Performance Analytics™ through Benchmarking
Does your business understand how it leverages assets - people, processes, plants, technology - to achieve strategic goals? Businesses of all sizes compare performance data throughout their operations. At Phillip Townsend Associates, we deliver an approach intended to improve value creation. Our views on performance management means that we focus on business impact:
Control cost without sacrificing future growth objectives: Given the nature of current incentives (meeting quarterly or annual targets), the challenge is to meet short-term targets while preserving strategic growth initiatives.
Understand what drives cost and profit (or value): Without this understanding, managers are unlikely to allocate resources appropriately and know where to make improvements. At best, it may generate suboptimal results; at worst, it could inadvertently and irreparably destroy value.
Improve agility: Organizations that can identify opportunities and threats more easily than their competitors, understand the implications, update strategy quickly and then execute that strategy consistently across the organization will be the winners.
Identify and respond to environmental, social and economic risks and opportunities: A focus on the people, profit and competition drives increased brand value through innovation, improves internal efficiencies and accountability, and engenders the loyalty of consumers, employees and other stakeholders.
Our Benchmarking Process
The general outline of our benchmarking process is illustrated in the diagram below:
For further specifics, click on the following links:
- Industry-focused benchmarking (external)
- Intra-company benchmarking (internal)
Benchmarking Done Right
The following characteristics are indications of a benchmarking program that was done right:
- Start by using data that is currently available internally
- Use narrowly defined KPIs for simple data input/collection
- Access to results is limited to participants only
- Confidentiality throughout entire process
- Normalization of KPI calculations to a common denominator
- Third party collection and validation of inputted data
- Results presented concisely and visually to top management
Benchmarking Done Wrong
On the other hand, here are some features of benchmarking programs that are done wrong:
- Broadly defined KPIs
- Results are published and sold to nonparticipants
- Lack of third party validation of incoming data
- Transparency of data i.e. revealing the sources of any data (even confidential data)
- Benchmarking results are used for alternative motives (e.g. to gain market intelligence or to secure consulting or outsourcing business from participants)
Phillip Townsend Associates has been the innovator in peer group benchmarking for a wide variety of industries. We manage a proven process that enables competing companies to accurately measure their costs and selected performance data against that of their industry peers. Managing such a process requires an independent expert who can maintain rigid confidentiality, comply with all legal and regulatory guidelines and validate data to insure that it is truly comparable. When all data has been collected, validated and concisely formatted, our greatest value is delivered when we present the data to each of the participants in a format that is both meaningful and actionable.
Our intra-company benchmarking projects cross functional, operating and organizational barriers in providing an "enterprise wide" comparisons that management can use to make decisions and course corrections that will have a competitive impact.
The metrics covered in our programs will undoubtedly continue to change over time as participants find that some of the information is not meaningful or as the environment in which the industry operates changes. Participants are encouraged to propose new metrics in the context of group participant meetings or privately to Phillip Townsend Associates. Suggestions regarding new metrics are presented to participants for feedback and willingness to provide data.
We utilize the industry-leading TABS® data collection and formatting system.
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We were making the wrong decisions based on assumptions that we had held to be true. The PTAI analysis revealed that we were not as competitive as we had believed. Our performance paradigms clearly had to be changed at the top and throughout the organization.”
“We did not fully understand how the margins on various product lines could be optimized. When we were able to see our costs in a true competitive context for the first time, we made some dramatic changes in our sales strategies that almost immediately improved our gross margins.”
SVP, Sales and Marketing
“We realized that our sales incentives did not fit our competitive strategy.”
Director of Sales
“Our competitive position had changed, but we were able to learn why and how to change course with reliable information. The type of benchmarking cleared our vision and gave us the facts to act.”