What is Benchmarking Understanding its Philosophy

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What is Benchmarking? Understanding its
Philosophy

• Metin Kozak
• School of Tourism and Hospitality Management
• Mugla University
• Turkey
• Benchmarking Forum, Texas, USA
• 14-16 March 2004
•   

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What is Benchmarking?

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What is Benchmarking?

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What is Benchmarking?

• the continuous measurement and improvement of
  an organisations performance against the better
  ones or the best in the industry to obtain
  information about new working methods or
  practices in other organisations

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What is Benchmarking?
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A benchmarking gap analysis model
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Gap Analysis (Spiter chart)
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Definition of Benchmarking-related Terms
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Definition of Benchmarking-related Terms
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Definition of Benchmarking-related Terms
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Definition of Benchmarking-related Terms
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• Benchmarking not mean
• Comparison
• Competitive analysis
• Exactly copying others.

• Benchmarking means
• Why differences in performance are observed?
• How a higher performance can be obtained?

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Why to Benchmark?

Benchmarking
c
b
Performance
Competitiveness
a
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Benefits of Benchmarking

• helps organisations understand strengths and
  weaknesses
• helps better satisfy the customers needs by
  establishing new standards and goals
• motivates employees to reach new standards and to
  be keen on new developments
• allows organisations to realise what level(s) of
  performance is really possible by looking at
  others
• documents reasons as to why these differences
  exist
• helps organisations improve their competitive
  advantage
• is a cost-effective and time-efficient way of
  establishing a pool of innovative ideas

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TQM, Performance and Benchmarking
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Types of Benchmarking

• Internal Benchmarking
• covers two-way communication and sharing opinions
  between departments within the same organisation
  or between organisations operating as part of a
  chain in different countries

• Advantages
• Easier to implement
• Easier to access data

• Disadvantages
• Close to external ideas
• Time-consuming

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Types of Benchmarking ()

• External Benchmarking
• As being the converse of internal benchmarking,
  external benchmarking requires a comparison work
  with external organisations in order to discover
  new ideas, methods, products and services. The
  gap between internal and external practices
  displays the way where to change and if there is
  any need to change.

• Advantages
• Helps to measure ones own performance
• Helps to search for best practices

• Disadvantages
• Takes time
• Requires support
• Cross-cultural differences

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Types of Benchmarking ()

• Functional Benchmarking
• refers to comparative research and attempts to
  seek world-class excellence by comparing business
  performance not only against competitors but also
  against the best businesses operating in similar
  fields and performing similar activities or
  having similar problems, but in a different
  industry

• Advantages
• Developing networks
• Discovering innovative practices

• Disadvantage
• Not suitable for every organisation

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Types of Benchmarking ()

• Performance benchmarking
• An activity of comparing ones performance level
  against other businesses on the basis of ranking,
  e.g. the speed of computer processing,
  reliability and so on.
• Process benchmarking
• An activity of investigating how others achieve
  and identifying root causes as to why they are
  better.
• Strategic benchmarking
• Benchmarking the critical components of an
  organisations success that lead to competitive
  advantage.

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Types of Benchmarking ()

• Non-competitive benchmarking
• Involves comparison of a related process in a
  non-competitive organisation, a related process
  in a different industry and an unrelated process
  in a different industry.
• Industry benchmarking
• Conducting research only in a whole industry to
  obtain baseline information, e.g. hotel industry.

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Types of Benchmarking ()

• Best-in-class benchmarking
• Identifying the best processes regardless of the
  industry.
• For example, a hotels accounting department
  looking at that of a manufacturing business may
  identify as having the fastest accounts
  receivable turnover.
• Operational benchmarking
• Attempting to exceed the best practice
  organisations at a specific activity, function or
  operation.

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Components of Benchmarking
                                         
 

 
  Assessment
Enabler
 
Outcomes
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Components of Benchmarking

• Assessment Measuring own and partners
  performance
• Enablers Practices leading to performance
  improvement
• Outcomes Performance outcomes yielded by
  implementing the findings.
• It is a lot easier to benchmark a process than
  to benchmark an output (Kaplan 1993)
• Process a specific investigation
• Output rather complex and extensive.

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Quantitative Measures (Hotels)
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Quantitiave-Qualitative Measures (Destinations)
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Role of qualitative and quantitative measures
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Measures in Balanced Score Card
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Limitations of Past Benchmarking Research

• Research assuming that benchmarking is solely a
  comparison activity or every comparison survey is
  a form of benchmarking
• Little has been done with regard to the empirical
  assessment of CS as a performance assessment and
  improvement tool
• Limited use of statistical tools to test the
  significance level of results yielded from the
  comparison of qualitative measures
• Customers are not homogeneous in terms of their
  socio-demographic and socio-economic
  characteristics as well as in terms of
  motivations, purchasing behaviour and loyalty
• Little research allocated efforts to perform or
  develop methodologies for internal or generic
  benchmarking studies
• Not much attention to the consideration of
  cross-cultural differences either between
  organisations or between the organisational
  structure of their governments.

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Elements of Tourism Benchmarking model



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Limitations of Tourism Benchmarking

• Benchmarking services - benchmarking products
• Quantifying qualitative measures
• Industry wide-standards

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• Thank you...