Part III Other types of audit
D. Adebanjo. Leatherhead Food Research Association
9.7 Review
9.7.2 Maintaining the momentum of benchmarking: re-calibration Re-calibration refers to the formal review of the benchmark process to ensure its continued validity. This may be carried out as part of the annual business planning cycle, through specially targeted assessment studies or by examination of routinely collected information. As industry practices evolve, re-calibration is necessary to ensure that the organisation keeps up with changing conditions in addition to improving the maturity of its benchmarking philosophy. Companies in less dynamic industries may opt not to re-calibrate on an annual basis but choose a longer timeframe that is better suited for both the industries and their operations.
The starting point for re-calibration is often an internal study that would identify the nature of the gaps in information. The study may also determine changes in attitude to benchmarking since the previous review. The review should also take into account approaches and results from other benchmarking exercises within the organisation as this may identify new and more efficient practices.
The style of the review will depend largely on the maturity and culture within the company and could range from formal questionnaires and audit to less formal information-gathering techniques.
When the internal review has been completed, the benchmarking partner and/
or another best practice organisation may be visited as part of a broader review.
The process to be adopted in the external review should be more or less the same as the benchmarking process described in this chapter.
Dedication and constant review of the benchmarking initiative should ultimately lead to the institutionalisation of benchmarking within the organisation. At this point, an overwhelming majority of staff would routinely seek best practices and ensure continuous improvement. It is likely that less of a push will be required from management when employees are able to take such initiatives.
However, management will continue to play an important supporting role in ensuring that benchmarking continues to deliver benefits to the organisation.
They will need to recognise and reward employees for their efforts. They also need to ensure that adequate resources are made available to support the ongoing efforts in respect of benchmarking. Some of the ways in which the organisation can manage its benchmarking initiative continuously are described in the next section. It is worth noting that benchmarking can only continue to be successful for as long as management regards it as important to the overall business strategy.
9.8 Managing the benchmarking process
Benchmarking is a change tool that can be aligned to other initiatives within the company (e.g. business process engineering, problem solving). Irrespective of how it is employed, benchmarking needs to be systematically managed to ensure
its effectiveness. While the company will get better at benchmarking over time, there will also be a cost and resource implication for the company. The ability of the company to improve continuously by using benchmarking techniques will depend largely on how the initiative is systematically managed and encouraged to become a component of everyday working. While there is no single way to manage a benchmarking initiative, some of the findings from organisations that are experienced at benchmarking are presented here.
9.8.1 Leadership of a benchmarking programme
Without the support, commitment and involvement of senior management, not only might there not be enough resources for undertaking benchmarking activities but recommendations from benchmarking studies may not be implemented. The supporting role that management can play in institutionalising benchmarking can be split as follows:
• Initiating benchmarking. Benchmarking should be seen as a tool to assist the attainment of the organisation’s mission and should be linked to the corporate strategy. In order to apply this to best effect, it is also advisable to determine expectations and set measurable objectives from the outset. This will send a clear message through the organisation that benchmarking is not only valued by the leaders of the organisation but will play a vital part in the organisation’s drive to achieve excellence. If the company intends to use benchmarking continuously, it may be worthwhile to determine protocols for managers and benchmarking teams. This will promote uniformity in the use of benchmarking and ultimately make transferability of personnel and learning experiences seamless.
• Supporting benchmarking. Benchmarking teams should be knowledgeable and influential enough to drive change. The members of the teams need to be carefully selected to reflect not only a natural understanding of the relevant processes, but also to have teamwork skills that complement each other and create balance within the group. There may be a requirement to provide training and information before the ideal team dynamics are achieved. In organisations where many benchmarking studies may take place simultaneously or over a relatively short period of time, a benchmarking
‘czar’ may be appointed to oversee the overall initiative. This person would typically be a very senior manager, who will also be responsible for providing support directly to the benchmarking teams. At a process level, the organisation needs to define ways of determining the right issues for bench-marking. Processes for determining ideal benchmarking partners for a range of issues should be specified and the prospective partners stored on a database.
• Maintaining benchmarking. Although it can be argued that once benchmarking is accepted as the norm, it becomes self-sustaining, complacency and inability to innovate may gradually erode the value that
the organisation gets from benchmarking. The organisation should routinely study benchmarking programmes in other companies in order to identify possible beneficial refinements to the process. It is also important to celebrate successes as a way to maintain awareness and provide increased impetus.
There should also be reward and recognition for successful benchmarking teams. It should, however, be noted that not all benchmarking exercises will be successful and such circumstances should be used as an opportunity to commend and reassure teams rather than punish them. Finally, management must continue to walk the talk and as much as possible, remaining personally involved in benchmarking exercises.
9.8.2 Stages of benchmarking development
As indicated earlier, an organisation is likely to get better the more it undertakes benchmarking exercises. There are at least three developmental stages to benchmarking maturity. It is important that organisations are aware of the three stages so that they can assess where they are in benchmarking and where they need to go next.
Stage 1 – Evaluating the relevance of benchmarking
This is primarily an exploratory stage for the organisation. It is unlikely to have carried out a benchmarking exercise before and there may be some difficulty in understanding the relevant methods and principles. The organisation is not likely to understand fully the need for benchmarking and how it relates to overall improvement. This may be compounded by poor communication through the organisation. There may also be a lack of conviction and commitment to benchmarking right from the shopfloor through to management. Other characteristics of this stage are:
• Insecurity about the consequences that benchmarking will have on the organisation.
• Reluctance to share information and consequently lose ‘control’.
• Unwillingness to participate in benchmarking activities because it ‘takes us away from our job’.
Stage 2 – Entrenching benchmarking within the organisation
This is primarily a transition stage. It is perhaps the most important of the three stages as the long-term survival of the benchmarking will depend on the successful negotiation of this stage. Initially, this stage will be characterised by a lack of uniformity and a lack of focus across the organisation. Some benchmarking exercises will have been carried out, but there are likely to be different levels of understanding, awareness and commitment to benchmarking.
It is also likely that many people within the organisation will not have the training and skills required to participate in benchmarking. There may also be personal, professional, operational and interest group conflict.
As management support (see previous section) takes ground, most of these problems will be overcome. The increasing focus on external partners (especially from the same industry) may become the new source of resistance.
However, there is an increased understanding of the purpose of benchmarking and this may result in better cohesiveness within the organisation.
Stage 3 – Maturity in benchmarking
This is the final stage and it indicates that the organisation has achieved maturity in benchmarking. The organisation will, typically, have carried out many benchmarking exercises and will have developed an effective approach to maximising the benefits of these exercises. The new challenge will be to avoid complacency and to maintain enthusiasm for the programme. It is also feasible that, at this stage, less developed or experienced organisations will be looking to benchmark and may require some measure of support.
9.8.3 Future trends in benchmarking
Over the past ten years, there has been an increasing number of companies undertaking benchmarking studies. This trend is likely to continue as competition, globalisation and the need to satisfy stakeholders make increasing demands on the performance of organisations. The importance and benefits of opening up and sharing information with best practice organisations is taking root, and the likelihood is that this trend will continue.
Increasing awareness and subscription to the various business excellence and quality award models will also play a significant part in the sharing and dissemination of best practice.
However, research at Leatherhead Food RA has indicated that the UK food industry lags behind other industries in the awareness and use of both benchmarking and business excellence models. This may be attributed to the following factors:
• The food industry is not as globalised as other industries (such as aerospace and automobile industries) and as such is less exposed to differing business practices.
• Many food sector organisations in the UK are small to medium-sized enterprises, which may struggle to provide resources for benchmarking (especially in a low-margin industry).
• Benchmarking exercises are medium- to long-term programmes and are unlikely to appeal to organisations that require short-term bottom line results.
Encouragingly, the indications are not all negative. Many food companies in the UK participate in sharing initiatives such as those promoted by the DTI, Cranfield University (Management Today) and the Best Practice Club. In particular, Leatherhead Food RA’s business excellence and benchmarking activities continue to attract commendable interest from the industry. To date, about 250 organisations have joined the business excellence self-assessment
programme while the Food and Drinks Industry Benchmarking Club continues to move from strength to strength.
In conclusion, the increasing demand from consumers will drive the need for innovation and flexibility from the food industry. This in turn will promote the seeking of best practice from within and outside the food industry and consequently promote the awareness and adoption of benchmarking.
9.9 Sources of further information and advice
Listed below are organisations that may provide assistance with respect to obtaining benchmarking information or data.
The Department of Trade and Industry Kingsgate House, Bay 511
66–74 Victoria Street London SW1E 6SW www.dti.gov.uk
www.fitforthefuture.org.uk
The DTI has provided financial support for a range of benchmarking initiatives including the production of guides and other publications.
Management Today (Cranfield School of Management) Cranfield University
Cranfield, Bedford MK43 0AL
Tel: +44(0)1234 721122 Fax: +44(0)1234 751806
Management Today, in association with Cranfield School of Management, runs an annual award scheme across all industries for Britain’s best factories. All participating companies receive a free confidential and detailed report, which compares their performance with industry standards.
Inside UK Enterprise Status Meetings Limited Festival Hall
Petersfield
Hampshire GU31 4JW www.iuke.co.uk
Tel: +44(0)1730 235015
Fax: +44(0)1730 268865
Inside UK Enterprise is a DTI scheme that provides an opportunity for senior managers to visit over 120 leading companies to gain a better understanding of the processes, technology and strategic issues that have helped build successful businesses.
British Quality Foundation 32–34 Great Peter Street London SW1P 2QX
www.quality-foundation.co.uk Tel: +44(0)20 7654 5000 Fax: +44(0)20 7654 5001
The BQF runs the annual British Quality Award. It is possible to obtain from them past award winners’ submission documents.
The Industrial Society Robert Hyde House 48 Bryanston Square London W1H 7LN www.indsoc.co.uk Tel: +44(0)20 7479 2127
The Society publishes Managing Best Practice. This monthly report focuses on a different topic each month with the aim of being an authoritative and practical benchmark.
Institute of Quality Assurance 12 Grosvenor Crescent
London SW1X 7EE www.iqa.org
Tel: +44(0)20 7245 6722 Fax: +44(0)20 7245 6755
The IQA is a professional body that promotes quality practices. Membership of the organisation enables access to the National Quality Information Centre.
The Food and Drinks Industry Benchmarking Club Leatherhead Food Research Association
Randalls Road Leatherhead Surrey KT22 7RY www.lfra.co.uk
Tel: +44(0)1372 376761 Fax: +44(0)1372 386228
The Club is a forum for leading food companies to benchmark their performance and share best practice. It aims to be the flagship for business excellence within the food industry.
The Benchmarking Centre Ltd Truscon House
Station Road Gerrards Cross Bucks SL9 8ES
www.benchmarking.co.uk
The Centre is involved in a number of activities aimed at promoting best practice, helping to identify benchmarking partners and facilitating the exchange of information.
The American Productivity & Quality Center 123 North Post Oak Lane
3rd Floor Houston TX 77024-7797 USA
www.apqc.org
The Center has created the International Benchmarking Clearinghouse to provide a resource for organisations interested in using benchmarking as a tool for breakthrough improvement.
IFS International Ltd Wolseley Business Park Kempston
Bedford MK42 7PW Tel: +44(0)1234 853605 Fax: +44(0)1234 854499
IFS also manages a Benchmarking Clearing House in addition to producing publications on a range of topics, including best practices and performance information.
Best Practice Club Wolseley Business Park Kempston
Bedford MK42 7PW www.bpclub.com Tel: +44(0)1234 853605 Fax: +44(0)1234 854499
The Club’s activities include organising best practice visits and facilitating networking between member companies. The Club publishes a monthly magazine that usually includes case studies and information for success.
The PROBE Initiative Manufacturing Division
Confederation of British Industry Centre Point
103 New Oxford Street London WC1A 1DU www.cbi.org.uk
The initiative is a benchmarking/self-assessment programme that benchmarks manufacturing performance against that of other manufacturers.
European Foundation for Quality Management Avenue des Pleidas 15
Brussels
B-1200 Belgium www.efqm.org
The EFQM manages the European Quality Award and promotes quality management in Europe.
9.10 Further reading
The following publications have been referred to in the writing of this chapter and are recommended for further reading.
ADEBANJO, O. and KEHOE, D. (June 1999), LFRA Benchmarking Training Seminar. Presented to UK Food Industry Benchmarking Club.
CAMP, R.C.(1989), Benchmarking – The search for industry best practices that lead to superior performance. ASQC Press, Wisconsin.
CAMP, R.C.(1995), Business Process Benchmarking – Finding and implementing best practices. ASQC Press, Wisconsin.
CODLING, S.(1992), Best Practice Benchmarking. Gower Publishing, Hampshire, UK.
COOK, S. (1995), Practical Benchmarking – A manager’s guide to creating a competitive advantage. Kogan Page, London.
MANN, R., ADEBANJO, O., andKEHOE, D.(1999), ‘Best practices in the food and drinks industry’, British Food Journal, Vol. 101, No. 3, pp. 238–53.
WATSON, G.H. (1993), Strategic Benchmarking – How to rate your company’s performance against the world’s best. Wiley, New York.