Performance Management:

Measuring Performance

Benchmarking

Measuring Products, Services, and Practices Against Standards Set by Competitors or Renowned Leaders

Vadim Kotelnikov personal logo Vadim Kotelnikov

Founder, Ten3 Business e-Coach – Inspiration and Innovation unlimited!

  

"People never improve unless they look to some standard or example higher and better than themselves" – Tryon Edwards

 

Three Types of Benchmarking1

  1. Internal Benchmarking: compares common processes among diverse functions within a single company (such as how efficiently and accurately orders are produced between divisions)

  2. Competitive Benchmarking: looks at direct competitors and their processes, and measures levels of customer loyalty, customer satisfaction, and market share. Reveals what customers value most about your goods and services and how well they think your are doing in the areas that matter most to them; can also assess companies as potential candidates for mergers and acquisitions.

  3. Functional Benchmarking: focuses on the process itself, and organizations with similar processes, regardless of their industry. Reveals a plant's overall manufacturing strategy, training requirements, a plant's scrap and rework cost, a plant's warranty costs, and/or a plant's on-time delivery rate.

 

Seven Steps of the Benchmarking Process

  1. Determining what to benchmark

  2. Determining what to measure

  3. Determining whom to benchmark

  4. Collecting data

  5. Analyzing data

  6. Setting goals and action plans

  7. Monitoring the action

Why Benchmarking?

Benchmarking is the approach of continuously measuring products, services, and practices against tough standards set by competitors or renowned leaders in the field.

Balanced Business System

6Ws of Corporate Growth

8 Best Practices of Successful Companies

Managerial Communication

  • Demonstrating: Communicate with reports and benchmarks to track progress... More

 Case in Point  Using the Best Practice at GE

The Trotter Scorecard

Many GE business units employ a tool called the Trotter Matrix to check on their use of best practices. The scorecard was developed by Lloyd Trotter, who ran the Electrical Distribution and Controls side at GE. He listed six desirable attributes for each of his plants and then scored each attribute... More

 Case in Point  Benchmarking Employee Performance at GE

Jack Welch does a good job of illustrating the need for constant reassessment and employee benchmarking when he says, "If the rate of change inside an organization is less that the rate of change outside... their end is in sight". One of the tools used by Welch to ensure constant reassessment and benchmarking is the annual review undertaken by every GE executive and staff member. Once a year, every employee's performance evaluated and awarded a numerical ranking of between 1 and 5. "The implicit understanding is that both the individual and his or her score are moving up or it's time to leave the company.2"

5 Keys to Building a Great Company

By: Narayana Murthy, Founder of Infosys

  • Benchmarking: Your company has to benchmark itself on a global scale in every area including sales, production, human resources, R&D and finance. It creates an open and confident environment where first-raters recruit first-raters.... More

 

References:

  1. "Six Sigma", Mikel Harry and Richard Schroeder