The Value of Benchmarking: Know Your TargetPosted on Jul 5, 2013 12:00:00 AM
What is the value of benchmarking organizational performance? For perspective, consider this question as if you were an Olympic athlete…it is highly unlikely that you will set a world record in any event, if you do not know what the record is.
I am always impressed when watching the Olympics; that existing world records that seem impossible to match…are beaten. How are these athletes able to do this? Is it just technology and training technique? Or, is there something more basic? I would suggest that it is the presence and the knowledge of the record that allows the record to be beaten.
Whether you have the perspective of an athlete or an organization – the desire to set a record, combined with the knowledge of the benchmark allows you to align your resources and effort with focus towards a specific outcome.
In education, collecting and measuring academic performance and student achievement is an exercise that has been done well for decades. And now, with increased analytic horsepower, many school systems are using assessment tools and converting the data into classroom and student-based strategies. Similar data-based strategies can now be deployed with financial information.
Schools or other local governments can use financial benchmarking strategies to discover and calculate the gap between their current financial structure and the peer models that are delivering increased performance. These insights can help the organization align and deploy their financial resources in a way that provides the best opportunity to “set a new record” and sustain performance over an extended period of time.
While any local government is most focused on meeting the needs of their own local community, benchmarking financial performance with a wide field of view initiates at least two perspective-building questions:
- How are we doing and how do we compare to relevant peers?
- How could we realign our resources to achieve outcomes that are “best-in peer group”?
As a leader within your organization…if it is your desire to establish a new level of output and service, it is critical to have and use comparative financial information. It is the presence and knowledge of the existing “record”…that will allow you to beat it!
For more ideas on benchmarking, read more at: The Olympic Decathlon: Strategies for the CFO.
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Mike English is a founder and the CEO/President of Forecast5 Analytics, Inc. – a technology company focused on software development and data analytics for the public sector. Mike has spent his entire career concentrating on the development of financial and strategic solutions for schools and municipalities. Forecast5 is headquartered in Naperville, Illinois – a suburb 30 miles west of Chicago.