Managers have to divide their time between two basic activities, maintaining and improving the existing operation within the given framework. Most managers spend most of their time on day-to-day tasks and problems, leaving relatively little time for development.

Operational development

Managers have to divide their time between two basic activities, maintaining and improving existing operations within the given framework. Most managers spend most of their time on day-to-day tasks and problems, leaving relatively little time for improvement.

The aim of operational development is to raise the performance (service quality, efficiency, effectiveness, effectiveness, flexibility, etc.) of the organisation to a higher level. Operational improvement very often starts from the processes, changes the processes of the organisation, and thus performance improvements are the result of the changed processes. Operational improvement is not an end in itself, it is about adding value to the stakeholders of the organisation.

There are several conditions for successful operational improvement:

The steps of operational improvement:

 

• Assess environmental expectations, conditions and opportunities
• Analysis and evaluation of current operations
• Identifying opportunities for improvement
• Developing objectives for the future operation
• Change
• Monitoring the results of change
• Establishing and institutionalising the new operation

In our own consultancy practice, operational development covers the following areas:

 

• Developing corporate strategy and goals
• Developing new operating models, systems and processes
• Improving existing processes
• Cost and loss reduction, Kaizen
• Quality improvement
• Developing a performance measurement system
• Regulation of operations
• Developing management and control systems (e.g.: Quality Management System, Balanced Scorecard, Controlling)

 

Linking benchmarking to operational improvement:

As organisations' resources are limited and a significant amount of people's time and energy is tied up in day-to-day maintenance activities, we need to consider carefully where and on what improvements we spend our resources and how we do it.

Benchmarking and the search for best practices can facilitate successful operational improvement in many areas:

• It helps to stimulate the need for change by facilitating introspection, evaluating one's own performance and highlighting the performance gap in relation to the performance of others
• Helping to identify improvement directions and to evidence and justify improvement decisions
• Helps to identify opportunities for improvement by directing operational development to areas where there is significant potential for improvement and feasible opportunities for improvement based on the experience of others.
• Links the results of benchmarking analysis to the implementation of improvements and monitoring of results through steps that fit into the logic of the PDCA development cycle
• It helps to develop more efficient and effective processes through the identification and adaptation of best practices
• A benchmarking activity is effective if the results of the benchmarking analysis are used to induce improvements and actions within the organisation and thus the benchmarking experience is incorporated into future operations through operational improvements and the choice of objectives.

Benchmarking and the search for best practices will help to:

• Evaluate our existing operations
• Identify areas for improvement (What are we improving?)
• Identify opportunities for improvement in existing operations (How do we do it differently?)
• Benchmarking and looking for best practices
• Let's briefly review what benchmarking is, what are the basic concepts and knowledge about benchmarking, what types of benchmarking there are and what is the process.

The origin and history of benchmarking

The spread of benchmarking as a management method dates back to 1989, when Robert Camp, an engineer at Xerox, published his book "Benchmarking: the search for best practices that lead to superior performance". This book summarizes the author's experience in research conducted at Xerox between 1976 and 1986 to recover and improve the company's competitiveness. There are, of course, examples of certain types of benchmarking from earlier times: 'reverse engineering' - product re-engineering, 'dantotsu' - the Japanese equivalent of benchmarking; but it was in the structured and process-oriented approach we use today that benchmarking first appeared in Xerox's practice.

In the developed world, benchmarking has become extremely widespread in the last 10 years in the activities of companies and countries, and according to some surveys (Bain Consulting), benchmarking is the third most widely used management method, after visioning and strategic planning. Today, benchmarking is not only used consciously by companies, but also by other organisations and regions of countries to improve their operations and performance. The significant competition between companies, organisations and regions, the data opportunities offered by the Internet and the fact that the national quality awards based on the "Business Excellence Model" give considerable weight to the presentation of benchmarking data in the assessment of an organisation's performance and the conscious use of this data to improve the organisation's performance have contributed to this widespread use of benchmarking. Today, benchmarking is not only used consciously by companies but also by other organisations and regions of countries to improve their operations and performance. The significant competition between companies, organisations and regions, the data opportunities offered by the Internet and the fact that the presentation of benchmarking data and the conscious use of this data to improve the performance of an organisation are very important factors in the evaluation system of national quality awards based on the "Business Excellence Model" have contributed to the widespread use of benchmarking.

Benchmarking
Benchmarking is an activity carried out by organisations on an ongoing basis to compare their performance with the best in class and to use the information and experience gained to help them develop their own objectives and operations.

In benchmarking, the organisation conducting the activity defines the purpose and scope of the benchmarking exercise, selects potential benchmarking partners, collects data on its own operations and on the partners, identifies the performance gap in each benchmarking area (Figure 1), analyses the data and communicates the results, and then uses the information and experience gained to develop and improve its own goals and ways of operating. Benchmarking has recently proven to be a very effective form of organisational learning and knowledge sharing within and between organisations.

Benchmark
The word benchmark means a standard, something against which you compare something else. A benchmark can refer to the level of performance itself or to the organisation that has achieved that good performance.

A benchmark may not necessarily be found within an industry, it may be possible to find an organisation with outstanding practice and performance outside the industry against which we wish to benchmark ourselves.

Best Practice
Best practice refers to the process, procedure or way of working behind the benchmark performance that has been used to achieve the benchmark performance.

In the search for a benchmark, we are looking for the answer to the question of what is the current best performance and how our own performance compares to it, and in the search for best practice, we are looking for the answer to the question of how we achieved benchmark performance and the reasons behind the difference between our performance and that of the benchmark company.

Scope and types of benchmarking

A benchmarking study can focus on different areas of organisational functioning, and the depth, scope and potential impact of a benchmarking study will vary accordingly (Figure 2).

Different types of benchmarking can be distinguished based on the target areas of benchmarking:

• Strategic benchmarking - Benchmarking is aimed at analysing and developing strategy
• Process benchmarking - Benchmarking is aimed at analysing and improving processes
• Functional benchmarking - Benchmarking is aimed at analysing and developing the organisation of a company
• Performance benchmarking - Aims to benchmark and evaluate performance, results and set performance targets

 

Benchmarking studies should first start by identifying the directions and areas for improvement. If we are looking at how other organisations intend to meet environmental challenges and, accordingly, what long-term decisions they have taken and what systems they have developed, then a strategic benchmarking study can be carried out. If we are interested in how our organisation's performance compares with that of other organisations operating in similar conditions, performance benchmarking can be used. In setting realistic organisational goals and judging organisational performance, performance benchmarking can be of great help to managers.

Once you know the areas where performance is lagging behind the benchmark, and which organisations are capable of achieving higher performance, you need to find out what factors are behind the performance gap and how the other organisation and its operations (processes) differ from ours. The benchmarking study related to organisational issues is called functional benchmarking, and the study related to process (operational practices) is called process benchmarking.
(Note: the literature describes many forms and categorisations of benchmarking other than those detailed here, the list here is based on the link to operational improvement.)

The phases of application of each type of benchmarking:

 

Different types of benchmarking can support the operational improvement efforts of organisations at different stages and levels. In particular, strategic benchmarking helps to set the direction for the long-term development of an organisation. Performance benchmarking can help to set specific and realistic goals in a given direction and to evaluate performance and progress thereafter. Once we can see the direction we are heading in, the areas we want to improve and the performance improvements we want to achieve, we can use functional and process benchmarking to look for answers on how to put improvement into practice.

The benchmarking process
In our own consulting practice, the following benchmarking process (method) has been developed and proven to be effective:

 

 

Design phase
First, the benchmarking activity must be planned, specifying: the subject of benchmarking, the scope of benchmarking, the objective of benchmarking, the benchmarking partner, the benchmarking format to be used (performance, functional, process), the possible sources of benchmarking information. Organise the benchmarking team (team if necessary), develop a data collection plan and estimate the approximate resource requirements.

Data collection phase
In the data collection phase, the following tasks should be carried out: review own operations, identify possible sources of data collection, determine the format of data collection, prepare questionnaires, data collection sheets, schedule data collection, carry out internal and external data collection, check and validate the data collected and refine with the benchmarking partner as necessary, structure the data in an appropriate format.

Analysis phase
During the benchmarking analysis, the aim is to: identify the differences between the benchmark and our own performance or practice, present the information and the results of the analysis in a structured way, identify the reasons for the differences and possible alternatives for improvement.

In analysing the performance gap: analyse the reasons for the performance gap and the factors that contributed to it, identify best practices, consider what we need to change in order to close the performance gap and even to improve our position, identify opportunities for improvement in our own practice

Adaptation phase
In the adaptation phase, we need to incorporate the findings of the benchmarking research into our own decisions, apply them to our own organisation, and communicate and present the results in a way that demonstrates the lessons learned and opportunities for improvement in a usable form. Take action and launch improvement actions based on the results of the benchmarking study

Implementation phase
During the implementation phase, we will implement the decisions and actions informed by the benchmarking survey. Implementation is often no longer carried out by the benchmarkers, so it is important that the implementation decisions are integrated into the objectives, plans or projects launched in each area. The results of the changes need to be monitored, often additional benchmarking information needs to be collected during implementation, sometimes going back to previous benchmarking phases and incorporating the information gained during implementation into the decisions.

Closure phase
Closure is important for the effectiveness of benchmarking activities, i.e. to monitor the results of the changes brought about by the benchmarking exercise and to incorporate the lessons learned into the next benchmarking exercise.