Benchmarking tips to ensure you review ALL your business

Don’t just find out what your competitors are doing… use these tips to Benchmark Well!
A benchmarking exercise aims to identify the best internal and external practices, by compiling performance data, financial results and other metrics. Once we complete the benchmarking, the object is to figure out how the winner got to be the best and determine what we have to do to get there.
The fact is, you need to know where you stand before you can map out your strategy for future growth. The insights will identify areas of strength within your firm so you can take steps to maintain your advantages, as well as spot areas of opportunity where you can make improvements. Further, bench-marking should serve as a rallying tool to point your team toward your objectives; they gain much-needed clarity about what they need to do to take the firm to the next level.

Benchmarking Tips

Almost anything can be benchmarked so the first trick is to target just a few areas. Developing a handful (usually 5-8) of core Question Areas, on which more detailed questions are based, is a good place to start. Once you have some focus and direction, generally, the final list of discovery questions will be fairly extensive (usually 30-40). Your benchmarking efforts and the specific metrics you track will also be related to where your business is in its life-cycle.
 

1. Choose a Direction: Outcomes for Benchmarking

A comprehensive benchmarking process will include questions covering each of these areas, to ensure the maximum number of goals are achieved.
Benchmarking goals:

* Challenge “business-as-usual” methods
* Justify costs and practices
* Identify best practices
* Measure your effectiveness
* Identify your strengths and weaknesses
* Facilitate discussions about best practices between organizations
* Establish goals for further improvements
* Provide information for strategic planning
* Practice continuous improvement

However if you are a small or micro-business it is probably wiser to create a “Benchmarking Theme” to narrow down your scope.
 

2. Create a Focus: Areas for Benchmarking

Again, a comprehensive benchmarking process will consider each of the 5 key areas of your business:

* staff
* systems
* processes
* customers
* suppliers and inventory

To start you may want to focus on just one of these area, or choose a Theme such as “people” covering both staff and customers.
Or choose a spread such as “growth-oriented drivers” which would include revenue growth, number of new clients and new client acquisition methods (such as referrals from existing clients and referrals from other professionals).
Alternatively productivity is also very common; metrics such as “revenue per client-facing professional” and revenue per employee can help determine the overall levels of effectiveness and efficiency.
Don’t try to bite off more than you can chew – remember that every aspect benchmarked will create a set of activities for improving the low layers.

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3. Mix your Approaches

Metrics will give the clearest picture when a combination of both quantitative and qualitative measures are used. Include some “Soft Stuff” to enable you to learn which issues, initiatives, predictions and concerns are on people’s minds. This understanding is invaluable for discovering where cultural changes, education, or business strategy updates may be required.
Include questions that uncover things like:

* perceived barriers to growth
* customer preferences
* staff satisfaction

 

4. Leverage Buy-In

Key stakeholders are those people who are likely to have some role in implementing the lessons learned from the best-practices discovery process. Without the upfront and constant involvement of these relevant stakeholders, effective execution of improvements will become virtually impossible. Create a good spread of buy-in across your staffing levels of seniority to garner organisational wide co-operation.
 

5. Protect the Momentum

Any bench-marking process will take time and resources, from a few weeks to a few months, and ideally becomes embedded as an ongoing, cyclical, part of the business.
In conclusion do not attempt to tackle everything en-masse.
The key to a successful action plan is to focus on just one or two initiatives that the data indicates will generate the biggest return for these time and resources; address your most pressing goals!
Setting expectations too high will seriously undermine the credibility of the benchmarking effort. Complete planning applies to thinking through clearly the requirements for successfully implementing the results.
 
There is no RIGHT or WRONG outcomes when it comes to benchmarking, and while some areas or people may be doing better than others approach this as a journey of discovery enabling greater transparency.
 

Use these Benchmarking Tips to uncover where things are done well, dig down into how and why things are done well, and then apply the ‘how and why’ across the business.

 
 
PS. There is a PS this week that goes with the blog picture, apparently when you sit on this park chair, it is activated to enable you to talk to whomever is sitting on the “partnered” chair elsewhere in the park!