THE REALITIES OF BENCHMARKING

Since the designation of the candidate we wanted to recruit was unusual, we were discussing how to address the issue, especially in the context of managing the equity within. The junior team came up with several recommendations on how we should change the titles of some of the other positions within the organisation. One senior manager asked, “Why don’t we find out what other companies are doing?” The members of the junior team looked at each other and shrugged indicating their reluctance. The reason was that in fact, they had come up with innovative suggestions.

I started thinking about the whole incident. “How many times do we tell our team members to find out what is happening elsewhere and kill their creativity and enthusiasm?”

Finding out existing available practices and leveraging on them is logical and benchmarking is an accepted practice of sharing information among organisations. It is effectively used by so many organisations across the world to improve their processes, operations and quality. The most important argument in favour of benchmarking is that it saves “reinventing the wheel” and in many cases reduces or eliminates “cycle time”. A lot of literature exists on the basic process of benchmarking, how it is used, the pros and cons of the same etc.

Many a times, benchmarking kills creativity. It is just possible that a team of talented executives comes up with very innovative ideas, which have not been tried by others till then. Comparison with others takes away the joy of their creativity and distorts their original proposal beyond recognition. No invention would have been made if everyone had used benchmarking before putting up a theory. In fact, there would have been nothing to benchmark with, if someone would have not come up with “original” ideas. Imagine Sir Isaac Newton doing benchmarking before announcing his “law of gravity”!

Some leaders use benchmarking to postpone decision-making. One has observed in meeting after meeting managers coming to a conclusion or suggesting that we would check with so and so company and find out what they are doing, so that we could also decide in the next meeting. Those who hesitate to decide anything without comparing with what is happening around can never be path-breakers or leaders.

There are others who give examples of what other companies are doing, which are convenient and do not take into consideration the totality of the situation. Just as while citing case laws, the context of the case and other details are very important, we cannot compare just one aspect of the other company ignoring the other relevant details. For instance, if a comparison is made for higher stock options for employees, it is also necessary to check the compensation levels. If we are comparing the quality of services, we must also understand the commitment of the top management to quality. If we are citing the commitment of the employees between two organisations, we must also understand the work culture and empowerment differences between these organisations.

I remember a situation when the top management was very upset about the quality of telephone operations in the organisation. They called the HR manager and asked him to experience the way the operation is handled in a five star hotel and questioned why we cannot have equally competent telephone operations. When the HR manager went into depth, he found so many details of practices that were different. To begin with, the five star hotel that was the reference point had operators in three shifts. Each operator was hired as a trainee and trained for more than 6 months on the job. The quality of the telephone board was top class. Above all, the compensation was about three times higher than paid by this company. Thus, the top management was demanding only one aspect of performance without regard to the reasons for the difference in service.

What is interesting is even the employees many a times, do very selective comparison, though quite in an unstructured manner. They expect the compensation, stock options, holidays, five day week, top class IT support for the job, the required empowerment, exciting work place, without comparing the nature of business, operating margins and productivity ratios of the organisations with whom then compare.

The other problem of benchmarking is when you do it with organisations that are anyway not the best in the aspects you are looking for. The most critical decision the organisations have to make is whether you want to create conditions wherein you lead the performance with which others would benchmark or keep comparing yourself with the established leaders and chase their performance.

The reality in many cases is that transfer of best practices is not strictly possible. Each best practice has its own human setting, cultural setting, environmental setting, ecological setting and many other conditions that are not replicable. Transferring best practices is uprooting a fully grown up tree and planting it in a new place. Unless you are able to uproot it carefully alongwith its existing roots and plant it with those roots, the tree may not survive in a new place. If this was not the case, all organisations would have been successful following one single success route.

Contemplated & Written by: Mr. Dileep Ranjekar, CEO, Azim Premji Foundation. [Originally appeared in Jigyasa 2004 (Jigyasa is the Annual Journal of MHROD)]