Benchmarking outside the health care industry
January 1, 1998 3 minutes read
Benchmarking outside the health care industry
Here are some tips for success
Gulp! You’ve decided to benchmark outside the health care industry. Aside from taking a deep breath and plunging in, what should you do? American Productivity and Quality Center (APQC) in Houston gave Healthcare Benchmarks four things you should know about before you venture outside your comfort zone.
1. Shift your thinking.
"Benchmarking is not merely number crunching or competitive analysis; it is truly a method of organizational learning in which you identify, understand, and adapt outstanding practices and processes in order to improve your performance," says APQC president Carla O’Dell, PhD.
2. Concentrate on process, not product.
Thus learning, she explains, can be gleaned from industries very different from yours, as long as the process itself is similar. For example, here are the top "hot" processes being benchmarked by APQC’s members through its International Benchmarking Clearinghouse:
• internal communication systems;
• strategic planning;
• customer satisfaction;
• new accounting and decision tools;
• human resource strategic planning;
• purchasing;
• self-managed work teams;
• innovative reward systems.
"Cross-industry benchmarking is easier, faster, and cheaper when one joins a consortium benchmarking study," O’Dell points out. For example, in APQC’s consortium study, companies that are interested in the same process can join together to benchmark themselves and with firms that have world-class best practices, she says.
"The participants not only share the costs in time and money but also learn a tremendous amount from each other. The target companies are delighted to deal with only one group, rather than 10 companies all wanting to benchmark the same process."
3. Compare equivalent things.
Suppose you’re comparing your hospital’s admissions process to a major hotel chain. Of course, your process will be a lot more complex than hotel registrations. But Robert Camp, PhD the grandfather of benchmarking, who introduced the concept to Xerox in 1981 says the secret to success is to make sure you compare equivalent elements.
"You do that by looking at the focus of your investigation as a process. Break down the processes into their elemental steps; define what is done and how it is done at each step. When you get it down to a certain level of detail, you can make a one-to-one comparison with what the other organization does," says Camp, who is the author of Benchmarking: The Search For Industry Best Practices That Lead To Superior Performance (APQC Quality Press, 1989).
However, process comparisons require you to know your own process and problems thoroughly to "see the underlying characteristics and spot analogies across other industries," O’Dell stresses. "You also have to have the ability to look for common themes without having them spoon-fed to you."
Having a common language for comparison also is essential, she adds. "One of the barriers to sharing across industries is finding a common language that describes processes regardless of industry. That’s why APQC has developed a Process Classification Scheme that identifies generic processes from other industries and contexts."
4. Convince administration.
Although companies like Xerox are benchmarking 80% of the time outside their industry, health care lags behind. To educate administrators on the value of generic process benchmarking, explain how it can help them set legitimate and realistic goals," O’Dell says.
"Without a stretch goal, organizations tend to plan for the future in similar patterns, i.e., the same as last year plus 5%," she explains. "But that won’t cut it in today’s competitive environment."
She cites the case of Xerox executives who once considered an 8% gain in one of their divisions as "doing well." "Then they benchmarked and found it would take 18% to merely catch up and much more than that to stay ahead."
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