Exploding the Myths of Benchmarking
by Anne Feltus, Feltus/McFarlane Communications 

Do you find yourself in a defense mode when explaining the benefits of benchmarking to your organization? Worse, are you having trouble justifying the process of benchmarking to YOURSELF? 

As critics of benchmarking surface, or as your own doubts creep in, it is important to answer with substantial, fact-based answers. Here, then, are five of the more popular arguments/myths that surround benchmarking. Continuous Journey looked to the experts—those in benchmarking's trenches—to answer them. 

Myth #1: Benchmarking is too expensive.

Quality can be critical when you're producing diagnostic imaging devices for the health care industry. That's why, after exploring continuous improvement initiatives for several years, Medrad introduced its own quality effort in the spring of 1990. 

In the last four years, Medrad's employee quality teams have traveled around the country visiting Malcolm Baldrige National Quality Award- winning organizations and other quality champions in a variety of fields. Through these excursions, they have gained firsthand insight and information about these leaders' best practices in such diverse areas as employee empowerment, employee evaluation processes, cash flow management, customer order entry, and information systems. "We've stolen ideas shamelessly and have adapted many of their practices to our own operations," Robert Graham, vice president, corporate quality process, for the Pittsburgh-based company, points out. "And in some instances, we have been comforted by the knowledge that our processes are on target or are even more advanced than theirs." 

Similar successes can be found in almost every company that's involved in benchmarking. Yet, the myth prevails that the process is prohibitively expensive, which can keep some prospective participants from trying this quality approach for themselves. Indeed, benchmarking comes at a price, Graham is quick to admit. "Typically," he says, "there are expenses related to travel as well as indirect costs associated with employee time devoted to trips and team meetings." Still, the process is not as expensive as some people believe. "With careful planning," he explains, "benchmarking costs can be kept to a minimum." 

One way to control costs is to tackle benchmarking one step at a time. "Some people think benchmarking is an extremely difficult and complex process, but that's not necessarily the case," Graham contends. "You can benchmark without making it a big ordeal. You don't have to examine all processes at once. You can keep costs down by doing benchmarking in degrees and by defining very narrow areas to explore." 

To minimize costly travel and meeting time, he continues, you must work efficiently and communicate effectively. "First, you have to do your homework," he explains. "Before you visit other companies, you must know specifically what your own problems are. You must clearly define what you intend to accomplish and what you need to look for during your trip. Then you must make that information known to the people you are planning to visit. And since benchmarking is a two-way street, you also must understand what the other companies want from you and what you are willing to share with them. 

"Some people say there is a cost associated with giving away more information about their total quality processes to other companies than they feel comfortable providing," he adds. "But you can reveal information judiciously. You don't have to give away the heart and soul of your company. And sharing data and processes will help us as a country become more competitive in the global marketplace." 

Benchmarking can be done without breaking your company's budget, Graham concludes. "And remember this: The knowledge you gain is well worth the investment you make." 

Myth #2: Management does not understand/support benchmarking

While some managers remain skeptical about the benefits benchmarking can bring to their companies, Turk Enustun believes most senior executives have a more positive point of view. After more than a decade of experience in this quality process, he is convinced that benchmarking represents a natural extension of management's traditional role. 

"Managers are by nature competitive, and anyone who is competitive is looking at what other companies are doing," the director of corporate benchmarking for Eastman Kodak in Rochester, New York, maintains. "Therefore, most managers are benchmarkers at heart. They understand the need to compare other companies' performances with their own, and they're very adept at doing competitive analyses because that's what is expected of them by Wall Street and by securities analysts all the time." 

After making these comparisons, he adds, it's only natural for managers to begin asking some critical questions: How do other companies achieve their good results? What can we learn from them? Can we implement some of their good ideas? Will this lead us to be as good as they are? "If a company's annual sales are up 2 percent and its competitors' sales are up 10 percent, the managers want to know why," he explains. 

"Part of management's' role," he says, "is to enable their companies to emulate leaders. They can put the resources in place their organizations need to effect change, and benchmarking is one tool that can be used to accomplish this goal. "Management understands and supports benchmarking," Enustun concludes, "because it's the component that leads to the results management wants." 

He cites an example: "Early in 1990, our manufacturing division began gathering benchmarking data internally on the performance measures of various products. When we compared six or seven different products made at seven sites around the world, we found big differences in such categories as quality, cost and inventory level. 

"The information was a real eye-opener for the division's general manager, who became a firm believer in benchmarking," he concludes. "He recognized that if each unit could be as good as the best one in each of these categories, we could add millions of dollars the company's bottom line." 

Myth #3: You can benchmark only with the best

Benchmarking has played a role in Pacific Bell's progress for three years. "We benchmarked a tremendous variety of topics ranging from affirmative action to auditing to business planning to cable damage prevention," said Al Pozos, former benchmarking manager for Pacific Bell's corporate quality center in San Ramon, California. Pozos currently works as director of the Houston-based International Benchmarking Clearinghouse. 

Pacific Bell doesn't always elect to benchmark with companies whose practices are considered superior. You don't have to benchmark with the best companies to get the results you want, Pozos points out. In fact, there are some solid benefits to working with organizations that aren't quite the cream of the crop. 

Among the reasons? Companies with the best practices often are over- whelmed with requests to benchmark and have to turn some prospective partners down. "Furthermore, there often is a tremendous gap between your own company's practices and those that represent the absolute best," Pozos believes. "It would take a quantum leap to reach their level, which can be quite discouraging. Sometimes it's better to make incremental changes." 

Benchmarking with the best companies also can be daunting when you're tackling extremely complex projects that involve a number of variables and that require gathering large volumes of data. Pozos presents this analogy: "You go to a gym and all you want to do is work on your biceps. But if the trainer says you should work on your thighs, stomach, and neck as well, it can be overwhelming. It can discourage you from doing what you set out to do." 

There's an inference that you obtain inferior information when you benchmark with companies that are less than the best. But as Pozos points out, that's not necessarily the case. 

"It's just that companies that qualify as the leaders have applied their practices over longer periods and with more consistency," he explains. "It's a matter of fine tuning." 

In fact, benchmarking with companies that are less than the best has brought positive results for Pacific Bell. "In measures of customer satisfaction, for example, we worked with companies that were not necessarily the absolute best in this area," Pozos says. "Yet, we gathered enough useful information to enable us to reduce our expenditures by $9 million. And when we benchmarked with other companies to determine how they handle employee suggestions, we were able to obtain data that saved us about $12 million." 

Pozos puts it this way: "You can learn from an Olympic athlete. But you also can learn from the local tennis pro." 

Myth #4: There is no analogous process to benchmark in my industry.

Brian Andes received an inquiry recently from a benchmarker who was looking for ways to protect a telephone company's underground cable network. But Andes is the director of business process improvement at Tenneco Inc., whose products and services bear little resemblance to those offered by the phone company. So, why did the caller pick him as a benchmarking partner? 

To Andes, the analogy was obvious. "We don't have under- ground cables, but we do have underground pipelines," he points out. "The object of our processes may not be the same, but our approaches to resolving problems may be similar." Andes dispels the myth that to benchmark effectively, you must team up with companies in your own industry whose processes are analogous to yours. "It's a matter of mind set," he maintains. "It's a matter of understanding that even companies or industries that are different can have similar core processes or common characteristics."

He cites an example. "Tenneco has six operating companies that sell to each other, and we wanted to learn more about other companies' processes for billing between companies," he explains. "But when we began gathering information on intercompany billing, it's such an esoteric practice that very little information has been published on it." So, the Tenneco team broadened its search. It identified companies that do billing and then isolated those who have excelled at it.

"Next, we narrowed our focus," Andes recalls. "We asked if any of these organizations had several companies that did business with each other." This approach led to a successful benchmarking effort. 

Andes offers another example. "We were benchmarking on innova- tion," he recalls. "Very few companies have discrete innovation processes, but in the course of calling people, we found companies that have introduced initiatives to encourage innovation, and we focused on these."

Identifying compatible benchmarking partners requires asking questions and recognizing benchmarking opportunities when they arise, Andes explains. "One benefit to belonging to the International Benchmarking Clear- inghouse is networking," he notes. "And, whenever I call someone with a specific purpose in mind, I also review my list of current benchmarking projects and ask about anything I have an inkling they may be doing."

That's how the call about the phone company's underground cable network came about. "I was researching the innovation process," Andes points out. "The phone company is in a regulated industry, just as we are, and I wanted to know how innovation is approached in a regulated environment. We started talking about other issues, and my phone company contact saw the connection."

Myth #5: Benchmarking is only for big companies.

It's no surprise that quality proponents claim benchmarking is only for big companies. They're the ones with the human and financial resources it takes to do benchmarking on a grand scale and with the structure in place to facilitate other companies' benchmarking requests. 

But as Ken Dooley can tell you, benchmarking can benefit smaller compa- nies, too. He's the quality manager for Syntron Inc., which makes marine electronics for the seismic and exploratory drilling industries. His company has about 300 employees situated around the world. And despite its diminutive size, it's actively involved in benchmarking.

Syntron traditionally has teamed up with companies its own size. "It's easier to learn to do benchmarking when you're dealing with a company the same size as yours," he points out. "But more importantly, we work with small companies because the processes we're benchmarking are more likely to be beneficial for both of us. 

"The reason is that companies of different sizes approach processes in different ways. What's best in class for a big company might not be best in class for a smaller one. For example, a small company that's benchmarking the process of receiving goods might discover that what works well for a big company might not work for it at all." 

Dooley admits the myth that benchmarking is only for big companies has discouraged some small organizations from participating in benchmarking activities. "I wanted to benchmark the ISO certification process for international standards," he recalls. "But when I approached companies of similar size in our area, they saw little value at first in comparing processes. They considered what they were doing to be unique, because they had consolidated processes within their organization that would have been conducted separately in bigger companies. But after we talked about their processes and how they documented and audited and prepared for certification, they changed their minds.

"There are elements of almost any process that are similar no matter what size the company is," Dooley maintains. "In fact, big companies can benefit from benchmarking with smaller ones when they're planning to consolidate their operations. 
"Benchmarking is a learning process, and the success of your efforts depends heavily on how well you get to know the processes you're studying," he concludes. "The more companies you talk to — regardless of their size — the better."