What are the benefits of goal setting
BenchmarkingAdvantages and goals
In addition to benchmarking in the original sense, i.e. the analysis of best-in-class companies, metric benchmarking in particular is becoming increasingly important. The key figures in a benchmarking study are therefore a central aspect. Properly presented, they are the building block for analyzes, recommendations and improvement of activities.
Benchmarking is the process of comparing one's own company, products or processes with the benchmark and deriving measures for improvement. Often only selected processes and not the entire company are compared.
A benchmark is a reference or comparative value (as a company as a whole or as a selected process) with which companies, products or processes can be compared. The benchmark is considered to be the best in its industry or in comparison with all others.
Little effort to collect data when benchmarking with key figures
The first step in developing a solid metric base is a clear definition. Without clear definitions of the key figures, the participants have different standards, which makes an exact comparison impossible. As soon as the key figures are formed, the data is collected and analyzed. The so-called gap analysis between the individual participants and a selected standard (“best in class”) is often used for this.
The advantages of benchmarking with key figures: In addition to the relatively uncomplicated procurement of information through benchmarking databases, there is usually little effort to collect and analyze. In order for the results of benchmarking projects to meet the high expectations, attention must be paid to the informative value of a comparative analysis. This depends essentially on the quality of the benchmarking database used for the comparative analyzes.
Studies show that almost 50 percent of all benchmarking projects fail because of the inadequate quality of the data. At the same time, this is where the greatest potential for improvement exists. This could be remedied by increasing the use of benchmarking databases with comparable data sets.
Benchmarking of individual sub-areas in the company
Good benchmarking databases make it possible to carry out national and international comparative analyzes based on key figures. Individual areas in the company such as production, purchasing, logistics, product development or personnel management can also be analyzed. Special direct comparisons with competing companies of the client are advantageous. The competitor then has to agree to the comparison.
Industry-independent analyzes, on the other hand, make it clear what innovation opportunities there are and how you can differentiate yourself from the competition. In addition, it can make sense to compare individual operational functions with specialists from outside the industry, for example the logistics of a mass manufacturer with a logistics company.
Formulate the goals of the benchmarking in concrete terms
The goal of benchmarking should match the company's strategic goals. The sub-goals should also be formulated as specifically as possible. Example: We want to optimize our product development processes. Or: The effectiveness of marketing should be increased. After the objective has been defined and the areas examined have been determined, the relevant key figures are recorded by the client and subjected to a comprehensive validation process.
This validation process is necessary to achieve the highest possible accuracy of the data. The collected data is entered anonymously into the database and can - depending on the task and objective - be compared with companies from all countries. The selection of suitable benchmarking partners plays an important role. The scores are compared to the industry average and the best in the industry.
In addition to the industry comparison, it is possible to compare the client's values with the best in a geographic region, a certain company size, a specified sales area, the number of employees and the volume of the respective transactions.
Benchmarking increases employee motivation
The result report typically includes a comprehensive presentation of strengths and weaknesses as well as the potential for improvement. The comparisons with the average and the best in the industry show which optimization steps should be taken in order to make your own company even more successful.
The "quasi-competition" and the comparative analyzes also increase the employees' willingness to perform and change. The motivation of managers and employees to be better than competitors or industry leaders spurs ambition. At the same time, the comparison and the associated transparency of one's own weak points increase the urgency, which is essential for change projects. The comparison with the best supports the company in setting current standards for the competition.
The aim is a continuous improvement process
Experience shows that especially companies that operate globally and have to assert themselves against fierce competition regularly carry out comparative analyzes. The aim is to initiate and establish a continuous improvement process (CIP) that is necessary to maintain one's own competitiveness over the long term. Medium-sized companies also benefit from comparative analyzes, as the results show them which processes and methods need to be improved and how they can better exploit innovation potential.
Studies show that, for example, comparisons from outside the industry can achieve extraordinary improvements, as these comparisons go beyond intra-industry paradigms. Benchmarking therefore pays off for the client in a very short time. The special methodology of benchmarking projects allows them to be integrated into existing management processes and change projects. In addition, the benchmarks support methods such as balanced scorecard (BSC), process management, supply chain management, lean management or Six Sigma.
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