake organisations make is to do nothing. It is a mistake because it harms
management's credibility and often impacts on future competitiveness. But most managers have
been burned in the past by some of the improvement activities that they have accepted on a blind
leap of faith. As a result, these managers are reluctant to implement any unknown, untried concept
designed to improve the organisation's performance. This is where benchmarking steps in, with a
proven concept that defines how the organisation can close the gap between its performance and the
performance of its very best competitors.
There is always more "speed to be found in the engine". To find it, what you need to do is to look
outside your own location at other, similar processes and/or products within your own organisation,
and at outside organisations as well. Your purpose is to understand what they are doing, and to use
this combined experience and knowledge to help improve your process even further. This act of
systematically defining the best systems, processes, procedures, and practices is called
benchmarking. The benchmarking process can improve an item's (product, process, procedure,
practice or equipment) performance by as much as 60 percent in less than a year.

High

Benchmarking
Applied

Low Time

Being the very best in any area is a difficult and lonely road to travel. Once you reach your goal,
you can only go down from there. When you are the best, you are envied, undermined, frequently
criticised, and expected to outperform the competition no matter what the circumstances. Why then,
do so many people, teams, and organisations want to be recognised as the very best? The reasons
are simple. Excellence brings customer, satisfaction, recognition, higher rewards, respect, power,
and money.

However, there are some steps you need to take to become the very best:
1. Know yourself, your strengths, and your weaknesses/limitations.
2. Recognise and understand what the leading organisations do in the area in which you hope to
become the best.
3. Use the best processes available.
4. Build on these processes to create even better ones.
5. Never stop improving.

The benchmarking process helps you to know your organisation, understand its competition, define
the best processes, and integrate them into your business activities. Most organisations are faced
with the realisation that they need to improve indicators (measurements) such as return on assets,
market share, customer satisfaction, and net profits. Although these are important measurements
that should drive the business, they are resultant measurements and do not reflect the true cause of
the problem. Most managers react to negative trends in these major indicators by implementing
corrective action to re-stabilise the organisation's pattern, putting it back on track.

Seldom are the organisation's targets challenged to be sure they are correct. If the organisation was
growing at a rate of 5% a year and stops, management directs its efforts at re-establishing a 5%
growth rate, when perhaps the correct figure is a 15% growth rate. Budgets are based on last year's
budgets, plus a little extra for inflation and/or a little less for improved productivity. Maybe the
budget should be 50% of what it is right now. Managers try to improve their product development
cycle and pat themselves on the back if it drops from 18 months to 14 months, when it really should
go down to 6 months. The problem is usually threefold:
1. Management does not know how well the different parts of the organisation should be
performing.
2. Management does not think a major improvement in the organisation can be accomplished.
3. Management does not know how to bring about a major improvement in the organisation.

The answer to this dilemma is benchmarking. Benchmarking is a powerful tool that provides the
organisation with measurements of how well products, equipment, people, services, and processes
can perform. It allows the organisation to realise that it needs to break out of the old mode, and that
major improvements not only can be made but must be made if the organisation is to survive.

Benchmarking also gives the organisation a clear understanding of how other organisations are able
to perform at superior levels. It provides managers not only with aggressive, realistic goals but also
with the confidence that they can achieve these goals because they know that other organisations
are doing so. Is it any wonder then that benchmarking has become one of the world's most powerful
improvement tools?

3 FOR WHICH ORGANISATIONS DOES BENCHMARKING WORK?

Benchmarking work well for organisations classified as winners and survivors, but not for those
classified as losers. The following diagram illustrates the distribution of organisations according to
their performance. Organisations classified as losers should be very careful to use benchmarking. In
fact, best practices benchmarking van be detrimental to loser organisations, because the need to pay
attention to the basics and today's problems rather than focussing on being country class or world
class.

World
Class Winners

Country
Class

Above average, but think

they are good or very good
Survivors
Below average, but think they
are average or better

Slipping
Organisations
Losers
Troubled
Organisations

The following figure shows the steps to becoming the "best of the best". There can only be one
"best of the best" for every benchmark item. Most organisations can consider themselves a success
if they reach step 6 or 7. A few of the very best organisations will reach step 8 or 9, and that one
very special organisation will reach step 10. The benchmarking process is all about assisting
organisations to move up this "stairway to success".
 wBest of Breed
vWorld Class
uCountry Class
tWorld Class in Industry
sCountry Class in Industry
rVery Good – performing better than in the past
qSurvivor – tracking with past performance
pFair – holding its own, no profits
oPoor – has problems and is losing money
nLoser – has major problems, in or near bankruptcy

4 WHAT IS BENCHMARKING?

Benchmarking is the process of identifying, understanding and adapting outstanding practices from
within the same organisation or from other businesses to help improve performance (Cook,
1995:13).

This involves a process of comparing practices and procedures to those of the best to identify ways
in which an organisation can make improvements. Thus new standards and goals can be set which,
in turn, will help better satisfy the customer's requirements for quality, cost, product and service. In
this way, organisations can add value to their customers and distinguish themselves from their
competitors.

Benchmarking is a continuous process of comparison, projection and implementation. It involves –

• Comparing the organisation and its parts with the best organisations, regardless of the industry
or country.
• Comparing business processes with the best similar processes in any or all industries to define
best value.
• Comparing production processes with the best similar processes in any of all industries to define
best value.
• Comparing the organisation's products and services with those of the best competitors.
• Comparing different types of equipment to select the best-value equipment for the specific
application.
• Implementing defined best practices.
• Projecting future trends in best practices and proactively reacting to these trends.
• Meeting and exceeding customer expectations.

Benchmarking will help you do the following in your organisation:

• It will help the organisation learn from the experiences of others. No organisation has the time
or the resources to make all the mistakes itself.
• It will show the organisation how it is performing in comparison to the best.
• It will identify the organisation's weaknesses and strengths.
• It will help the organisation prioritise its improvement activities.
• It will provide the organisation with proven corrective action plans.
Benchmarking is the most powerful technique for gaining and maintaining competitive advantage.
Why? Because it drives best practice oriented continuous improvement through the organisation.
The perpetual goal is to achieve measurably better performance than the competitors and ensure
best value to the organisation at the same time.

Whatever it is that you decide you want or need to improve, you -

• Analyse the position you are currently in
• Find someone who is performing measurably better, and
• Learn from them what they are doing to achieve that performance
• You then adapt your practices and processes as a result of that learning and so implement
relevant changes which will effect superior performance in your organisation.

4.1 Types of Benchmarking

There are five types of benchmarking processes. They are:
• Internal benchmarking
• External competitive benchmarking
• Compatible benchmarking
• Trans-industry benchmarking
• Combined internal and external benchmarking

The following table shows the benchmarking partners' relative co-operation, the applicability of the
data collected, and the degree of breakthrough the organisation will get using the different types of
benchmarking. There is no "best" benchmarking type. Each of the different types has its own
advantages and disadvantages that need to be considered.

Type of Co-operation Relevance of Degree of

benchmarking information breakthrough
Internal High High Low
External competitive Low High Medium
Compatible Medium Medium High
Trans-industry Medium Low High
Combined internal and Medium Medium Very high
external

4.1.1 Internal benchmarking

Internal benchmarking is the starting point and should always be considered before any organisation
looks to the outside. If an organisation is just starting its benchmarking program, internal
benchmarking is an excellent way to develop the benchmarking process and train people in how to
use it. This approach is very effective in organisations that have many small business units and/or
relatively autonomous sites that are engaged in similar activities.

Internal benchmarking involves looking within the organisation to determine if other locations are
performing similar activities, and then defining the best practices observed. This type of
benchmarking is the easiest to conduct because there are no security and/or confidentiality problems
to overcome. In almost all cases, internal benchmarking should be undertaken first, since it is
inexpensive to conduct and provides detailed data. Even better, the organisation can frequently
borrow experienced personnel from other locations to help implement the future-state solutions.
4.1.2 External competitive benchmarking
External competitive benchmarking is an effective approach in industries that are very competitive,
industries whose competitors have very different management philosophies and histories, and
industries that are driven by emerging technologies and processes. The reverse engineering and
competitive shopping approaches that are part of this type of benchmarking are very important to
organisations whose output is hard or soft goods. Organisations using external competitive methods
need to be experienced in benchmarking.

Competitive benchmarking, which includes reverse engineering and competitive shopping, requires
that the organisation perform a detailed analysis of a competitor's products, services, and processes.
The most common approach is to purchase competitive products and services, then analyse them to
identify competitive advantages.

4.1.3 Compatible benchmarking

Compatible benchmarking compares the benchmark item with items produced by the world's best
organisations in a general industry category (for example, banking, insurance, health care and
electronics). In this case, the benchmarking partner's item does not compete directly for the same
customers. This type of benchmarking is used when organisations feel they have something to gain
by comparing their benchmark item with compatible items in other organisations that are engaged
in the same industry but are not direct competitors. Organisations using compatible (external
industrial) benchmarking should already be familiar with the benchmarking process.

4.1.4 Trans-industry benchmarking

Trans-industry (external generic) benchmarking extends the benchmarking process outside the
specific organisation and its industry, to involve dissimilar industries. Many business processes are
generic in application and extend across industry, for example warehousing, supplier relations,
service part logistics, advertising, customer relations and hiring. Applying the benchmarking
process to these generic items can provide meaningful insights, particularly when the information
comes from unrelated industries. Benchmarking dissimilar industries enables you to discover
innovative processes, not currently used in your particular product types, that will allow your
process to become the best of the breed.

4.1.5 Combined internal and external benchmarking

The most frequently used approach is the combination of internal and external (competitive,
compatible or trans-industry) benchmarking. This combination usually produces the best results.
The following table shows a comparison of the different benchmarking types.

Type of Cycle time for future- Benchmarking Results

benchmarking state solution (FSS) partners
Internal 3-4 months Within the Major improvements
organisation
External competitive 6-12 months None Better than the
competition
Compatible 10-14 months Same industry Creative breakthrough
Trans-industry 12-24 months All industries world Changes the rules
wide
Combined internal and 12-24 months All industries world Best in class
external wide
5 WHY BENCHMARKING IS NECESSARY?

Benchmarking helps organisations focus on the external environment and improve process
efficiency. The number, extent and pace of changes in the external environment mean that no
person or business can afford to be complacent, the increasing sophistication of marketplaces and
rise in competition means that an organisation's competitive advantage is constantly being eroded as
barriers to entry decrease.

Benchmarking promotes a climate for change by allowing employees to gain an understanding of

their performance – what they are achieving now and how they compare to others – in order that
they become aware of what they could achieve.

The two primary reasons for using the benchmarking process are setting goals and identifying how
the goals can be accomplished. There is nothing like seeing someone else achieve what was thought
to be impossible to make believers out of the most sceptical of us.

Every person, process, and organisation needs to set goals that are challenging yet attainable.
Without set goals, life becomes confusing and unrewarding. Whether it is in personal matters or
business matters, we all want to improve. No one wants to be average. In today's fast-paced,
quality-focused business world, being average is just as bad as being poor. Always remember that
50% of the people, organisations, and products are below average. Are you sure your organisation is
not below average?

By setting low goals for ourselves, we enjoy a false sense of accomplishment. When we do not
know how good we should be, improvement within our organisation is slow – because we so easily
meet the low standards we set for ourselves. As a result, many individuals, processes, and
organisations fail to mature to their full potential. Benchmarking is the antidote to this self-imposed
mediocrity, because it provides a means for setting challenging goals and attaining these goals.

Even more crucial is the fact that the benchmarking process provides a way to discover and
understand methods that can be applied to the organisation to bring about major improvements. The
unique value of the benchmarking process is that it not only tells you how good you can be, it also
tells you how to change the way you are doing business so that you can be that good.

You need to address both functions of the benchmarking process – comparative analysis (the what)
and product/system knowledge (the how). What good is defining the gap between your organisation
and your competitors or world-class organisations if you do not know how to improve your
processes to narrow the gap? Knowing that you are inferior, but not being able to improve, just
discourages everyone. A proper benchmarking process must be designed to provide both the "what"
and the "how".

5.1 Providing the "What"

The importance of measurements cannot be over-stressed. Without the ability to measure, you
cannot control your organisation. Obtaining quantitative data is absolutely essential in the pursuit of
becoming, and then staying, world class.

There is no real debate over the importance of measurements. We know that in order to operate
effectively, we must be able to measure. The question that needs to be decided is what should be
measured in the benchmarking process. Benchmarking should measure things such as:
• How fast
• How good
• How much
• Where
• When
• How long
• Size, shape, form and fit

5.2 Providing the "How"

Another real advantage of the benchmarking process is that it provides insights into how other have
become the best. This aspect focuses on discovering how world-class organisations developed their
processes and products to ensure superior performance.

At this juncture, you must look at an organisation, a product, a process, or an activity, and seek out
and analyse the reasons that make it the best of its kind. The specifics you might analyse are:
• The how-to's
• The knowledge
• The ways
• The processes
• The methods

You should then apply this knowledge to your benchmarking item, adapting and/or improving it to
meet the unique requirements of the customers, employees, and products that make up your
organisation's personality.

6 THE BENCHMARKING PROCESS

Benchmarking is an ongoing process which requires a systematic approach. There are six basic
steps to effective benchmarking.

n Identify and
understand your
processes

s Review o Agree what and

who to benchmark

r Plan and action p Collect the data

improvements

q Analyse the data

and identify gaps
Benchmarking is a process. Its overriding characteristic is the discipline it requires and imposes.
Rigorously following a logical sequence of steps enables managers to identify what is most
important to the business, where improvement is most needed and in which areas; if there is more
than one, it would have the most significant impact on performance.

The process encourages, but also demands, intimate understanding of the business before
comparisons can be made, gaps identified, or actions implemented. The goal, which is always to
achieve competitive superiority, can be realised only over the long term.

As with any process, there are inputs, several of which are 'soft' or intangible factors, and others that
are 'hard' and quantifiable; as well as activities and outputs.

INPUT
Soft Vision
Commitment
Diligence
Training
Hard People
Money
Time
OPERATIONS
Planning
Analysis
Action
Review & Recycle
OUTPUT
The Objective
Achieved

RESULTS
Efficiency
Profitability
Understanding
Commitment
Continuous
improvement

6.1 Preparing for benchmarking

There are five steps in the planning process in preparation for benchmarking:
• Establish a sponsor
• Agree objectives for the programme
• Establish a project team
• Allocate resources
• Train the team

6.2 Step 1: Identify and understand your processes

The preparing stage of benchmarking is the most critical. Until an organisation understands its
business processes it is difficult to compare them with other parts of the organisation, or with
external organisations.
• Identifying processes
• Plot your processes
• Chart the process
6.3 Step 2: What and who should be benchmarked?

There are three different benchmarking approaches:

• Strategic benchmarking: Under this approach, major portions of the organisation are
benchmarked to identify weaknesses and strengths within a specific area or functional unit. For
example, the financial function could benchmark its activities to define internal weaknesses.
The strategic benchmarking process is usually followed by a series of very specific
benchmarking activities, such as benchmarking the billing process.
• Organisational (or process) benchmarking: When the organisational approach is used,
considerable research has already been done to be sure that the benchmarking projects will
support the business plan and are directed at items that, if improved, will impact the
organisation’s competitive position. An example of this type of benchmarking is order-entry
process benchmarking.
• Statistical benchmarking: Here benchmarking partners make direct comparisons between one
measure of performance within a process and another. For example, the number of people
employed to undertake a certain task, or the revenue per employee, or the number of days
training per employee, etc. There is, however, a danger in employing this quantitative approach
only.

6.3.1 Analytical Hierarchy Process

One way to select what to benchmark is to adopt the route which Xerox and other advocate – the
Analytical Hierarchy Process (AHP). This method provides a structure for the team to select the
process to benchmark. It requires the project team to rank decision alternatives against a common
set of decision criteria. In this way emotive decisions can be avoided. The following are the five
steps in this approach:
• Step 1: Develop a set of decision criteria to evaluate alternative processes.
• Step 2: Establish through consensus the weighted value of the decision criteria.
• Step 3: Rank the processes under consideration against each of the decision criteria.
• Step 4: Make a comparison of the scores for each process.
• Step 5: Select the most appropriate alternative.

6.3.2 Who to benchmark against?

To benchmark successfully, care must be taken in the choice of partners. These are other business
units who are prepared to co-operate in the exchange of information and learning points and who
may expect reciprocal sharing from your organisation too.

There are four routes which are generally taken to establishing benchmarking partners:
• Look inside the organisation
• Gather external data in other competitive businesses
• Gather external data in the same industry or similar areas
• Establish partnerships with organisations who are considered ‘world best’ or ‘best in class’,
irrespective of their industry sector or location

The route to adopt to partnering depends on the process to be benchmarked and the type of
organisation. There are advantages and disadvantages to each route. Results in terms of
improvements in performance, however, are directly related to the degree of external perception
that is given to a benchmarking project. Change can take two forms: incremental change over time,
and step change which involves radical differences in work practices and procedures. Best practice
benchmarking brings about the highest potential improvement leaps and as such acts as a catalyst in
step change processes.
6.3.3 Selecting the best partner
Finding the best partner requires extensive research. The starting point is to ask your suppliers and
customers who they consider to be the 'best in class'. Once you begin networking within an industry
it is not surprising to find that all organisations have pockets of excellence. A key question therefore
is to decide 'To whom is the process we wish to benchmark key for survival?'. A possible starting
point for selecting partners is to hold a meeting with project team members and to brainstorm a list
of potential partners. Where possible it is useful to hold a similar meeting with customers and
suppliers. The Financial Times' Top 500 Companies list is also a useful source of information for
selecting possible partners.

The project team also needs to consider possible selection criteria such as benchmarking partner
location, language constraints and culture. The essence of the selection criteria is to identify
partners – organisations which will co-operate in full agreement with the sponsor organisation in the
exchange of information. In return the benchmarking sponsor must be willing to collaborate fully in
the exchange of information with partners during a benchmarking exercise.

Once you have chosen your benchmarking partner, it is important to verify your choice through up
to date background information so that you gain a better understanding of the culture and climate of
the partner company.

6.4 Step 3: Collect the data

Data collection is a vital part of the benchmarking process. In particular, detailed planning is
essential to ensure that attention is directed at the areas most likely to generate suitable information.
The emphasis is on practicability, not academic research.

If objectives are correctly and accurately defined, there is less likelihood of diversions or wasted
resource. The world is full of data. It is easy to become inundated with data; the skill lies in
knowing what is needed and in collecting the right, i.e. useful, information.

Before assigning tasks, therefore, it is useful to consider the answers to the following, which will
provide a working framework:
• What is the objective?
• What do we need to look for and why?
• How accurate must the data be?
• How much information do we need?
• How much time and resources can we allocate to data collection – people, budgets, and so on?

The task of identifying sources is a challenging one. Depending on the selection of potential
partners, there will be numerous internal sources or trade associations, industry journals and
analysts, surveys and company reports, and so on. The table below provides some of these typical
internal and external sources. However, there may be fewer formal channels, including sources such
as 'what people say'. Word of mouth recommendation can be invaluable, whether from friends or
media broadcasts. No one person knows all the sources or all the answers. Gathering information is
rather like piecing together a jigsaw puzzle; bits in isolation may seem meaningless, but the least
significant piece may eventually prove to be the one that completes the picture.

6.4.1 Preparing a visit to a potential benchmark partner

The visit should be the conclusive port of call for information. Unlike competitive analyses, the
essence is to comprehend how practices result in superior performance. To understand the
combination of skills, attitudes, values, pride, and culture that motivate people to produce excellent
results, it is necessary to experience them first hand. At least one visit must be made to 'get a feel'
for how things are done there.
Benchmarking is still relatively new, and it should not be assumed that the partner company will
understand the technique, the work involved, or potential benefits. Whether or not a relationship
already exists, the initial contact should be carefully thought through. Some useful questions to
consider include:
• Do we know this company?
• How do we know this company?
• With whom do we need to establish contact (title, level, etc.)?
• How can we clearly explain the purpose of the contact?
• Who is the best person in our organisation for this task?

Once this ground is been covered, and therefore an approach is made, some time should be given to
planning a visit in outline. The more carefully this is thought through, the more convincingly it will
communicate and strengthen any resulting association. Questions that need to be covered at this
stage include:
• What is the objective?
• Why did we choose this partner?
• What is in it for them?
• What process do you wish to see?
• Where do you wish to visit?
• Who is/are the key person/s?
• When is it best to visit?
• How many people will need to be involved (your team and theirs)?
• How long is the envisaged visit (hours/days)?

When these questions has been addressed, contact can be made and the visit arranged. Depending
on the degree of experience and awareness of benchmarking in the proposed partner company, it
may be relevant to arrange an initial meeting to explain what is being undertaken and why.
Although much of benchmarking is a combination of familiar tools from other performance
improvement approaches, the philosophy that underpins it is counter-cultural to the behaviour of
some traditional organisations. During the initial approach, therefore, the co-operative element
should be stressed, including any mutual benefits that could result, a readiness to share information
gathered, and the lessons to be learned.

There are no formal visiting rules, but a general code of conduct has been developed based on
maintaining honest, courteous, and respectful manner in benchmarking dealings. If there is a
guiding principle it is the golden rule:

6.5 Step 4: Analyse the data and identify the gaps

Data analysis is a critical step of the benchmarking process, because your must organise masses of
numbers and statements into coherent, usable information to direct all your future activities. The
success or failure of the benchmarking process depends on how well the reams of collected data are
translated into usable information.

The measurement data provide you with indicators of where the best practices, procedures, and
processes can be found. As you compare the data on benchmarking items against your item, you
may find that you are the best, the same, or worse. If you are the best, congratulations! If your
comparison is negative or the same, an opportunity exists to improve by studying another
organisation's or location's item.
Once data has been collected the task of the project team is to interpret the information they have
acquired and identify areas for improvement. This analysis takes two forms: review of the data, and
preparation of gap analysis.

6.5.1 Review analysis of data

Two types of data collected and used in the benchmarking process include qualitative data (word
descriptions) and quantitative data (numbers, ratios, and so on). There has been much debate over
which to collect first, and how to use each type of data. In reality, your benchmarking strategy
should be designed to collect both types of data as opportunities present themselves. A quantitative
data matrix should be developed and filled out during the data collection cycle. This matrix should
highlight the parts of the process requiring additional data and study. It is best to complete the
matrix as thoroughly as possible before doing surveys or visiting organisations.

Do not be misled by the measurement data. Just because an organisation has better overall
performance does not mean that all the activities within its process are world class. Every item has
its strong and weak points. Use all the data you have collected to search out the very best of each
part of the item being studied.

There are various tools you can use for analysing data. The tools and techniques mentioned earlier
(flow charts, fishbone diagrams, etc.) can be used with internal and external benchmarking partners
to understand better how they operate. There are also a number of other techniques, such as bar
charts, histograms, pie charts and scattergrams.

6.5.2 Gap analysis

Successful data analysis should result in a comparison being able to be made between different
performance criteria and best practice methods. Once the analysis has been completed, therefore,
the next step is to identify your own company's performance measures and to make comparison
with other benchmarking partners. In this way target levels of performance can be discussed and
agreed and a further comparison can be made between target performance and actual performance.

Where the actual standard is higher than the target performance this is termed a 'positive' gap.
Where the performance levels in place in an organisation are lower than the target performance or
best practice this is called a 'negative' gap.

The task of the project team is to quantify the size of the gap in actual versus target or best practice
performance. As well as quantifying this it is important to state the causes for differences in
performance – what is best practice versus the current in-house practices. The skill is to build on
what is good within the host organisation and to take on board improvements which can be
identified in benchmarking partners.

6.6 Step 5: Plan and action improvements

Having identified both the size of gap in performance and potential causes, the next step is to
identify and prioritise areas of change and to draw up a plan for improvements. Often benchmarking
studies identify a number of improvements that can be made. It is important to attach priorities to
these so that efforts are worthwhile. There are various methods of identifying which changes need
to be addressed:
• Prioritisation
• Cost-benefit analysis
• Significant improvement matrix
6.6.1 The change options
There are a number of tools available to plan for improvement in the process which has been
benchmarked:
• Brainstorming
• Scenario development
• Greenfield design
• Re-designed process flow

6.6.2 Preparing recommendations

In putting forward recommendations for improvement the team needs to document fully what the
improvements involve, how the changes will be implemented, and when. The team also needs to
outline who will take responsibility for implementation.

The project team should be firm in its recommendations of who should be responsible for each
stage of the implementation plan, including a timetable for review. Where possible link
improvements to individual personal objectives (CPAs) to ensure that there is more likelihood of
changes taking place.

When preparing recommendations for improvements, the project team needs to consider how its
findings will be communicated and understood by everyone throughout the organisation. Initially,
the number of people who will have knowledge of the benchmarking process will be few. This
number will probably be restricted to project team members and members of senior management.
An awareness of benchmarking and its benefits needs to be spread throughout the business.

6.6.3 Adjust goals and develop improvement plan

Incremental improvement can be achieved using the old remedies. Quantum leaps forward require
the strength of purpose to go for bold goals, which are rarely attained without discomfort or even an
amount of pain. Sometimes this is coupled with an extraordinary leap of faith.

Once the strategy is formulated, a plan to achieve it must be developed. It is easy to understand our,
and other people's, potential; drawing out the best is usually only possible through a combination of
vision – to recognise potential and patience – to nurture its development. First teach people to
climb, then ask them to scale K2!

The more ambitious the goal, the more flexible that initial target must be. The unique feature of
benchmarking is the comparison with actual 'best practice' performance. This gives a realistic
reflection of what is ultimately, if not immediately, available.

6.6.4 Implementing the plan

No amount of reading, writing, or exhortation will secure successful implementation. There are no
quick fixes or easy answers, no magic wands or secret solutions. There is only the guarantee that the
accolade of 'best' will not be achieved through one solitary action. Two factors, however, that can
help determine success are: detailed attention and attention to detail.

When all the hype is stripped away from the debate about what made Japanese firms pre-eminent,
their obsession with detail is the one common denominator that stands out. Assuming that
communications strategies have established secure foundations, attention to detail will be the one
factor that governs the outcome of any implementation plan. A question that frequently occupies the
minds of would-be benchmarkers is how an already excellent company can stay ahead if everyone
else is benchmarking against it, the implication being that their methods then become just average.
The truth is that while many seek and find best practice, few companies are sufficiently adept in
detailed, attentive follow-through to overtake the leaders. Furthermore, outstanding performers are
rarely complacent. They continue to hone their competitive edge and so increase their potential for
staying in front.

During implementation, attention should focus on:

• The process being improved.
• Progress of the improvement plan.

The general procedure for successful implementation of improvements is as follows:

Improve Implement

Communicate Document

6.7 Step 6: Review

Review is to benchmarking as breathing is to life. It is so obviously necessary that it is often taken
for granted. Many people only breath efficiently and effectively when they are made aware of bad
habits; shallow breathing, for example, can compound the effects of tiredness or stress, whereas
deep breathing helps combat them. Similarly with review. It is essential, but how many people have
a disciplined procedure?

Benchmarking studies should be monitored on a regular basis. Project teams do not have to wait
until a benchmarking study is complete. Progress checks are useful throughout the development of a
benchmarking study. Two possible types of review can take place:
• Review of the results of the benchmarking project in terms of organisational performance,
• Review of the results of the benchmarking process in terms of the learning which has been
gained and how this has been applied.

6.7.1 Keeping up to date

In order to keep benchmarking information up to date a number of benchmarking networks have
been established. Here groups of individuals representing their companies meet on a regular basis to
share information, successes and failures. If you do form a benchmarking network where possible
keep the numbers of participants in such networking groups small. Remember, however, that
attendance rates at meetings can be as low as 50%!

Strict confidentiality should be a prerequisite of membership so that participants are able to share
their experiences openly – both good and bad. Benchmarking networks are only as beneficial as the
input from their membership.

As best practices are ever changing, it is helpful to keep abreast of developments in the external
market. To this end some organisation appoint someone in a strategic position who can take an
overview of external developments and related these back to the organisation. This type of
benchmarking on a strategic level can help the business address longer term issues of competitive
advantage.
7 LESSONS FROM LEADING-EDGE BENCHMARKING COMPANIES

What makes the management of benchmarking studies so difficult? There are a number of key
success criteria which have been identified by benchmarking practitioners:
• Link benchmarking to the organisation's vision.
• Set measurable objectives.
• Gain senior management commitment.
• Create a powerful team.
• Focus on the right issues.
• Focus on the right partners.
• Be willing to change.

8 BENCHMARKING RULES OF THE ROAD

As with any other process, benchmarking has specific rules that must be followed to get the best
results. Designing the organisation's benchmarking process and implementation strategy to ensure
that it will adhere to these rules will save you a great deal of time and trouble. The following is a list
of benchmarking rules of the road:
• Get top management's commitment to the benchmarking process first.
• Design your benchmarking process before you start to benchmark.
• Start with a few critical items.
• Define a specific code of ethics and be sure that everyone engaged in the benchmarking process
is trained on its content and intent.
• Train all the employees who will be actively engaged in the benchmarking process in the
benchmarking methodology and the appropriate supporting tools.
• Characterise your benchmark item first.
• Never ask a benchmarking partner for information that you would not share with that partner.
Be very careful not to obtain confidential information from your benchmarking partner, even if
you would be willing to share that information with the partner.
• Tell your benchmarking partner up front how the data will be used.
• Combine inputs from all your benchmarking partners to define a number of potential future-
state solutions. Then select the best-value solution for implementation. This is not necessarily
the one that results in the item's best performance.
• Be satisfied not to be the best. Stop when additional cost does not improve your competitive
position.
• Start managing the benchmark item's change process the first week that the benchmarking item
team is formed.
• Do not try to collect all the data that is out there. If you do try, you will never get beyond the
data collection stage.
• Don't copy; create. Analyse what the benchmarking item team has collected so that the data can
be transformed into information. Then be creative with the use of this information to design the
future-state solution.
• No organisation is the best at everything it does. Find the right benchmarking partner for each
item that is benchmarked.
• Keep focused on implementation of the future-state solution. Remember, the very best plan is
useless if it does not get implemented. Don't analyse the benchmarking process to death.
• Make line managers responsible for benchmarking, and measure their performance.
• Establish a reward-and-recognition system that supports the desired benchmarking behaviours.
André Knipe, Acting Manager: Institute for Public Management Development, Technikon SA

André Knipe graduated from the University of Stellenbosch with a B.Admin. and B.Admin.(Hon)
degree, being a full-time student for the period 1987 to 1990.

He completed his national service in the SA Air Force in December 1991. In January 1992 he was
appointed as lecturer in Public Administration at Technikon Southern Africa and was promoted to
senior lecturer in 1998. He enrolled for a Masters degree in Public and Development Management,
titled "A Development Management model for Local Authorities in South Africa", at the University
of Stellenbosch during 1995 and completed the degree successfully by the end of 1996.

He has published extensively and presented numerous papers on issues relating to public
management, development management and project management. He has extensive experience in
the application of Strategic Management and Project Management for institutions such as the
Pretoria City Council, Departments of Welfare and Education and various other private and public
institutions. André has facilitated courses for, amongst others, the Wits Business School, the Fort
Hare Institute for Government, and the Universities of Stellenbosch and Pretoria.

He has a keen interest in MBP, benchmarking for international best practice, and human resource
management functions, skills and applications. The importance of enhanced service delivery and
customer care through the application of project management principles in the public and private
sectors is another primary interest.