Benchmarking and dashboards are tools that are used to help improve key business processes. Any business process can be benchmarked. Yet many privately-held businesses are unsure where to even begin, particularly since their financial information is not public.
Let’s answer a few commonly asked questions:
What is benchmarking?
Put simply, benchmarking is the process of comparing one set of measurements of a process, product, or service to those of another organization.
What will you learn from benchmarking?
The main goal of benchmarking is to find better ways to do what you are currently doing, so you can move from where you are NOW to where you WANT to be. By going through this process, you can identify, understand, and adapt outstanding practices from within your organization or from other businesses to help improve your performance.
Who or what should you benchmark against?
One of the common mistakes of benchmarking is to only look at a specific industry group or your own backyard. For example, a company like Toyota will have similar human resource processes for recruitment and training as many types of firms, not just other car manufacturers. So look at benchmarking your business against companies that are well known for being high performers in the area you are benchmarking.
Benchmarking expands well beyond just financial data. You can also utilize benchmarks for organizational improvement, which include:
- Changing the culture of an organization from inward-looking to outward-facing
- Improving the quality and quantity of performance information
- Making it easier to monitor your organization’s performance, thereby improving accountability
What are some of the challenges with benchmarking?
We often see business owners and executives who are so busy putting out fires every day that they don’t have the time or ability to evaluate their key processes in a quantifiable and measurable manner. Here are some other challenges we have seen clients grappling with:
- After having measured key process capabilities, what measures should we use to benchmark against?
- How should we change our management communications and expectations in light of newly agreed-upon benchmark goals?
- What changes to roles and responsibilities should be made to increase the odds of achieving our benchmarking targets?
What are you doing about benchmarking and dashboards?
Take some time to think about this question as it relates to your business. If you haven’t effectively implemented benchmarks and dashboards within your company, you are not alone—but help is available.