In the last year Massey University and
the New Zealand Quality Foundation (NZQF) have been working on new initiative to improve the performance of New Zealand organisations.
The result is the NZ Benchmarking Club, the first of its kind in New Zealand. Its goal is to let organisations work together, share best practices and achieve world-class performance levels in relation to the internationally recognised Criteria for Performance Excellence (also known as the Malcolm Baldrige framework).
The Club assists organisations in applying the two most powerful business improvement techniques: benchmarking and performance excellence assessments.
Benchmarking
The technique stems from work by the Xerox Corporation on benchmarking photocopiers in the late 1970s.
In the first landmark study for Xerox the United States operation compared its operations with its Japanese counterparts.
They found to their dismay and disbelief the following:
* The ratio of indirect to direct workers in the US was twice as high as the best Japanese competitor
* Xerox (US) used almost double the number of workers to develop new product
* It took twice as long to develop new products
* It took nearly three times longer to deliver new products to the marketplace.
There were many other insights gained, all of which led Xerox (US) management to explore practices in Japan that resulted in this outcome. These practices were then adapted and adopted where appropriate in the Xerox organisation, resulting in improved performance.
Despite this work by Xerox, it has taken until the 1990s for the term benchmarking to become well known in the business world.
This new found interest in benchmarking primarily comes from general increased awareness and understanding of what is required to become an excellent organisation. Much of this knowledge has come from organisations applying improvement programmes based on Performance Excellence Models.
The road to superior
performance
So what is benchmarking? Benchmarking is defined by Robert Camp, one of the world’s leading benchmarking experts, as “finding and implementing best practices that lead to superior performance”.
This simple definition is either not well known or it has been misunderstood by most organisations. The common interpretation of benchmarking is comparing performance levels against benchmarks. This however is only one small part of benchmarking — its true value comes from understanding why another organisation is performing better and then assessing whether or not those best practices could be transferred effectively into your own organisation.
The typical steps involved in benchmarking project are:
* Analyse the position you’re currently in
* Identify an organisation that’s performing better
* Learn why they are performing better
* Adapt and implement the practices that will improve your organisation’s performance.
Benchmarking’s strengths are:
1. Indicates that higher performance levels are achievable, hence discrediting those who argue that “it can’t be done”.
2. Fosters pressure for change on the grounds that high-performing companies are likely to remain in business whereas low-performing ones will not.
3. Provides structured approach for introducing new “improved” processes into the organisation.
Performance excellence
assessments
Performance excellence assessments refers to the practice of organisations assessing their management systems and performance using Performance Excellence Models (such as the European Business Excellence Model, the US Baldrige framework or the “Criteria for Performance Excellence” as used in New Zealand).
These models, first developed in the late 1980s and early 1990s, are used to assess an organisation’s strengths and weaknesses against recognised performance excellence criteria so that effective action plans can be implemented to improve competitiveness. The extent of their use throughout the world continues to grow with most developed nations offering National Performance Excellence Award programmes based on these models.
In the United States, the US Baldrige framework is seen as key reason why its economy has moved from strength to strength in the 1990s. Harry Hertz, chief executive of the Baldrige office, stated that “firms that account for three fifths of the dollar value of the US economy have some connection to Baldrige — they are past winners, contributors to the award process, or use the criteria for internal improvement”.
In New Zealand the uptake of these models has been steadily growing (in the last year the NZQF sales of the Criteria of Performance Excellence booklets was at its highest total since it was formed in 1992 with almost 7000 being sold).
This growth is expected to increase even further as the NZQF expands its education programme on the application of these models. In particular, more organisations are beginning to realise that the purpose of the models is to help any organisation, at whatever stage of development, to improve its performance (not just organisations competing for National Awards). In addition, self-assessment (the practice of organisations assessing themselves against these models) can now be conducted quickly and at little or no cost using simple questionnaire approach. Whilst such method does not provide the level of depth or feedback that is provided with thorough National Award assessment, it is still an extremely valuable method in assessing whether an organisation is moving forward in the right direction.
An integrated
approach
Benchmarking and performance excellence assessments are powerful set of complementary tools.
Self-assessments are the first step to improvement. They are usually undertaken before any benchmarking activity, as it is necessary to understand your own business and processes before comparing against others. Self-assessment enables an organisation to identify its strengths and weaknesses, whilst benchmarking enables an organisation to identify and implement the best practices required to improve.
Overseas clubs
The combination of these two techniques has already been used to powerful effect in membership club format.
In the UK the Benchmarking Club for the food and drinks industry consisting of such organisations as Campbell Soups, J Sainsbury plc, Kraft Jacobs Suchard, Scottish Courage Brands, Cargills, SmithKline, Beecham and Van den Bergh Foods used the techniques to identify and share with each other areas of organisational strength and weakness. In this way each member knew how the other group members performed in terms of the major areas of the European Business Excellence Model (such as leadership, strategy and policy, processes, people management, resources, customer satisfaction, employee satisfaction, impact on society and business results). This information was then used to help each organisation to benchmark their performance, and identify and apply best practices to individual processes.
After three years the UK Benchmarking Club is still running strong and has now developed portfolio of best practices and benchmarking data. Key benchmarking studies undertaken have been on forecasting food demand along the supply chain, selecting and designing corporate performance measures and improving employee and customer satisfaction.
NZ’s club
The idea for NZ Benchmarking Club that brings together companies interested in using both these techniques arose from discussions between Dr Robin Mann, lecturer of Business Improvement, Massey University, and Sue Wright, chief executive, New Zealand Quality Foundation (NZQF). Mann had witnessed the power of these techniques as manager of the UK’s Benchmarking Club for the food and drinks industry and Sue Wright was keen to develop learning on best practices that results in improved performance of NZ organisations.
As result of these discussions the idea for club was born and the search for an initial 12 members began. Or
