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Measuring Performance

Benchmarking

Vadim Kotelnikov, founder of 1000ventures - personal logo VadiK

Inventor Business e-Coach

Author Innoball

Founder Innompic Games icon

 
 

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

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

  

Performance-based Company

Examples

Performance Management

Benefits

  

 
Naryana Murthy advice

Your company has to benchmark itself on a global scale in every area including sales, production, human resources, R&D and finance.

Naryana Murhty

 
 

"Don't rest on your laurels. Constantly evaluate your competition and benchmark yourself against them."

~ Meir Liraz

  

10 Keys To Building a Successful High-Growth Business

  

 

 
 

The 3Ss of great performance are Stretch, Synergy, and Speed.

The 3Cs of poor performance are Copying, Complacency and Comfort.

   3Ss of Great Performance, 3Cs of underperfomance benchmarking

 

 
 

 

  

Measuring Performance

Good KPIs

  

 

 

 

 

 

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

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.

 Case in Point  Benchmarking Employee Performance at GE

Jack Welch illustrated the need for constant reassessment and employee benchmarking when he said, "If the rate of change inside an organization is less than 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. If the score of an employee is not moving up then something should be improved.

 

References:

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