Benchmarking is the most talked about, under-utilized tool in corporate history. When it is used properly, it improves productivity, efficiency, effectiveness, and profitability. It doesn’t require special technology; a spreadsheet will work fine. Of course, you can make the information capture process more efficient with software, but the initial setup is best when it is done manually.
Most of the questions I receive when speaking at conferences are framed like this: “Our ______________ (fill in the blank benchmark) is _______. How does this compare with your clients or the industry?” The real answer is always unsatisfactory “How your benchmarks compare with my clients or the industry doesn’t have any value for your company. How do your benchmarks this month compare to last month or last year? Are you trending up or down?”
Benchmarking is a way to keep score. This is probably why most people want to see how they rate next to the competition. But there is a problem when you compare your marks to another company. Their playing field is different from yours. Imagine two boys comparing their favorite teams. One declares that his team won their last game and scored 10 points. The other responds that his team won also, but they scored 17 points. Which team is best?
It depends on many things. Who was the competition? What were the playing conditions? Were they playing with their best players? And, are we talking about the same sport? A score of 10 in a hockey game is impressive while 17 in a football game is not so unusual.
Comparing your company to your competition is like comparing hockey to football. They are both rough sports, but the games are very different. If you have to look at your competitions benchmarks, watch their market share. It will start decreasing when your benchmarking program becomes effective.