Why Benchmark?

Why Benchmark?Simply stated, benchmarking is one of the most powerful tools forinitiating and sustaining continuous improvement.
Comprehensive, accurate, timely information combined with judgment is the foundation for good
decision-making.Unfortunately, managers with good judgment are frequently required tomake important decisions with little or no factual information.Information is necessary for accurate problem identification and thedevelopment of viable solutions. Benchmarking results focusmanagement‘s attention on underlying issues and problems and provide avehicle for developing timely and effective solutions. The bottom line:Good decisions begin with good information and benchmarking provides aframework, structure, and methodology to gather essential analysis. Insummary, benchmarking is a powerful tool for change by generatingcredible, comprehensive, comparative information that authoritativelyidentifies weaknesses which move professionals from a debate about whatis wrong to a discussion of how to improve. Benchmarking over timeidentifies the results of interventions in an iterative processfostering continuous improvement.
"If you know a thing only qualitatively, you know it no more thanvaguely. If you know it quantitatively -- grasping some numericalmeasure that distinguishes it from an infinite number of otherpossibilities -- you are beginning to know it deeply. You comprehendsome of its beauty and you gain access to its power and theunderstanding it provides.
Being afraid of quantification is tantamount to disenfranchisingyourself, giving up on one of the most potent prospects forunderstanding and changing the world." - Carl Sagan
How Does Benchmarking Work?
Benchmarking includes six independent areas which, when brought together, forms a comprehensive picture. Benchmarking:
Provides a framework for institutional introspection
Supports the development of a fact-based philosophy of decision-making and continuous improvement: Initially, benchmarking and fact-based decision-making stimulate an organization to initiate changes by identifying problems and generating solutions that meet its goals. After decisions are made and initiatives implemented, managers rarely receive quantifiable feedback about their decisions. To continually improve, organizations must consistently monitor their processes, procedures, and performance. Managers recognize that decisions based on anecdote and inference are not nearly as effective as decisions based on an analysis of comparative information from competitive institutions. If improvement is to be sustained over time, benchmarking of competitors must become a consistently applied tool that is used over the longer term.
Identifies a comprehensive set of input and output measures that describe performance: Given the different scales and structures of operations at various business programs, it is important to establish input and output criteria measures that are consistent and comparable. In the EBI benchmarking studies, a number of criteria are utilized to take these factors into consideration. Some of the measures used for management studies are: Average financial aid award as a percentage of tuition, Full Time Equivalent (FTE) staff in the admissions office per inquiry and application received, student recruiting travel expenditures per inquiry and per applicant, percentage of coursework per instructional hour (to compensate for differences in term structure) in required curriculum areas, placement office staff per graduating student, and design/mailing cost of recruiting literature per inquiry. These ratios are all measures of performance and "correct for" differences in scale and structure. With these measures and comparative reference points from peer institutions, relative performance can, for the first time, be reasonably evaluated.
Creates a common definition of key terms by:
Establishing commonly agreed upon definitions of terms that allow valid comparisons across institutions: Previous attempts at data comparison have always been compromised by differences in data definitions. For example, starting salaries of graduating students reported at some institutions include bonuses (specified and/or projected) while such bonuses are not included at other institutions. Some schools determine the cost of publications in any one year as only the printing costs if the design work is done in another year while other schools allocate design costs over the life of the publication. Some schools count as an applicant all students from whom they receive any part of an application while other schools only count completed applications that are actionable. Having common definitions of key terms is essential if the data being compared is to be of value. Some schools had to start keeping data in different ways in order to report on the basis of the agreed upon definitions in this study. Those schools participating were willing to make changes because of the perceived value of gaining real and useful comparative information.
Establishing study area standards and facilitating the search for "best practices": In a competitive environment, performance is relative. How do managers evaluate their performance? Without comparative data, the only baseline available is how they did last year. Although valuable in identifying the effects of new initiatives in improving performance, such comparisons do not allow managers to determine overall effectiveness in relation to competitors and specific study area standards. If a school‘s applications increase by 5% in a given year, this only has meaning in the context of what is happening at their peer institutions and in that study area. The 5% increase looks quite different if peers are increasing by 20%--or if they are declining by 10%. Over time as the EBI benchmarking projects evolve, it will be possible to identify ‘best practices‘ on a variety of dimensions. When such practices are identified, schools will have an additional tool to utilize in their continuous improvement agenda.
Developing a comprehensive base of analysis that permits meaningful comparisons
Enhances strategy development and implementation by providing relevant points of reference: Karlof & Ostblom in their book entitled Benchmarking: A Signpost to Excellence in Quality and Productivity state, "The conclusion...is...that benchmarking has a remarkable effect at all stages of the sequence of strategy determination, strategy formulation, strategy implementation, leadership development, organization development and training." The process of introspection that results from the gathering and reporting of data provides a vivid picture of how the organization deploys its resources and the ultimate effectiveness of that deployment in terms of the stated strategy. For example, one school in an EBI pilot study found that it was spending twice the group average on activities generally seen as working toward the conversion of inquiries to applications, but only 40% of the group average on converting applicants to enrolled students. Unfortunately, their actual yield performance data in both areas would have suggested the need for a reversed strategy. Without comparative data, there was no way to effectively evaluate expenditure levels in the context of yield results. With relevant comparative data, the school was in a position to develop a plan that was congruent with their program strategy.
Longitudinal analysis provides a perspective on performance over time: The current benchmarking effort establishes a set of data that will serve schools in the current year and provide a baseline for longitudinal analysis in the years ahead. The data base is rich for analysis and provides participating institutions with clear direction as to where possible problems exist, where to seek additional information to clarify conflicting data, and in what areas to allocate incremental or reduced resources.
Do educators need to benchmark? In the "QualityMovement", education has significantly lagged behind its corporatecounterparts. While major corporations have demonstrated the need andvalue of employing continuous quality improvement techniques to improvemanagement of their organizations, education has so far avoidedadopting the basic principles of continuous quality improvement. Evenin the face of global competition, constrained resources, and greaterexpectations from customers, education has, to date, largely ignoredmarketplace pressures and realities, remaining confident of its abilityto attract students regardless of the perceived value of its service.Ted Marchese most poignantly described this attitude, editor of Changemagazine (November/December 1994):
"Corporate Leaders believe in the tenets of qualitymanagement and their sense of its rightness and efficacy colors theirperceptions of higher education. From hard experience they embracenotions of continuous improvement, collective responsibility, customerfocus, and management by fact. To them, colleges and universities…looklike organizational left-behinds that can‘t be very interested inquality itself."
As an ever more sophisticated customer is asking for demonstratedvalue-added products and educators are being driven to the point ofcritical introspection about what their service is, how much it costs,and what outcomes it delivers. In response they are attempting tounderstand and respond in substantive and creative ways to their keyconstituents, prospective students and employers.
Is benchmarking an effective tool for continuous improvement?The virtues of benchmarking have long been recognized in the corporatecommunity and educators that participate in educational benchmarkingstudies are now recognizing their insight.
"We do not believe that any particular doctrine is the sole path tosalvation, but that leaders must choose the tools, approaches andmodels best suited to themselves and their circumstances.. Having saidthat, we must hasten to add that we have yet to work with a method thatoffers so much inherent potential for improvement as benchmarking."
"...Benchmarking has a remarkable effect at all stages of thesequence of strategy determination, strategy formulation, strategyimplementation, leadership development, organization development andtraining."
Reference: Karlof & Ostblom, Benchmarking: A Signpost to Excellence in Quality and Productivity
Benchmarking can be a critical catalyst for change. It is difficultfor managers and staff to dispute weak performance or inefficientprocesses when clear, systematic, comparative data is available. Thebenchmarking process eliminates the attitude so aptly described in theadage, "If it isn‘t broke, don‘t fix it". Data empowers and stimulatespeople to address real issues and find solutions where results can bemeasured. Determining organizational effectiveness and facilitatingchange are two of the primary roles of leaders in management education.Benchmarking can be a tool to support both of these important roles.