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David Farrell answers:
Ken, let’s begin by defining what we mean by “benchmarking.” We define it as “a systematic, continuous process of identifying, understanding and evolving superior products, services, designs, equipment, processes and practices to improve an organization's real performance, not simply the comparative analysis as many people consider it.”

In the long term, for benchmarking to become part of the organization’s culture, strategy and practices, not a one-time project, is must be shown to add value to the organization. A benchmarking project that may decrease cycle time but does not improve market share, value added per employee, return on assets or customer satisfaction is not a value added solution.

If benchmarking is not yet an integral part of the organization's culture it will be particularly important to set the stage properly. Executive sponsorship of the entire effort, and the identification of a sponsor for each item being benchmarked is crucial. Assume that the knowledge gained will be used to make significant changes in your processes and procedures, and that the management of change during the all-important implementation phase of the project will require effective and sustained sponsorship.

As with any significant endeavor, there's no substitute for a well-designed benchmarking plan to guide the process, keep it on schedule and assess outcomes. A useful plan outline is:

Phase I. PLANNING AND CHARACTERIZATION OF THE ITEMS, including: identify what to benchmark, obtain top management support, develop a measurement plan and a data collection plan, involve location experts, and characterize the current state of the selected item including process models and measurements.

Phase II. INTERNAL DATA COLLECTION AND ANALYSIS, including: collect and analyze internal published information, select potential internal sites, collect original research information, conduct interviews and surveys, form an internal benchmarking committee and conduct internal site visits.

Phase III. EXTERNAL DATA COLLECTION AND ANALYSIS, including: collect external published data and collect original research information.

Phase IV. IMPROVEMENT OF THE ITEM'S PERFORMANCE, including: conduct a gap analysis and an analysis of the causes of the performance gap, identify corrective actions, develop an implementation plan, gain top management approval of the future state solution, implement the solution and measure the impact.

Phase V. CONTINUOUS IMPROVEMENT, including: maintain the benchmarking database and implement continuous improvements.

Some “tips” to draw from this perspective are:
- Don't forget to include other Weyerhaeuser mills in your benchmarking project (at Xerox, more gains were achieved through internal benchmarking than external)
- To mitigate the potentially low level of cooperation with external competitive benchmarking partners while capitalizing on their high potential relevance, consider the use of a third party for confidentiality, or an industry group,
- Consider using all the types of benchmarking to capitalize on the best features of each type.

As you consider your benchmarking strategy for each item (process, procedure or activity) such as customer service, safety, delivery or training, distinguish those items which are mission critical or core competencies from those which, although important, do not have the same level of stakeholder value. For mission critical items, the benchmarking objective should ultimately be to become the “best of the best” to assure continuing competitive advantage, while for other items, “best value” solutions are sufficient. A best value solution is one that results in the most beneficial redesigned item as viewed by the item's stakeholders. It is the best combination of desired results and costs. Examples include ROI, customer satisfaction, market share, risk or value added per employee.

A mistake frequently made is to define a solution that provides the maximum positive change in key measurements without considering its costs, economic or otherwise. Take for example Manpower Inc., which employs more people than any other organization in the world. They have an outstanding hiring process as measured by cost per hire, cycle time, etc. For Manpower, the hiring process is a core competency, and while effective hiring is important for every organization, for most it would not merit the cost and effort to become world class in that process.

Focus on the desired or required outputs of the process, not just to discover the “best” process. For example, with respect to your training process, what is it you want to accomplish? It is not just well-trained, or rapidly trained people, but rather demonstrated best performance from those people. If you were looking for the best training process you might look to educational institutions as a model. Instead, look for organizations whose people consistently perform at outstanding levels, then benchmark that organization's training process.

Myron Kellner Rogers Responds