Benchmarking - Approach with caution and know its limits

Robert M. Tomasko


I have been involved in benchmarking assignments for much of my consulting career. While I have found these very useful to stimulate client (and consultant) thinking, and to give a feeling of optimism that alternatives are available and change possible through carefully selected role models, there are always limits to how successfully one company can pattern themselves after another.

Here are some common difficulties businesses have had with benchmarking.

1. Benchmarking is by nature a rear-view mirror approach. Before a practice can be selected for benchmarking it has to have been put in place and proven its worth. Considerable time may pass from when this happened and when a client is considering adopting a practice. A practice that was right for one point in time, may be less useful in the present.

2. Companies to be benchmarked against are frequently chosen by past financial performance. Past success is not always the best predictor of today's or future performance, and many one-time excellent companies have suffered performance declines ­ even though they seemed to be doing all the "right things." Also, past financial success might have had nothing to do with many of the management practices in place at that time.

3. Benchmarking often attempts to isolate and extract individual management practices from the broad array of practices a company is using. This extraction processes often misses the interdependencies and preconditions one practice sets for another. This extraction almost always misses the cultural context that enables a particular practice to be effective in one company, but useless in a business with a different history and culture.

4. Companies sometimes try to take short-cuts to addressing their underlying problems, by hoping to find (symptom) relief through force-fitting "proven" best practices on to their organization. Organizations have to be treated as organic "wholes" and the implications of change in one aspect of the how the company operates must be considered in relation to how everything else works.

5. For many companies the future is a moving target. The biggest danger from focusing too heavily on the best practices of the past is the risk of missing clues about what will be most needed in the future. Back to point one above - it's hard to see where you are going if too much time is spent looking in the rear-view mirror.


© Robert M. Tomasko 2002



SEE ALSO: IS GE A Good Model for Other Companies to Follow?

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