Benchmarking: Building a “World Class” Operation
Any business can become a “World Class” operation, regardless of size. What it takes, according to John Eldred, founder of the Wharton School’s Family Business Program at the University of Pennsylvania, is a firm commitment and continuous “benchmarking.” You learn from others’ experiences. You find out what the successful companies are doing, those in and out of your industry, and do it… only better, Eldred told the members of the Family Business Forum at the Rothman Institute at Fairleigh Dickinson University during a seminar on April 25th.
“Benchmarking,” contends Eldred, whose company, Transition One Associates, specializes in Strategic Change Management, “has emerged as a major force for corporate change and renewal. However,” he noted, “earlier versions can be traced to inter-firm cooperative efforts by family firms in several industries.”
There are many benefits to be gained from using “benchmarking” — measuring yourself against others — as a succession development tool, according to Eldred, a frequent lecturer before such industry giants as Alcoa, Anheuser-Busch, Bell Atlantic, Campbell Soup and Westinghouse. Among them:
- a clearer understanding of your customer/client needs
- a better understanding of your own process, including such things as accountability, current strengths and weaknesses
- knowledge of other companies’ operations, which when properly applied may provide a foundation for building operational plans to meet and surpass other industry practices and policies.
“Benchmarking,” Eldred cautioned the audience, requires some pre-planning. You just don’t plunge ahead. He suggested a ten point “readiness test” for companies, comprised of the following questions and using a rating system of 0 to 10, indicating “no clue” to “clear winner.”
Is there a shared vision?
- Is there a commitment to quality? <P>
- Is there a commitment to learning? <P>
- Is there a climate for confrontation? <P>
- Is there an information infrastructure? <P>
- Is there a motivated key management team? <P>
- Is there competence? <P>
- Is there a long term perspective? <P>
- Is there a strategic planning orientation? <P>
- Is there a capacity to compel commitment?
If you’ve answered “no clue” (0 to 3) or “long shot” (4 to 5), to any of the questions, you’ve got some internal work to do before forging ahead.
The greatest pitfalls in any “benchmarking” effort, he said, are:
- Lack of sponsorship. Selecting the wrong people as part of the team.
- Scheduling teams which do not fully understand their work.
- Teams taking on too much.
- Managers who fail to understand the necessary commitment.
- Focusing on metrics rather than processes.
- Not positioning “benchmarking” within a larger strategy.
- Misunderstanding the organization’s mission, goals and objectives.
- Assuming every project requires a site visit.
- Failure to inspect benchmarking.
“Benchmarking,” he said, is an ongoing process. “A good scare,” he added, “is worth a pound of advice.” Fear of failure, he noted, can be a great motivator. He identified the values, strategies and traits common among the best companies as:
Commitment. A strong determination to stay the course.
Communication. Paying exceptional attention to employee comments and suggestions. “Wainwright Industries, a family-owned manufacturer of stamped and machined products for the automotive, aerospace and other industries, and a winner of the national Malcolm Baldridge Award for quality, claims its 275 employees are constantly suggesting ways to streamline the process, reduce delivery times and improve customer relations. You just have to listen,” Eldred noted, adding, “people support what they help to create.”
Culture Consciousness. Fitting systems and programs into the culture.
Customer-focused. Being proactively attentive to customer needs, both present and anticipated. Lost business opportunities, he noted, may have a significant impact on the bottom line, particularly when eight of every ten unhappy customers don’t complain, they just don’t return. Without some remedial action, he noted, these silent sufferers will soon be spending their dollars elsewhere.
Interdependence. Recognizing the influence of one function’s work on others.
Never Satisfied. Being deeply committed to the continuous improvement ethic.
Relationship. Building alliances to gain support and complete the work.
Risk Taking. You need to take risks. Don’t get sandbagged by your mistakes, he cautioned. Learn from them.
Strategy and Planning. Doing what management books prescribe.
A “world class” organization, Eldred said, “has learned how to master change.