How good are you?

I FIRST LEARNED AN APPROACH TO benchmarking on a mountaintop in New Mexico years before I began my work career. Back then, I knew nothing about operational excellence or process improvement, but I was quite happy to see that golden, circular piece of metal on the top of Mount Baldy after climbing to a height of more than 12,000 feet.

Benchmarking is not as popular as it used to be, and we appear to take this necessary improvement process for granted. Most organizations seem content merely to benchmark internally from department to department. While this practice makes sense, it does not function really well when it comes to motivating an organization to higher levels of performance. If you are only gauging your progress against your most recent internal successes, how can you determine what your true potential is? More importantly, are you also benchmarking the processes that gave you those results, or are you simply looking at the numbers?

The most commonly used benchmark is the industry average. This benchmark is often used in gauging safety system performance since OSHA expects incident rate tracking. Comparing yourself only to the industry average, however, is not going to provide much incentive toward becoming a high performer. If you are besting the industry average, you are only that--better than average.

Observations have shown me that a lot of organizations don't use benchmarks. When they do, benchmarks are primarily used as a tool for placing blame. This is especially true in companies that have multiple locations. Having multiple sites does make benchmarking easier, but you must be careful when comparing one location to another. I spent several years in a 23-location trucking company, and it took two or three of those years to convince the owners that some comparisons weren't relevant. They were comparing two vastly different systems against each other and then berating the underachiever who did not even have the capability of achieving similar numbers.

The best organizations benchmark the processes and systems that produced the results along with the numbers. They realize that a system will only give you the results it is designed to give you and that if you want different results, you have to change the system. The best organizations use the identification of great numbers as a means of finding great processes.

High-performance companies use a benchmark for each of their key metrics, have a process for searching out better benchmarks that are refined over time, and, most importantly, benchmark the processes that produced the benchmark results. They are willing to go beyond using the industry average and using metrics from only those companies that are direct competitors or exist within their industries. They avoid using the benchmark as a blame-placing tool, instead recognizing it for what it is: a reference point.

How effective is your benchmarking process? Do you improve it over time?

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The Internet has made it somewhat easier to find benchmarks. Organizations such as Gallup, JD Powers, and Industry Week have actually made providing reference points to others into a profitable business. You can learn how to benchmark more effectively at the Disney Institute as well.

Benchmarking is not a difficult process to undertake. Perhaps the toughest decisions lie in determining how good you really want to be, making a commitment not to use your benchmarks to assign blame and choosing to change your work systems in order to get the results you want.

Kevin McManus is a performance improvement consultant based in Seattle and a 23-year member of IIE. He has written several workbooks on personal and team effectiveness. McManus is a senior examiner for the Malcolm Baldrige National Quality Award. Reach him at kevin@greatsystems.com.