Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask)

Transcription

1 Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) Ben Carroll, Jen Krider Bersin by Deloitte, Deloitte Consulting LLP

2 Contents Introduction 8 Phase 1 Understanding What Benchmarking Is (Not) 9 Phase 2 The Role of Properly Harnessed Benchmarks 13 Phase 3 Determining Organizational Readiness 19 Phase 4 Benchmarking Initiatives from Scratch 24 Conclusion 29 Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 2

3 Introduction Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 3

4 Measurement is the first step that leads to control and eventually to improvement. If you can t measure something, you can t understand it. If you can t understand it, you can t control it. If you can t control it, you can t improve it. * H. James Harrington & Thomas McNellis *Source: Harrington, James H., & McNellis, Thomas, Mobilizing the Right Lean Metrics for Success, QualityDigest.com, May 2006, Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 4

5 Advantages of Data-Based Decision-Making Strategic decisions business or otherwise should be grounded in fact. Potential Benefits: Objectivity Less emotional Reliability Accuracy Richer insights Revealing Regularly updated Unbiased Inscrutable Allows ability to predict Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 5

6 Dangers of Relying On Anecdotal Evidence Just because something feels right does not make it true. Potential Downfalls: Biased Lacks objectivity Misdirection of focus Does not stand up to scrutiny Cannot be used for predictions Exists in a vacuum Cannot be tested Shortsighted Widespread, magnifying ripple effect Values immediacy over verification Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 6

7 Dangers of Relying On Anecdotal Evidence Just because something feels right does not make it true. Potential Downfalls: Biased Lacks objectivity Misdirection of focus Does not stand up to scrutiny Cannot be used for predictions Exists in a vacuum Cannot be tested Shortsighted Widespread, magnifying ripple effect Values immediacy over verification Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 7

8 From Feelings to Facts Creating a properly structured benchmarking program can shift the focus from heart to head. Phase 1 Understanding What Benchmarking Is (Not) Phase 2 The Role of Properly Harnessed Benchmarks Phase 3 Determining Organizational Readiness Phase 4 Creating Benchmarking Initiatives from Scratch Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 8

9 Phase 1 Understanding What Benchmarking Is (Not) Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 9

10 What Benchmarking Is Benchmarking is the act of examining one data point or set relative to others with the purpose of improving or driving efficiency. Benchmarking is: Tracking and evaluating A process that allows for the improvement of products, strategies, procedures etc. A means of comparing oneself to others across similar categories, sectors, verticals against organizations, for example, determined to be the best of the best Key objectives: To assess whether an organization is keeping up with, falling short of, or surpassing norms Harnessing data to improve performance Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 10

11 Common Benchmarking Examples Benchmarking is an integral component to everyday life; it is not limited to the business world. Olympic Medal Counts 5K Times Summer Movie Grosses Monthly Electrical Use Customer Service Center Time-per-Call Rates Annual Revenue Year Over Year or Relative to Competitors Attrition Rate Marketing s Opened Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 11

12 What Benchmarking Is Not Benchmarking is not simply about making comparisons; it s about using insights from those comparisons to drive change. Benchmarking is not: A means unto itself A way to copy other organizations strategies A silver bullet Comparison for comparison s sake A one-time process Only for statistics gurus Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 12

13 Phase 2 The Role of Properly Harnessed Benchmarks Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 13

14 Awareness Leads to Action Benchmarks, when properly used, can be a powerful business tool. Overview of Competitive Landscape See how others are doing Assess strengths and weaknesses of similar organizations Gain holistic industry knowledge Means of Determining Progress Evaluate internal processes past and present Examine trajectory Reveal connections between strategy and business metrics Common Performance Language Establishes continuity Analyze business goals by same criteria Facilitates communication with key audiences Unified Direction Ensure that everyone has a clear understanding of progress and success Creates continuity of goals across the organization Reinforces company priorities Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 14

15 Aligning Benchmarking With Business Objectives Deciding what to benchmark should be driven by an understanding of business goals. Questions Worth Considering What are possible areas for improvement? What are we doing well? What are we doing poorly? Do day-to-day operations support our ongoing business strategy? What are our competitors doing? What is happening in the marketplace? Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 15

16 Toward a Targeted Analysis Knowledge of business goals narrows the types of benchmarks to employ. Types of Benchmarking Internal Used to benchmark performance of groups, functions, branches within the organization External Used to benchmark your organization to others of similar size, industry, or geography Process Benchmarking Performance Benchmarking Strategic Benchmarking Focus: Daily processes of an organization Goal: Improving efficiencies Focus: Comparative analysis of other groups or organizations esp. products and services Goal: Boosting performance Focus: How organizations compete Strategies leading to effectiveness Goal: Identifying winning strategies Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 16

17 Defining What Good Looks Like Properly employed benchmarks highlight areas of success or in need of improvement. Aiming for Good, Not Good Enough Prioritize strongest indicators of success Determine what data most clearly provides evidence for your claim Set goals and monitor performance relative to conclusions Driving Change Good : maintaining the status quo Better : improving Best : radical change Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 17

18 Forecasting the Future Benchmarking provides a consistent way of assessing performance over time, as well as organization trajectory. Evaluative Frameworks At a single point in time Across comparable areas Across these areas over a lengthy period Insight Examples Time it should take for a new process to get up to speed Cost implications of new processes and procedures Means of improving staffing efficiency Looming revenue shortfalls Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 18

19 Phase 3 Determining Organizational Readiness Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 19

20 Is Benchmarking Right for Me? When considering the implementation of a benchmarking initiative, it is important to assess organizational readiness. Potential Reasons to Benchmark Clearly defined financial goals Competitive analysis Mandatory reporting to board of directors or investors Multi-tiered product development process A means of assessing business components people are critical of Potential Reasons NOT to Benchmark Startup or new organization Niche industry with few standards Small, owner-run organization Product still evolving Processes still taking shape Heavy crossover with job responsibilities Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 20

21 Discussing Benchmarking with Senior Leadership If your organization is ready to begin benchmarking, the next step is gaining buy-in from senior leaders. Before: Understand what data is already being collected Reach out to other departments to increase buy-in Come prepared with possible benchmarking targets During: Explore current company strategies, goals, pain points Understand company s short- and long-term goals Demonstrate cross-department buy-in Outline timeline Set realistic goals and expectations After: Design initial benchmarks around leadership goals Target quick, easy, wins Don t aim too high Establish regular cadence of communication Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 21

22 Working with Data-Phobic Organizations While benchmarking might be right for your organization, it can take some effort to convince leadership of its effectiveness. Start Slowly Prioritize areas of exploration Avoid the temptation to do too much too soon Set realistic goals Remain Transparent Develop clear definitions of what is being measured Determine possible actions depending initial results Ensure that leaders are involved in shaping terminology Whenever possible, use your organization s language Keep in Constant Contact Establish frequent evaluation periods Check in with leaders to see what they think and feel about results Tailor benchmarks directly to their needs and concerns Know Benchmarking s Place Assure leaders the business decision process doesn t change Underscore fact that benchmarks are one of many evaluative tools Allow change in metrics or process Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 22

23 Phase 4 Benchmarking Initiatives from Scratch Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 23

24 Determining What to Benchmark The first step to implementing a benchmarking practice is deciding what to measure, track, and compare. Points of Consideration Actionable information Value over vanity Pre-existing data Utility Company goals and objectives Acceptable approximations Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 24

25 Determining When to Benchmark Choosing the time period you will benchmark should be meaningful, useful, and properly scaled. Time Periods Should Be: Aligned with company or industry standards Long enough to provide perspective Designed to allow adequate reaction time Scaled for usability Consistent Flexible Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 25

26 Three Key Components of All Benchmarks Strong benchmarking initiatives are holistic in nature. Audience (benchmark end users) Keep end-users in mind Distinguish user types Tailor data to differing expectations Set metric-related expectations early on Determine reporting frequency for each user group Subject (people or process tracked) Remember that metrics often connect directly to people Involve those affected in the process Communicate purpose of benchmarking in organization Outline possible responses to results Presentation (means of communication) Determine how data will be presented early in process Simple > complex Less >more Tailor results to individual audiences Harness existing communication channels Be willing to evolve Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 26

27 Conclusion Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 27

28 Key Questions to Consider When thinking about starting a benchmarking initiative from scratch, consider the following questions. Question 1 Could the decision-making structure in my organization benefit from continuous measurement? Question 3 Do I know my company s goals and objectives? How might benchmarking address these? Question 2 Is my organization ready for datainfluenced decisions? Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 28

29 Now What? Getting ready for the next steps in the benchmarking process Upcoming Webinars Understanding Where Benchmarks Come From Types of data How to find/gather data Understanding data quality How to transform data into benchmarks Making Sense of Benchmarks How to view and interpret benchmarks Putting benchmarks to use Benchmarking lifecycles Moving from benchmarking to analytics Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 29

30 Q&A Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 30

31 Ben Carroll, Senior Research Analyst, Benchmarking and Analytics Bersin by Deloitte, Deloitte Consulting LLP Jennifer Krider, Senior Research Analyst, Benchmarking and Analytics Bersin by Deloitte, Deloitte Consulting LLP Copyright 2016 Deloitte Development LLC. All rights reserved. Everything You Always Wanted to Know About Benchmarking* (*But Were Afraid to Ask) 31

32 About Deloitte As used in this document, Deloitte means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms, or their related entities (collectively, the Deloitte Network ) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte Network shall be responsible for any loss whatsoever sustained by any person who relies on this communication. Copyright 2016 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited