Achieving High Performance: The Value of Benchmarking

Benchmarking can provide companies with the concrete baseline and comparative data they need to identify performance gaps—and ways to bridge them.

Accenture looks at the benchmarking process and identifies key success factors in creating a benchmarking program that drives high performance.

In today’s competitive business environment, all corporate functions are expected to reduce operating costs while improving the business value they deliver. Yet many executives lack the essential tools they need: a detailed picture of their function’s performance along key dimensions, and how that performance measures up against its peers, both internal and external.

Benchmarking is an essential tool in helping executives reduce costs while delivering more value—and thus is an invaluable lever of high performance. It is the process whereby an organization captures specific data related to its costs and performance (the baseline), and then evaluates this cost and performance data against those from some other entity, be it internal or external.

Benchmarking delivers four critical benefits:

• A current-state assessment.
  
  
• A strong foundation for transformation programs.
  
  
• A strong basis for continuous improvement.
  
  
• A standard set of terms and definitions for key aspects of a company’s business processes.

The benchmarking process has four main steps that help organizations discover, deliver and maintain enhanced business value from the functions being evaluated:

• Phase 1. The company formally launches the initiative and devises its plan for gathering required data. It also identifies and trains the people responsible for gathering the data. Duration is typically one to two weeks.
   
• Phase 2. Gathering of the data to be evaluated, typically using a standard collection and formatting template. During this phase, schedule the executive interviews that will form the basis for the qualitative analysis. Duration is one to four weeks, but this is the phase during which delays are most likely.
  
  
• Phase 3. The company performs a qualitative assessment to help reveal insights behind the quantitative data. Duration is one to four weeks, but some overlap with Phase 2 is common.
  
  
• Phase 4. The company reviews the cost and performance gaps revealed in comparisons with the peer group, and identifies the root causes of those gaps. It also develops a set of recommendations.

In Accenture’s experience, benchmarking can be instrumental in helping companies emulate high-performance businesses by regularly identifying the gaps between current and desired performance; striving to be leaders in those capabilities most important to the business; and pursuing improvements via structured change programs. 

There are several keys to using benchmarking on an ongoing basis:

• Take a process view by identifying the processes and metrics the company wants to measure and keep them reasonably constant to enable the generation of trending data and the evaluation of improvement initiatives.
  
  
• Strike the right benchmarking rhythm by updating benchmarking information regularly.
  
  
• Configure systems and data structures to automate the capture of key benchmarking data as much as possible.
  
  
• Engage employees by regularly communicating the results of the benchmarking initiatives and tying individual performance evaluations and compensation of function leaders to results.
  
  
• Institutionalize the benchmarking program within the organization, making it part of an overall transformation or continuous improvement program.

Chuck Wise is a senior principal in Accenture Management Consulting and is the global lead of Accenture Benchmarking Solutions. He has more than 15 years’ experience working with organizations across a variety of industries to define strategy, improve performance, drive organizational change and lower cost.