Benchmarking and Forecasting

Benchmarks Are a Starting Point, Not the Goal

January 8, 2018 4:09 pm

Benchmarking can be an effective tool to determine areas in need of process improvement and budget realignment with business goals. Used correctly, benchmarks are used to develop and continuously improve a high-performing organization. It is important to keep in mind, however, that a benchmark is simply a place to start—a point of reference for motivating action aimed at improving the organization’s future position.

Benchmarking for Process Improvement

When using benchmarking for process improvement, healthcare organizations should take the following steps.

Establish a baseline and set performance targets. Organizations cannot improve what they do not understand, nor can they assess how they stack up to competition without a standard baseline to measure current performance levels. A formal quality assessment can help organizations gain clear insight  into what is or is not working based on facts rather than  gut feelings and opinions. A deep understanding of an organization’s strengths and weaknesses will help its leaders determine what is important to the organization and where it needs to take action and set higher performance standards.

Use benchmarks to identify opportunities to improve productivity. Assessing the organization’s key performance metrics and comparing them against metrics of similar scale and operational complexity can provide insight for determining next steps and underlining critical gaps. When benchmarking is used in conjunction with corporate and department strategy, leaders can align short-term objectives with longer-term goals, improving productivity and measuring progress.

Establish a focus for benchmarking efforts. Organizations tend to want to excel at every aspect of their business, which is an admirable but often unattainable goal. Benchmarking can help leaders home in on areas where differentiating and performing at a gold-standard level will be hugely beneficial to the organization’s outcomes. It also can show where a decision that efforts are “good enough” in some instances actually can be well-founded, as a means for reducing effort against diminishing returns. In these ways, benchmarking can help leaders focus on what matters to improve outcomes. Such a focus can be supported by appropriate investment in differentiating technology, people, and process can lead to better innovation for the organization.

A Standardized Benchmarking Framework

All organizations should aspire to self-awareness. But looking only inward, within the company, is not the best way to achieve this objective. Rather, it is better to use a standard benchmarking framework that allows an organization to compare itself with a larger sample of like organizations—larger than what any one organization could assemble through its own research. Standardizing metrics also allows for apples-to-apples comparison criteria and a more accurate assessment of a company’s performance.

Organizations that choose to develop their own metrics should take care not to apply so-called vanity metrics, which are insular and can’t be easily compared outside of the organization as a true benchmark. Such metrics tend to be misleading beacons for leaders and rarely move the organization forward in any meaningful way. For example, tracking number of visits to your website is meaningless if visitors don’t select a plan, schedule a service, or self-help an answer versus calling customer care. Or IT may track ticket closure rates, which, if the underlying issue is not resolved, does not actually improving the performance of your organization. Essentially, your metrics need to focus on desired outcomes versus numbers and activity. An organization’s framework should not be overly restrictive but should push to a fairly high level of granularity to uncover meaningful, actionable insights that improve decision support.

Where Benchmarking May Merit Extra Consideration

Even the best benchmarking model is incomplete without support surrounding the process. In particular, change management often is overlooked. Process improvement is inextricably linked with change management. All too often, managers think they can have a meeting and effect change. Sometimes they can, but bigger changes that are intended to move the organization forward quickly may require a steadier hand on the change process that runs in parallel to the process improvement.

Again, it’s important to remember that a benchmark is the starting point, not the goal. Benchmarking is not a one-and-done process: Repeated measurement is required for continuous improvement. Most organizations that actively benchmark conduct assessments every six months when the process is first implemented and then switch to annual assessments when steady progress is observed.

Improving 2018 Performance

Benchmarks are the basis of accountability for reaching operational and financial goals. The hard part is gaining organizational buy-in for using a standard benchmark. The overall process should start with an examination of current benchmarks. What are they? Who set them? Is what they are measuring still relevant? Are those metrics germane to the industry, or are they internal or vanity metrics that make everyone look good but are ineffectual in moving the organization forward?  

Setting improvement goals is an exercise in futility without knowing the starting point.  Objective, comparable, unbiased metrics are invaluable to a company’s ability to learn and grow into a more mature, high-performing organization. 

Nick Vennaro is the co-founder of Capto Consulting, Hartford, Conn.


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