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ARCHIVED - Quality Service - Benchmarking and Best Practices: An Update (Guide X)


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2. Benchmarking

"Benchmarking is the practice of being humble enough to admit that someone else is better at something and wise enough to try and learn how to match and even surpass them at it."[3]

Benchmarking In The Federal Public Service

Formal benchmarking is the continuous, systematic process of measuring and assessing products, services and practices of recognized leaders in the field to determine the extent to which they might be adapted to achieve superior performance. Some features of formal benchmarking, namely determining a strategic orientation, goal setting, performance measurement and best practices sharing, are integral to how federal departments, agencies and Crown corporations have operated for years. It is a legacy to build on. The challenge is to take advantage of the tremendous potential of systematically benchmarking the best practices of public service and industry leaders and to incorporate them into business strategies, management practices, work processes and services.

Some North American private and public organizations have adopted benchmarking and have realized significant improvements in processes, quality service, customer satisfaction, employee performance and reduced costs by learning from others and acting on the knowledge they have gained through the process.

Two Levels Of Benchmarking

Strategic Benchmarking is using best practices to develop corporate, program, product strategies and results. It includes:

  • the strategic study of the characteristics of effective continuous improvement strategies of public and private organizations, of change processes, of leadership styles, etc. to establish a vision, strategies, leadership competencies, client benefit results;
  • specific studies of the strategies and approaches of high performing organizations;
  • studies of trends and orientations as guides to action, e.g., technological trends.

Operational Benchmarking is assessing and implementing the best practices of industry or public service leaders to improve processes to the extent possible to meet organizational goals. It includes:

  • creating awareness and support at the senior executive level, and establishing dedicated benchmarking resources;
  • building benchmarking into business planning and continuous improvement;
  • establishing operational performance levels to sustain competitive advantage;
  • using a systematic, multi-step benchmarking process to improve business and work processes, and internal and external customer satisfaction.

Performance Measurement

Benchmarking is an integral component of a performance management process, where the relative comparisons to the benchmarks become some of the indicators for performance. It involves the establishment of service standards, performance levels, performance indicators, baseline measurements or benchmarks as comparisons against which to measure future performance, within or outside the organization, to sustain competitive advantage and to encourage or force improvement.

Performance measurement may include:

  • a qualitative or quantitative comparison of performance with other parts of an organization or against other organizations, and
  • time lapse data which indicate improvement or deterioration (e.g. year over year).

Once internal benchmarks have been determined, organizations involved in benchmarking then seek out industry or public service leaders to make comparisons and to implement best practices.

Finding A Benchmarking Partner Or Partners

When looking for industry or public service leaders to partner with, an organization will make one of four types of comparisons; it will make an internal comparison, benchmark with a competitor, benchmark along functional lines, or benchmark generically:

  • Internal benchmarking

    Comparisons within the Public Service e.g., Revenue Canada's audit process compared to the Auditor General's process

  • Benchmark with a competitor

    Comparisons between direct competitors e.g., Ford's automobile design process compared to General Motor's process

  • Functional benchmarking

    Comparisons between functions inside and outside the Public Service e.g., AECL's library function compared to Weyerhaeuser's library function

  • Generic benchmarking

    Comparisons to "unrelated" organizations known for innovation e.g., Xerox benchmarked L. L. Bean's product distribution process

The Steps To Benchmarking

The American Society of Quality Control (which set up the International Benchmarking Clearinghouse) and many consulting firms offer training in benchmarking models, tools and techniques. Xerox, Price Waterhouse, McKinsey and AT&T are among many firms which have spun off benchmarking groups as a result of their own experience. While the models may vary in their design and emphasis, they are all fairly similar.

Generic Steps to Benchmarking:

  1. Identify management practice, work process or result to be improved.
  2. Analyze your practice, flowchart process or identify results indicators.
  3. Measure your own performance.
  4. Identify benchmarking partners.
  5. Determine data collection method.
  6. Collect data.
  7. Determine performance gap.
  8. Project future performance.
  9. Develop action plan.
  10. Implement action plan.
  11. Monitor results.
  12. Recalibrate benchmarks (Repeat process ...).

Possible Costs Of A Benchmarking Study[4]

  • Benchmarking Team (5-7 people, one day per week)
  • Study Duration (3-12 months average, 6 months is typical)
  • $35-70,000 is typical (excluding implementation)