Benchmarking for Best Practice: the Power of Its Adoption and the Perils of Ignoring Its Use in a Modern Business Environment

Since the benchmarking movement started to grow significantly, many organisations have become engrossed in the 'mechanics' of doing the benchmarking by pursuing their quest for acquiring information on best practices and identifying gaps in their competitive performance. Overall, the notion is that benchmarking is considered successful once projects are completed, and an action plan is put into practice with immediate effect. The assumption emerging from this type of activity is that in most cases the focus is more on 'doing' rather than 'learning' (Zairi and Ahmed, 1999). It is important to realise that benchmarking and transfer of best practices is to support learning and not just doing. In the long run organisations that delve in the transfer of best practices need to appreciate that the real benefit from new knowledge is not just the optimisation of existing processes and dealing with gaps in performance due to lack of knowledge, expertise and poor procedures, systems, etc. Closing gaps in performance is critical but building capability and strengthening the knowledge pool is even more critical for sustaining long term competitive advantage (Zairi and Whymark, 1998). Benchmarking application is not just about managing projects effectively and developing appropriate action plans. Action plans need to be based on bringing in deficient knowledge and expertise and finding ways and means of selling best practices and developing most appropriate mechanisms for the effective transfer of best practices and their internalisation. When effectively implemented, the internal transfer of best practices can reap numerous benefits, such as: • reductions in time to market • reductions in costs • innovative use of existing products • revolutionary product ideas • decrease in employee turnover Pakistan’s 9 International Convention on Quality Improvement (ICQI`2005) © Pakistan Institute of Quality Control 3 • increase in customer satisfaction In addition, a large number of benefits of an intangible nature also accrued: improved knowledge sharing and communication, an increase in employee morale and learning, more effective cross-functional team working, greater organisational memory. However, organisations in general are still facing many challenges in the area of best practice transfer. In a recent survey using the Knowledge Management Assessment Tool (KMAT), a benchmarking tool devised jointly by the American Productivity and Quality Centre (American Productivity and Quality centre, 1997) and Arthur Andersen, only 15% of the organisations reported that they were satisfied with their ability to manage knowledge strategically. This is indicative of the fact that organisations are still absorbed with tackling current problems rather than building a knowledge capability that will provide them with sustainable competitive advantage.