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Why Benchmark?
Simply stated, benchmarking is one of the most powerful tools for
initiating and sustaining continuous improvement.
Comprehensive, accurate, timely information combined with judgment is the foundation for good
decision-making.
Unfortunately, managers with good judgment are frequently required to
make important decisions with little or no factual information.
Information is necessary for accurate problem identification and the
development of viable solutions. Benchmarking results focus
management‘s attention on underlying issues and problems and provide a
vehicle for developing timely and effective solutions. The bottom line:
Good decisions begin with good information and benchmarking provides a
framework, structure, and methodology to gather essential analysis. In
summary, benchmarking is a powerful tool for change by generating
credible, comprehensive, comparative information that authoritatively
identifies weaknesses which move professionals from a debate about what
is wrong to a discussion of how to improve. Benchmarking over time
identifies the results of interventions in an iterative process
fostering continuous improvement.
"If you know a thing only qualitatively, you know it no more than
vaguely. If you know it quantitatively -- grasping some numerical
measure that distinguishes it from an infinite number of other
possibilities -- you are beginning to know it deeply. You comprehend
some of its beauty and you gain access to its power and the
understanding it provides.
Being afraid of quantification is tantamount to disenfranchising
yourself, giving up on one of the most potent prospects for
understanding and changing the world." - Carl Sagan
How Does Benchmarking Work?
Benchmarking includes six independent areas which, when brought together, forms a comprehensive picture. Benchmarking:
- Provides a framework for institutional introspection
- Supports the development of a fact-based philosophy of decision-making and continuous improvement: Initially,
benchmarking and fact-based decision-making stimulate an organization
to initiate changes by identifying problems and generating solutions
that meet its goals. After decisions are made and initiatives
implemented, managers rarely receive quantifiable feedback about their
decisions. To continually improve, organizations must consistently
monitor their processes, procedures, and performance. Managers
recognize that decisions based on anecdote and inference are not nearly
as effective as decisions based on an analysis of comparative
information from competitive institutions. If improvement is to be
sustained over time, benchmarking of competitors must become a
consistently applied tool that is used over the longer term.
- Identifies a comprehensive set of input and output measures that describe performance:
Given the different scales and structures of operations at various
business programs, it is important to establish input and output
criteria measures that are consistent and comparable. In the EBI
benchmarking studies, a number of criteria are utilized to take these
factors into consideration. Some of the measures used for management
studies are: Average financial aid award as a percentage of tuition,
Full Time Equivalent (FTE) staff in the admissions office per inquiry
and application received, student recruiting travel expenditures per
inquiry and per applicant, percentage of coursework per instructional
hour (to compensate for differences in term structure) in required
curriculum areas, placement office staff per graduating student, and
design/mailing cost of recruiting literature per inquiry. These ratios
are all measures of performance and "correct for" differences in scale
and structure. With these measures and comparative reference points
from peer institutions, relative performance can, for the first time,
be reasonably evaluated.
- Creates a common definition of key terms by:
- Establishing commonly agreed upon definitions of terms that allow valid comparisons across institutions:
Previous attempts at data comparison have always been compromised by
differences in data definitions. For example, starting salaries of
graduating students reported at some institutions include bonuses
(specified and/or projected) while such bonuses are not included at
other institutions. Some schools determine the cost of publications in
any one year as only the printing costs if the design work is done in
another year while other schools allocate design costs over the life of
the publication. Some schools count as an applicant all students from
whom they receive any part of an application while other schools only
count completed applications that are actionable. Having common
definitions of key terms is essential if the data being compared is to
be of value. Some schools had to start keeping data in different ways
in order to report on the basis of the agreed upon definitions in this
study. Those schools participating were willing to make changes because
of the perceived value of gaining real and useful comparative
information.
- Establishing study area standards and facilitating the search for "best practices":
In a competitive environment, performance is relative. How do managers
evaluate their performance? Without comparative data, the only baseline
available is how they did last year. Although valuable in identifying
the effects of new initiatives in improving performance, such
comparisons do not allow managers to determine overall effectiveness in
relation to competitors and specific study area standards. If a
school‘s applications increase by 5% in a given year, this only has
meaning in the context of what is happening at their peer institutions
and in that study area. The 5% increase looks quite different if peers
are increasing by 20%--or if they are declining by 10%. Over time as
the EBI benchmarking projects evolve, it will be possible to identify
‘best practices‘ on a variety of dimensions. When such practices are
identified, schools will have an additional tool to utilize in their
continuous improvement agenda.
- Developing a comprehensive base of analysis that permits meaningful comparisons
- Enhances strategy development and implementation by providing relevant points of reference:
Karlof & Ostblom in their book entitled Benchmarking: A Signpost to
Excellence in Quality and Productivity state, "The
conclusion...is...that benchmarking has a remarkable effect at all
stages of the sequence of strategy determination, strategy formulation,
strategy implementation, leadership development, organization
development and training." The process of introspection that results
from the gathering and reporting of data provides a vivid picture of
how the organization deploys its resources and the ultimate
effectiveness of that deployment in terms of the stated strategy. For
example, one school in an EBI pilot study found that it was spending
twice the group average on activities generally seen as working toward
the conversion of inquiries to applications, but only 40% of the group
average on converting applicants to enrolled students. Unfortunately,
their actual yield performance data in both areas would have suggested
the need for a reversed strategy. Without comparative data, there was
no way to effectively evaluate expenditure levels in the context of
yield results. With relevant comparative data, the school was in a
position to develop a plan that was congruent with their program
strategy.
- Longitudinal analysis provides a perspective on performance over time:
The current benchmarking effort establishes a set of data that will
serve schools in the current year and provide a baseline for
longitudinal analysis in the years ahead. The data base is rich for
analysis and provides participating institutions with clear direction
as to where possible problems exist, where to seek additional
information to clarify conflicting data, and in what areas to allocate
incremental or reduced resources.
Do educators need to benchmark? In the "Quality
Movement", education has significantly lagged behind its corporate
counterparts. While major corporations have demonstrated the need and
value of employing continuous quality improvement techniques to improve
management of their organizations, education has so far avoided
adopting the basic principles of continuous quality improvement. Even
in the face of global competition, constrained resources, and greater
expectations from customers, education has, to date, largely ignored
marketplace pressures and realities, remaining confident of its ability
to attract students regardless of the perceived value of its service.
Ted Marchese most poignantly described this attitude, editor of Change
magazine (November/December 1994):
"Corporate Leaders believe in the tenets of quality
management and their sense of its rightness and efficacy colors their
perceptions of higher education. From hard experience they embrace
notions of continuous improvement, collective responsibility, customer
focus, and management by fact. To them, colleges and universities…look
like organizational left-behinds that can‘t be very interested in
quality itself."
As an ever more sophisticated customer is asking for demonstrated
value-added products and educators are being driven to the point of
critical introspection about what their service is, how much it costs,
and what outcomes it delivers. In response they are attempting to
understand and respond in substantive and creative ways to their key
constituents, prospective students and employers.
Is benchmarking an effective tool for continuous improvement?
The virtues of benchmarking have long been recognized in the corporate
community and educators that participate in educational benchmarking
studies are now recognizing their insight.
"We do not believe that any particular doctrine is the sole path to
salvation, but that leaders must choose the tools, approaches and
models best suited to themselves and their circumstances.. Having said
that, we must hasten to add that we have yet to work with a method that
offers so much inherent potential for improvement as benchmarking."
"...Benchmarking has a remarkable effect at all stages of the
sequence of strategy determination, strategy formulation, strategy
implementation, leadership development, organization development and
training."
Reference: Karlof & Ostblom, Benchmarking: A Signpost to Excellence in Quality and Productivity
Benchmarking can be a critical catalyst for change. It is difficult
for managers and staff to dispute weak performance or inefficient
processes when clear, systematic, comparative data is available. The
benchmarking process eliminates the attitude so aptly described in the
adage, "If it isn‘t broke, don‘t fix it". Data empowers and stimulates
people to address real issues and find solutions where results can be
measured. Determining organizational effectiveness and facilitating
change are two of the primary roles of leaders in management education.
Benchmarking can be a tool to support both of these important roles.
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