In the past despite inherent capabilities many Indian companies were non-competitive and complacent due to the protectionist in inward looking economic policies. The present business environment however requires both private and public sector enterprises to continuously hone their skills, inculcate the best practices across divisions and functions, reengineer their business processes and keep inventing themselves through continuous learning and innovation.
In an era of constant environmental change, total quality management is the need of the hour for Indian companies. While greater emphasis on product quality is required to survive in any business in today’s competitive environment, customer’s service has to be given equal importance. For this purpose new management tools and techniques need to be developed. Benchmarking is one such structured management tool and involves a simple act of comparison and learning for organizational improvement.
Bench marking is the process of identifying “best practice” in relation to both products (including) and the processes by which those products are created and delivered. The search for “best practice” can taker place both inside a particular industry, and also in other industries. The objective of benchmarking is to understand and evaluate the current position of a business or organization in relation to “best practice” and to identify areas and means of performance improvement.
A company can improve its own process and systems by carrying and learning from other leading companies excelling in specific areas. This does not imply blind imitation, but act of absorbing and incorporating the best contemporary practices that are relevant to the company’s needs. Benchmarking has wide applicability for various functions and also serves as an important vehicle for implementing contemporary strategic human resource policies and practices.
The term Bench marking was first used during the mid 1970s by the Xerox corporation, when the American copier market was facing increasing competition from Japanese companies. Moreover, IBM and Eastman Kodak were competing with high end copiers .To regain dominance Xerox started emergency maneuvers in 1983.It devised and successfully implanted strategy-finding out and reflecting the world’s best practices in various areas. The Xerox management christened this new management strategy ‘benchmarking’. In 1989 Xerox was awarded the Malcom Balridge National Quality Award for its efforts. It also should be mentioned that Japanese firms had long been benchmarking other companies, many of them American.
Benchmarking for Competitive Advantage
It is worth nothing that successful benchmarking begins with the mind and has to be approached with the attitude of a learner. It requires the humility to learn from someone else and the wisdom to implement match and perhaps better the best practices. This is especially relevant in the case of benchmarking human resource practices, where a human element forms a major component. An essential ingredient for a successful benchmarking programme is to prioritize and focus on a few business practices or functions that will affect the critical success factors of an organization at a given point in time. One can identify internal and external benchmarking and most importantly, absorb the relevant best practices to enhance organizational effectiveness.
The Process of Benchmarking
Benchmarking involves looking outward to examine how others achieve their performance levels and to understand the processes they use. When the lessons learnt from a benchmarking exercise are applied appropriately, they facilitate improved performance in critical functions within an organization or in key areas of the business environment.
The benchmarking process includes the following steps:
2. Collection of Information
3. Analysis of data
4. Implementation of the analyzed data
5. Monitoring the entire process
Benchmarking should not be considered a one-off exercise. To be effective, it must become an ongoing, integral part of an ongoing improvement process with the goal of keeping abreast of ever-improving best practice. The benchmarking process may be of different types like internal benchmarking, competitive benchmarking, Functional benchmarking, generic benchmarking, strategic benchmarking, process benchmarking and international benchmarking. Camp(1996) recommends a mix of these different types of benchmarking to which different weightages can be assigned depending on the type of the business.
The prerequisite for the absorption of these processes is for Indian organization to change the old order into the new. Today, Indian companies are on a steep learning curve. This is for the overall good of the industry and, in the long term, will lead to the emergence of globally competitive Indian companies.
About the Author: This article have been contributed by Ms Satarupa Banerjee , who works as a visting faculty HRM (MBA) with IISD (Institute for Inspiration and Self Development).