There are several ways to benchmark. The two most common benchmarking tools are
ID: 374714 • Letter: T
Question
There are several ways to benchmark. The two most common benchmarking tools are performance benchmarking and best-practice benchmarking. Consider a nationwide bank that has contracted with a seller to assess its current staffing and facility locations. The goal of the contract is for the seller to produce a strategic plan that creates cost efficiencies for the bank by recommending (and implementing) areas to consolidate among staff and facilities. (One recommendation may be to close down a bank branch that is located within three miles of another bank branch.) This is a long-term contract stretched out over five years. If you were the project manager in the bank, to what benchmarks would you compare your seller? Are theyperformance benchmarks or best-practice benchmarks?
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Explanation / Answer
The main activity which is involved in the performance benchmarking is to compare the performance levels of different organizations for a certain activity or the process. Once this information is collected, this information can be used to implement the corrective actions or determining the performance goals or targets. Benchmarks are basically the level of performance which is exhibited by the most efficient organization and the ideal benchmark is one relates to the firm or organization which is considered to be the leader in the industry for that specific activity. Both the financial measures and the non-financial measures such as absenteeism, staff turnover, and the percentage of administrative staff to front-line staff, budget processing time, complaints, environmental impact or call center performance can be utilized for the purpose of performance benchmarking.
In order to implement the best benchmarking practices, the organizations try to find out the other firms or organizations which have greater efficiency in performing some specific activity in the area of interest and then a complete analysis and study is conducted. In fact, the entire process is analyzed and evaluated rather than simply looking for the performance levels of these organizations. This is commonly done on the basis of some mutually advantageous arrangement which should also incorporate some benchmarking standards. The insights which are obtained are taken back to the organization and then these are executed and implemented in the organization of the feasibility of implementation exists. The high performing and best performing practices are adopted into the practice of the organization. Therefore the process of benchmarking mainly includes the entire activity of identification, capturing, analysis and implementation and execution of best practices and processes.
In the case specified, as this is a long-term contract having the time period of 5 years, the best method will be to implement the best practices within the firm after having the complete and thorough study of different processes, analysis of entire data and then executing the best possible practices. This I think, the best practice benchmarking should be adopted in this case.