Accenture on Industry Benchmarking

Accenture on Industry Benchmarking
Chuck Wise
Here is a compelling excerpt from Chuck Wise's 2011 report from his firm Accenture. We consider it a "must read" and hope that you will download a copy from our Non-Member Content Repository Executive Repository and Level I Member Repositories which are all free, of course.
This is only one of a number of key quotes that you will find and a long quote to get your team and yourself psyched to learn from:
“Now I have the ammunition to foster change.”
With benchmarking, change agents have the facts they need to convince executives that a transformation of processes or even entire organizations is needed to become more competitive.
What is Benchmarking?
Benchmarking is the process whereby an organization captures specific data related to its costs and performance—
i.e., the baseline, or current state of the organization under study— and then evaluates this cost and performance data against those from some other entity (which constitutes the actual benchmarking).
The benchmarking process typically is used externally—i.e., to compare an organization with another company or the composite average of a group of companies. But it also can be used internally: Organizations operating in several countries, or with multiple operating units and divisions, can compare cost and performance metrics across those different entities. A top performer often emerges internally whose practices then can be adopted and leveraged across the enterprise. This combination of internal and external benchmarking helps to identify the most important gaps
between an organization’s current state and where it wants to be, helping to create both a road map and a business case for change. Benchmarking also can generate the rigorous cost and performance baseline necessary to effectively
track progress on that road map over time in terms of cost reductions and performance improvements.
Ultimately, benchmarking provides people across the organization with a common business language regarding processes, metrics, key issues and outcomes, and helps organizations put in place a rigorous and continuous
improvement process to bring out higher levels of performance. Importantly, however, numbers alone are not enough. No database of information will churn out a readymade prescription for a company’s unique set of circumstances. Thus,
the quantitative dimension of benchmarking must be supplemented by a qualitative analysis informed by a deep understanding of leading practices and how they can be applied given the company’s industry, strategic goals and constraints.
Why is Benchmarking Important?
Benchmarking delivers four critical benefits for organizations looking to improve the performance of key corporate functions. The first such benefit is a current-state assessment of the function. This assessment involves a rigorous baseline of cost, quality and cycle time, external and internal comparisons (for example, by region or business unit) of cost and performance, and the identification of meaningful gaps. The result of this assessment is a fact-based, more
defensible understanding of the function’s cost and/or performance drivers.
A second benefit of benchmarking is a strong foundation for transformation programs. An effective benchmarking initiative enables an organization to more easily identify and prioritize opportunities—by process, region
and cost driver—which, in turn, results in more informed and relevant improvement targets and a stronger overall business case for the transformation effort.
A third major benefit is a strong basis for continuous improvement. Benchmarking helps create or renew a culture of managing by metrics by enabling periodic measurement against the initial baseline. Importantly, this baseline assessment is process-based, so it remains relevant regardless of subsequent organizational changes.
A fourth benefit is languageBenchmarking sets forth a standard set of terms and definitions for key aspects of a company’s business processes, thus enabling everyone in the enterprise to share the same understanding about the state of the enterprise’s operations. Unfortunately, despite these benefits, Accenture research reveals that companies are not capitalizing on the promise of benchmarking as much as they could be. For instance, according to the Accenture High Performance Finance study, only about one-third of participating  companies had conducted a recent benchmarking initiative to assess the quality and efficiency of their finance organization's performance relative
to similar enterprises. This lack of benchmarking was a major reason why just 29 percent of respondents said that they had a good understanding of where their organization stood in relation to the finance functions of comparable enterprises. Such lack of knowledge can be a significant impediment for a company pursuing high performance. Similarly, the latest Accenture High Performance Workforce Study found that only 8 percent of senior
executives and Human Resources (HR) leaders surveyed reported that the performance of their HR function, in terms of its ability to effectively support the larger enterprise’s pursuit of its business goals, was industry leading. This finding suggests that HR leaders could benefit from a benchmarking initiative to help them identify the areas in which they are
falling short, as well as opportunities to improve their function’s ability to meet the needs of the broader enterprise.
Benchmarking in Action
In Accenture’s experience, top organizations do three main things to achieve and maintain their leadership position. They:
Regularly identify the gaps between the capabilities they currently have and those necessary to be competitive in the future.
Strive to be leaders in those capabilities that are most important given the needs of their business.
Pursue improvements via formal, structured change programs. Benchmarking can be instrumental in helping companies emulate these leaders, as several companies have experienced.


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