I know I need to benchmark my business, but I don’t know where to start or how.
The definition of benchmarking is to evaluate or check by comparing with a standard. To determine the health of your business and find ways to differentiate your business among competitors, benchmarking is key. So, the best place to start is to understand the different ways of benchmarking your business.
When most think of comparing their business to others, they think only of comparing to competitors and peers. This competitive benchmarking is the most widely recognized type of benchmarking and easily utilized. Most industries have databases that house information to base basic company comparisons off of. The Medical Group Management Association’s DataDive is great for this type of comparison and allows medical practices to evaluate themselves to others within the same specialty, geographic region, or generically within the industry. However, there are other types of benchmarking that can be just as valuable.
One such type of comparison is internal benchmarking. This is done by many businesses, but administrators, owners, and managers often forget that this is benchmarking. There is much value derived from comparing this data. By watching measures within a business from one month or year to the next allows those watching to see growth, decline, or anomalies. By seeing these changes, recognizing their significance and planning action, a business can maintain a healthy schedule, market share, or financial status. Another form of internal benchmarking is comparing part of the business to the whole. This allows managers or administrators to see how a location, producer or specific staff are performing compared to the whole business.
Functional benchmarking is a type of comparison that many utilize. This is where a comparison is drawn between two unrelated industries that have similar functions. The benchmarking is utilized to show “if they can, why can’t we” and challenge the status quo. While hard to see that these comparisons are apples to apples, they are usually Granny Smith Green Apples vs Red Delicious Apples and do have similarities. One example would be hospitals and hotels. Both have clients/patients check in, places for them to say, and staff who clean up after the clients/patients. As you can see, there are many places for comparisons to be drawn.
The last type of benchmarking requires thinking outside the box. It’s called generic benchmarking and is where two unrelated industries are compared on seemingly unrelated processes. This would be comparing apples to oranges, they might both be fruit, but distant relatives for sure. One widely known example of this comparison is Disney vs Healthcare (If Disney Ran Your Hospital and the many spinoff articles). The comparison is focused on patient care/experience and how healthcare can use Disney’s approach to visitor’s experience as a priority to improve healthcare. Another example is airlines and healthcare (from a 2015 study to this highly entertaining YouTube take). Here the comparisons can range from scheduling to safety.
Now that we have identified the different types, how do you go about using these to benchmark your business? The first step is to identify WHAT you are going to measure. We’ll look at specific key performance indicators next week. There are many different areas you could be benchmarking, but it doesn’t mean you should. Do not go into Data Analysis Paralysis! Define the goals for your company and then choose the measures to benchmark that will help you manage those goals and expectations.
Measure to Manage – If you do not plan on managing, solving, or doing anything about the issue or situation, Don’t benchmark (ie: measure) it! It is a waste of your time and sets a bad precedent for the folks observing who will expect you to do something with the information.
Benchmarking is usually a highly data driven endeavor with spreadsheets and graphs. However, this will only work for those in the decision team who are analytical and data driven. Others in your team will want the thoughts and ideas behind the measures. Sometimes it will be harder to present both sides (analytical and ideal) of the measure. However, great administrators know how to use their decision team to their advantage – let them do the work. Find someone who is a thought leader and have them help with those Functional and Generic benchmarking ideas – how can we do better in customer service compared to the coffee shop down the road? Use your analytical members the same way – what is our current patient satisfaction surveys telling us? Then combine the two!
For more information and to dive into the statistical and analytical nature of benchmarking I strongly recommend 2 people:
- Frank Cohen (Frank Cohen Group) for statistics and relative data (they also have some great products that are extremely helpful) and
- Nate Moore (The Pivot Table Guy) for specifics on how to use excel (his videos are free, address a wide variety of features in excel, and his background is healthcare!).