But first, what exactly is a competitive benchmarking analysis project? It\u2019s the collaborative effort of key managers and subject matter experts in compiling and analyzing benchmarking data so as to give management (includes C-Suite managers as well as line managers, the Board of Directors, etc.) and stakeholders the ability to compare the quality of the organization\u2019s performance (e.g., a company\u2019s productivity, staffing levels, financial performance, etc.) against those of other organizations in the same industry through the use of standardized metrics, or KPIs. Once such competitive benchmarking projects are completed, all those involved are able to identify what needs improvement, and develop an action plan to move towards company-wide improvement.<\/p>\n
There are typically 4 steps taken to fulfill a competitive benchmarking analysis project which are as follows:<\/p>\n
- \n
- Outlining the benchmarking project\u2019s scope \u2013 what department or function will be the subject of the benchmarking analysis.<\/li>\n
- Defining the KPIs and metrics you need to benchmark against your competitors.<\/li>\n
- Sourcing and compiling your benchmarking data to properly compare your company to those of your peers.<\/li>\n
- Analyzing your benchmarking database and presenting the results to managers and stakeholders.<\/li>\n<\/ul>\n
Each of these steps will be explained in more detail, I promise. So read onwards!<\/p>\n
![\"A](\"https:\/\/opsdog.com\/resources\/wp-content\/uploads\/2019\/04\/bank-performance-metrics-kpi-encyclopedia-e1557521842731.png\")
<\/a><\/h4>\nBenchmarking Analysis Project Step 1: Outline the Benchmark Project Scope<\/h4>\n
Defining the scope (i.e., the part of the project where plans are made involving what needs to be achieved and the work that must be done to deliver the project in a timely and cost effective manner) of the competitive benchmarking analysis project should always be your starting point. After all, you don\u2019t want this competitive benchmarking project to slide out of control before it begins.<\/p>\n
So ask, and answer, these questions:<\/p>\n
- \n
- What are the goals of the competitive benchmarking analysis project?<\/li>\n
- What are your criteria for success?<\/li>\n
- What\u2019s the timeframe for the competitive benchmarking analysis project?<\/li>\n
- What\u2019s being assessed? That is, which lines of business, departments, business processes, work activities and\/or employees will you benchmark?<\/li>\n
- Is there any specific regional priority?<\/li>\n
- What is the overall focus of the competitive benchmarking analysis project effort? Is it market-focused benchmarking? Financial-focused? Product-focused? Operational? Or individual-level benchmarking?<\/li>\n
- Who will be involved in the project\u2014and in what capacity?<\/li>\n
- Who are your competitors, or peers?<\/li>\n<\/ul>\n
OpsDog benchmarking best practice tips:<\/strong> After you\u2019ve answered these questions, write them down. The entire document should be one or two pages long, max. Then distribute the scope document to all competitive benchmarking analysis project participants. Get their input. It\u2019s essential that you establish the scope and direction upfront, as this document will double as a reference guide to help you keep the competitive benchmarking analysis project on track.<\/p>\n
Benchmarking Analysis Project Step 2: Define the Metrics You Need to Benchmark Against Competitors<\/h4>\n
Which KPIs will you choose to compare your company\u2019s performance to others? The list of metrics you create is crucial.<\/p>\n
Keeping in mind the scope of the benchmarking project (which you just defined in Step 1), build your KPI list with the help of internal subject-matter experts. Refine your list with the help of research: do some searching on Opsdog for KPIs (https:\/\/opsdog.com\/search), tap the knowledge of industry associations, business contacts, and good ol\u2019 Google to ensure you end up with a comprehensive list of metrics to study for the areas you plan to scope.<\/p>\n
Here are some important requirements for your metrics to use in your benchmarking analysis project:<\/p>\n
- \n
- The metrics must align with the focus and goals of the specified competitive benchmarking analysis effort. That is, they must meet the criteria for the questions you answered in Step 1.<\/li>\n
- The list should be reasonable in length. It makes no sense to try and manage 100 different KPIs. As a rule of thumb, try and limit your list to about 5-10 KPIs per area to be studied.<\/li>\n
- Lean toward KPIs that other, similar organizations are using to measure their operations. This will increase the likelihood that external benchmark data will be available for you to use. (hint \u2013 we sell lots of benchmarking data and reports on this website!)<\/li>\n<\/ul>\n
![\"finance](\"https:\/\/opsdog.com\/resources\/wp-content\/uploads\/2017\/03\/finance-kpis-measurable-2-e1591295077921.png\")
<\/a><\/p>\nOpsDog benchmarking best practice tips:<\/strong> Create a detailed \u201cdata dictionary\u201d which lists each of the benchmarking KPIs to be measured, arranged by organizational area (check out OpsDog\u2019s KPI encyclopedias<\/a> to help you get started on this task). Each KPI \u201centry\u201d in this \u201cdictionary\u201d should include:<\/p>\n
- \n
- A simple benchmarking KPI definition.<\/li>\n
- A formula.<\/li>\n
- A few rules pertaining to its measurement (i.e.,<\/em> what to include and exclude from the calculation).<\/li>\n
- Meta data related to any relevant systems, employees, or data sources.<\/li>\n<\/ul>\n
Not only will your \u201cdata dictionary\u201d be an ongoing reference throughout the life of the project, but it\u2019s also a living document. It needs to be continually updated and refined throughout the competitive benchmarking analysis project\u2014and beyond.<\/p>\n
You\u2019re halfway done. Only two steps left.<\/p>\n
Benchmarking Analysis Project Step 3: Source and Compile Your Benchmark Data to Compare<\/h4>\n
To compare your business to others, you\u2019ll need to identify and gather benchmark data from two or more different sources (i.e., yours and others):<\/p>\n
- \n
- Internal benchmark data.<\/strong> This is what you can gather from sources inside your company. This typically includes benchmark data exported from various internal systems (ERP, general ledger, HR management systems, etc.), as well as benchmark data included in pre-formatted reports.<\/li>\n
- External benchmark data.<\/strong> This is info you\u2019ll pull from other companies and benchmark data providers. Typical sources include industry associations, government agencies (e.g.,<\/em> FINRA, healthcare.gov, etc.), consultancies, and third-party benchmark data providers such as Bloomberg and OpsDog. And did we mention OpsDog? Right. OpsDog. We are a freakin\u2019 benchmark data factory.<\/em> Check out how much benchmarking data<\/a> we put at your fingertips!<\/li>\n<\/ul>\n
[Could our self-promotion be any more shameless? Let us know.]<\/p>\n
OpsDog benchmarking best practice tips: <\/strong>Before you\u2014 spoiler alert for Step 4\u2014begin analyzing your benchmark data, make sure you compile it all, both internal and external, into a standard format, such as an Excel file. Simple meta data should be tagged to each value, including:<\/p>\n
- \n
- KPI name.<\/li>\n
- KPI definition.<\/li>\n
- Source.<\/li>\n
- Demographic attributes (region, company size, etc.).<\/li>\n
- Date of measurement.<\/li>\n
- And so on.<\/li>\n<\/ul>\n
Add more benchmarking analysis data to this \u201cmaster file\u201d as it becomes available.<\/p>\n
![\"insurance](\"https:\/\/opsdog.com\/resources\/wp-content\/uploads\/2019\/05\/kpis-for-Insurance-companies-to-track-e1557523235483.png\")
<\/a><\/h4>\nBenchmarking Analysis Step 4: Analyze your Benchmark Database and Present the Results<\/h4>\n
You\u2019ve sourced and compiled your benchmarking analysis data. Congratulations! Now you\u2019ll analyze it, collate it, and prepare it for center stage in your upcoming presentation.<\/p>\n
Warning: Benchmarks can be divisive.<\/em> (\u201cYou really think my department is that bad? Where\u2019d you get that benchmark data?! Who are you comparing us to?! You are seriously threatening my bonus!\u201d) So be sure to make clear, in your presentation, that 1) competitive benchmarking is merely a means to an end<\/a>, and not an end in itself; and 2) further action will be required to actually achieve the desired benefits<\/a> of cost reduction, productivity gains, service-level improvement, etc.<\/p>\n
With those admonitions under your belt, here are some basic presentation tenets to live by:<\/p>\n
- \n
- Consider the benchmarking audience.<\/strong> Executives, managers, and front-line employees each will have different perspectives and attention spans. Be sure to craft a slightly different competitive benchmarking analysis presentation experience, tailored for each audience segment.<\/li>\n
- File appropriately.<\/strong> Make sure that the file-format of your competitive benchmarking analysis presentation works well for you and the others with whom you\u2019ll share it. Should it be in PowerPoint, PDF, Excel, Tableau? It must meet the expectations and needs of your audience.<\/li>\n
- Sweat the details.<\/strong> Invest the time needed to really nail the page layout, chart design, and related on-page elements. Keep them clear and devoid of clutter. This is easier said than done.<\/li>\n<\/ul>\n
OpsDog benchmarking best practice tips:<\/strong> Simplicity is hard. Don\u2019t believe us? Consider these observations from history\u2019s great thought-leaders:<\/p>\n
- \n
- \u201cI didn\u2019t have time to write a short letter, so I wrote a long one instead.\u201d \u2014Mark Twain<\/li>\n
- \u201cSimple can be harder than complex: You have to work hard to get your thinking clean to make it simple.\u201d \u2014Steve Jobs<\/li>\n
- \u201cIt costs a lot of money to look this cheap.\u201d \u2014Dolly Parton<\/li>\n<\/ul>\n
It\u2019s easier to make a complex competitive benchmarking analysis presentation than a concise one. It takes time and effort. Remember: Your audience will have a short attention span. So\u2026<\/p>\n
- \n
- Lead with key findings (the \u201cheadlines\u201d) and anecdotes to get their attention.<\/li>\n
- Briefly dive into detail to build credibility.<\/li>\n
- Then go straight to the bottom line (i.e., what are the benefits and how can we get there?).<\/li>\n<\/ul>\n
This entire cycle needs to be completed in a relatively short amount of time\u2014we\u2019re talking five minutes or less.<\/strong> Drown out the noise in your competitive benchmarking analysis presentation, or risk losing your audience before you can make your point.<\/p>\n
To help you with this task, develop a page format or document structure that creatively combines competitive benchmark data (facts) with anecdotes (customer or employee stories, or comments). For example, if you are presenting a chart related to \u201cHow Long the Call Center Requires to Answer an Incoming Call (i.e.,<\/em> Average Speed of Answer),\u201d pair it with some selected customer comments related to the wait times\u2014and how that impacts their overall experience.<\/p>\n
Round 3 of 4 in This Competitive Benchmarking Analysis Bootcamp is Done!<\/h4>\n
You\u2019ve jammed a lot of important info into your brain in these past few minutes; consider yourself on the Road To Competitive Benchmarking!<\/p>\n
- File appropriately.<\/strong> Make sure that the file-format of your competitive benchmarking analysis presentation works well for you and the others with whom you\u2019ll share it. Should it be in PowerPoint, PDF, Excel, Tableau? It must meet the expectations and needs of your audience.<\/li>\n
- Consider the benchmarking audience.<\/strong> Executives, managers, and front-line employees each will have different perspectives and attention spans. Be sure to craft a slightly different competitive benchmarking analysis presentation experience, tailored for each audience segment.<\/li>\n
- External benchmark data.<\/strong> This is info you\u2019ll pull from other companies and benchmark data providers. Typical sources include industry associations, government agencies (e.g.,<\/em> FINRA, healthcare.gov, etc.), consultancies, and third-party benchmark data providers such as Bloomberg and OpsDog. And did we mention OpsDog? Right. OpsDog. We are a freakin\u2019 benchmark data factory.<\/em> Check out how much benchmarking data<\/a> we put at your fingertips!<\/li>\n<\/ul>\n
- Meta data related to any relevant systems, employees, or data sources.<\/li>\n<\/ul>\n