In today’s tougher times, more so than during the past decade of unparalleled growth, business owners and managers must focus their efforts on running their enterprise for optimal performance to ensure profitability and competitiveness. But how does the CEO and/or management team of a mid-market size company further stretch their resources to attain these optimal levels of performance – and what exactly is an optimal level?

One of the most effective methods of achieving optimal performance leading to superior performance is the process of benchmarking for “Best Practices” – identifying, sharing, and imparting knowledge, innovative ideas, and highly effective operating procedures related to best business practices, inside and outside your organization.

Implementing a Best Practices Program in your company means that you will have to “benchmark” specific aspects of your organization: your processes, products, manufacturing, equipment maintenance, safety procedures, logistics, and much, much more.

Certain companies may come to mind when you consider best practices that are world-class because they perform specific functions above the industry standard. Examples abound: Federal Express has developed some of the best systems for tracking shipments. Dell has developed some of the best direct consumer delivery logistics systems. Wal-Mart has developed some of the best inbound logistics and shipping procedures, while Proctor & Gamble has developed some of the best methods for introducing new consumer products.

By systematically studying the best business practices of companies within and outside of an industry, an organization can accelerate its growth through self-improvement. During this systematic study, products, services and work processes of organizations that are recognized as having the best practices can be evaluated for comparison purposes.

There are two areas of benchmarking:

1. Internal benchmarking

Internal benchmarking identifies the best business practices that are used within a department or are shared across multiple departments. By using your own company as a starting point, you can seek to close the performance gap that occurs both intra-departmentally and inter-departmentally by defining your current standards and developing plans to improve these standards. Through internal information sharing, the organization can improve merely by erecting its own hurdles.

Internal Intra-departmental Inter-departmental
External Own-Industry Non-Industry



2. External benchmarking

External benchmarking involves looking at both your industry competitors and looking outside your industry for best-in-class performers. By researching, identifying, and analyzing the products, services, and processes of both your own industry and non-industry organizations, you can use the results to compare current or planned products or services and current and suggested processes with both your direct competitors and best-in-class organizations.

External benchmarking typically focuses on the benchmarking of departmental or functional areas, such as manufacturing, maintenance, enterprising systems, management, human resources, and finance. This area of benchmarking, therefore, looks at generic activities, such as accounts payable procedures or purchasing procedures, rather than at a specific company’s accounts payable process.
So, how do you benchmark? What resources are available? And how do you overcome the “not invented here mentality” that thwarts its adoption and implementation?
Here are the eight vital steps we have identified to initiate the benchmarking process within your company:

Step 1: Form a lead Best Practices team charged with overall development and company-wide implementation of this important new activity. In addition, form departmental benchmarking teams charged with development and implementation of Best Practices within their individual department.

Step 2: Each team determines the types of Best Practices their department must uphold.

Step 3: Teams identify benchmarking resources applicable to their Best Practice needs.

Step 4: The teams collect and analyze information.

Step 5: Each team determines the value of each Best Practice relative to attaining departmental and overall corporate objectives.

Step 6: Team members take the time to understand and analyze the ‘point gap’ between an existing standard or practice and the desired best practice standard.

Step 7: Each team brainstorms how they can close the ‘point gap,’ and develops an action plan in support of upholding each Best Practice.

Step 8: The teams take action under the leadership and guidance of the Lead Best Practices Team, reporting to Senior Management.

To support your Best Practices program there are a number of benchmarking resources available in the public domain. There are many books on the subject, some of which identify some industry best practices by example. Also, the Benchmarking Exchange offers a number of opt-in surveys that provide you with real-time feedback on specific functional activities, e.g., purchasing. Industry Week has a Benchmarking Tool Kit – a database with in-depth performance data from more than 7,000 manufacturing facilities – that can provide many data points for comparison within your industry. The American Productivity & Quality Center (APQC) is a nonprofit organization that offers in-depth studies and reports to its member companies. Benchmarking business practices against those of companies outside your own industry can be challenging without third-party support of an independent organization, such as the APQC.

If benchmarking best business practices seems appropriate for your company, we urge you to note that the process of benchmarking can be tricky and time consuming. Obstacles can get in the way such as an organizational culture which values personal capability more than knowledge sharing, a lack of knowledge about available resources, and a lack of resources for implementation of best practices. It is because of this that we would highly recommend you utilize the services of a business consulting firm with expertise in the area of Best Practice benchmarking. This will not only ensure your Program is executed accurately and in a minimal amount of time, it should also give you access to the ongoing stream of benchmarking data that you will need to maintain your Best Practices program.

Finally, to make the implementation of a Best Practices Program successful, adoption and support of the effort and its resulting initiatives must have “buy-in” at the top. Without ownership from the CEO or the management team, it is much less likely to succeed. In addition, departmental Best Practices teams must be created and charged with the task of managing the process on an ongoing basis. This will greatly assist the success of the program, as the departmental Best Practices team can increase the likelihood of ownership at the top through solid presentations of findings, cost-benefits that are clearly illustrated, and a demonstrated measurable return-on-investment.

In our experience a “Best Practices” Program can assist in a company’s growth, and develop more consistency and stability, through the attainment and adherence to a set of constantly evolving standards that ensures your company is “Best in Class,” and, most importantly, remains that way!

About the Authors:

Julian Aston is the CEO of Double Digits, a strategic business and marketing services firm specializing in developing and executing growth strategies for mid-market companies across diverse industries. He can be reached at jaston@doubledigits.com.

Jonathan Goldhill is the Principal of Jonathan Goldhill & Associates, a management consulting practice serving entrepreneurial, middle-market and non-profit companies with business and strategic planning services. He can be reached at jon@jgoldhill.com.