Benchmarking covers a broad range of activities and it is possibly for this reason that its popularity has been sustained. Some, however, see it as just another management fashion with little to indicate why they should adopt it. Several limitations of benchmarking are argued to exist. These are detailed in this section along with discussion of how they will be overcome or minimised in the research.
There are a number of generic risks, which relate to whether benchmarking is appropriate or inappropriate. They are:
Misunderstanding the appropriateness of benchmarking;
Selecting an inappropriate set of performance measures;
Selecting the wrong benchmarking partners;
Failing to gain access to appropriate benchmark data;
Misunderstanding the contingent circumstances which support benchmark data;
Inability to implement someone else’s best practice;
Failing to establish top management support;
Potential loss of control of information to competitors;
Over-reliance on quantitative data and misunderstanding the underlying reasons for the performance measures, and;
The benefits derived from playing “catch up” are less than the costs of the benchmarking exercise.
(Cox and Thompson, 1998)
The risks listed above and potential ways to overcome them are discussed throughout this section. Most of the risks can be overcome with careful planning of the benchmarking
exercise. For instance, “selecting the wrong benchmarking partners”, “over-reliance on quantitative data” and “selecting an inappropriate set of performance measures” are all problem areas which can be addressed before conducting a benchmarking visit to another organisation.
Surveys conducted by Holloway et al (1998a) asked why some organisations had decided to reject benchmarking as a potential performance improvement technique. The problems cited included issues of comparability, resource constraints, access, staff resistance and confidentiality. Hinton et al (2000) cite the main reasons as being resource constraints and comparability of data. They also found that those who had rejected benchmarking had made informed decisions based on their own unique circumstances and not because of the concept in itself.
4.8.1 Finding “Best” Practice
Cox and Thompson (1998) question the validity of benchmarking as a rigorous theoretical concept, arguing that “best practice” differs for each organisation depending on their individual commercial circumstances. Similarly, by simply describing what companies are doing at a particular moment in time, there is no way of knowing whether what they are doing is indeed “best practice”, compared to what would constitute best practice in an ideal world. They add that the questions of “what to benchmark” and “who to benchmark” do not address the more fundamental issues of “what is it that is wanted in terms of business improvement and which tools and techniques are most appropriate to deliver the improvement.” Miller (2004) adds that unquestioning acceptance of ‘best practice’ is potentially dangerous and demonstrates a neglect of professional responsibility.
It may be the case that some companies may not wish to partake in a benchmarking exercise and hence the “best” organisations cannot always be benchmarked against. For this reason the search for benchmarking partners may be focused on “better practice” rather than “best practice.” Finding benchmarking partners can often be difficult particularly if searching for companies who are comparable in terms of size, market conditions and industry, while at the same time are sufficiently better to have something to teach others and are willing to share the information (Anderson et al, 1999). In the Britannia Airways example discussed in section 4.2.3, Britannia stressed that they had not done “true benchmarking” in terms of
comparing against best in class because they did not know who the best in class were (Francis et al, 1999).
In the benchmarking exercise undertaken in this research “best practice” organisations will be sought by consulting best practice guides in the area of travel planning and by talking to experts in the field. It may be that the very best organisations cannot be used because it is not always possible to know who they are or because they are unwilling to take part. It is expected, however, to be possible to find organisations demonstrating “better” practice than BAA from which BAA can learn. The use of three non-airport case studies will also allow for a range of information to be gathered, thus reducing any potential problems if it is not possible to benchmark with the “best” organisations.
4.8.2 Control of Sensitive Information
Benchmarking is regarded as inappropriate in some circumstances because it carries risks such as the inability to control effectively against losing sensitive data to competitors.
Surveys have found, however, that this is not viewed as a common problem, mainly because experienced benchmarkers are aware of the need to address such issues early in the process (Hinton et al, 2000). From the viewpoint of the company conducting the benchmarking visit, it can be difficult to gain access to certain data, particularly sensitive information such as finances. Many also see benchmarking as a mixed metaphor in that it may involve cooperating with competitors and if one organisation has an advantage then what is their motivation to share information (Cox and Thompson, 1998, Anderson et al, 1999). This is something that will have to be carefully considered in the research. By explaining that the benchmarking exercise is part of a research project not directly related to BAA, it should be possible to overcome such issues. The fact that non-airport organisations are being targeted should also reduce any potential problems.
4.8.3 Implementing Best Practices
Once the data collection is complete and analysis has taken place there is still the risk of failure in implementing somebody else’s “best practice” effectively, usually at a financial cost. In reality it does not always follow that processes in one organisation will be readily
applicable to another. Benchmarking often assumes that this is the case and may go to the extreme of saying if something has worked in one instance, it will work in all circumstances (Cox and Thompson, 1998). Hinton et al (2000a) conducted surveys which discovered that comparability of data was viewed as a common problem and that it was not always possible to know whether the data being collected would be easily transferable to one’s own company. One respondent stated “are we comparing apples with apples, or apples with pears?”
4.8.4 Playing Catch Up
It may be the case that when a company attempts to close the gap on current best practice they may succeed in catching another organisation in the short term but in the long term they fail to stay ahead of the competition because they are unable to innovate or demonstrate continuous improvement. The leading organisation may then improve further and hence the company using benchmarking is always in a position of catching up. Zairi and Leonard (1994, p.6) state “True leaders never rest. They believe that the more they learn, the more they realise how naïve they were.” McAdam and Kelly (2002) add that innovative companies thrive on change and the attitude that change is healthy is a key difference between leaders and followers. In this sense, market leadership and sustainable competitive advantage cannot be gained from benchmarking, it can only ever offer second best. As benchmarking may unwittingly draw companies towards imitation and homogeneity, managers have gradually let the importance of operational effectiveness increase over strategy.
There is an argument, however, that looking outside the boundaries of an organisation and comparing processes with others enables companies to acquire implied as well as explicit knowledge. When integrated with previous internal knowledge of one’s own organisation this creates new knowledge which can lead to improvements, creativity and innovations, perhaps not even directly related to the benchmarking area.
4.8.5 Resources
Elnathan et al (1996) suggest that benchmarking has hidden costs such as the time and effort
required to coordinate the process and participants so that a comparable set of data is gathered and the costs relating to issues such as cultural change or resistance to change by those affected or involved. Such costs may be hard to measure and understand. Time is considered to be the greatest factor causing resistance to benchmarking (Hinton et al, 2000).
In addition there are direct costs such as travel which can make a benchmarking exercise expensive (Bhutta and Huq, 1999).
If company directors do not fully understand the time, money and resources associated with benchmarking and the benefits it can offer then it may be hard to justify using benchmarking. Similarly, the benchmarkee may not be willing to devote lots of resources into hosting a benchmarking visit. This can lead to problems where process are not investigated thoroughly enough, for example if interview time is restricted. (Anderson et al, 1999)
Costs can be controlled if benchmarking is approached one step at a time with focus being directed at narrow areas rather than wide ranging studies. If benchmarking visits are well planned, there is a detailed understanding of the organisation’s own problem areas and it is clear what is wanted from the visit then costs can also be managed more efficiently. (Bhutta and Huq, 1999)
In the research any issues with getting the benchmarkee to devote resources to the exercise will be minimized by explaining to them what is required before conducting the visit.
Careful planning of the data collection, structure and timing of the visit will further facilitate getting the benchmarkee to devote some time to the benchmarking exercise.
4.8.6 Is Benchmarking the Appropriate Technique To Use?
It is argued that for benchmarking to be the appropriate management technique to use, there must be an understanding of why somebody else’s processes are appropriate to one’s own organisation. Benchmarking detractors state that the circumstances that make benchmarking appropriate are rarely present and any general rules for benchmarking are unlikely to exist because all companies are distinct in their culture and standard operating procedures. As most comparative studies do not study similar companies operating within the same industrial context, they normally take cases with very different competitive forces in
operation and where the business drivers are dissimilar (Cox and Thompson, 1998). This limitation can be overcome with careful planning and selection of appropriate organisations at the outset of the benchmarking process by basing the selection on appropriate criteria.
Benchmarking assumes that all organisations want to be the best, when in practice this may not always be the case. Best practice also assumes that there is “a single best way” to improve, rather than looking for the most appropriate way depending on an organisations circumstances and characteristics (Cox and Thompson, 1998). As has been mentioned, this limitation can be minimized by studying three non-airport organisations to give a wider range of findings than focusing on one company.
On its own, benchmarking does not tell organisations what customers actually want. If a product or service becomes obsolete, then no amount of improvements in the production processes will make it competitive (Bhutta and Huq, 1999). This is a limitation which does not really affect the research as the demand for employee car parking spaces is likely to remain for many more years.
4.8.7 Specific Risks of Benchmarking
In addition to the areas discussed thus far, there are specific risks of inappropriate benchmarking which may carry a greater severity than the generic risks. These can be summarised as being:
The exercise fails to generate the desired business improvements.
Competitors play “catch up with you”.
Business “fads” are adopted.
Potential long term business decline, loss of market share and risks of succession by competitors.
Loss of credibility with senior management. (Cox and Thompson, 1998) 4.8.8 General Solutions to Benchmarking Limitations
Anderson et al (1999) offer some general approaches to overcoming the challenges posed by benchmarking, namely:
Applying a systematic procedure to scan a large number of potential partners for relevance;
Seeking support from sources and institutions such as industry associations or the media that may be able to help highlight potential partners;
Making sure the offer made to companies is attractive, for example by informing
about processes the benchmarkee is good at and offering return visits, and;
Requesting initial performance information about the processes in question before selecting partners to ensure that the performance will be sufficiently good enough to offer new insights.
Where relevant, these approaches will be considered. Selection of organisations by scanning at a large number of companies and seeking support from “experts” is important and will be adopted. It is also a sensible approach to gather information on the benchmarkee before making a final selection decision or visit. It may not be possible to offer attractive reciprocal visits, but it is thought that the outside perspective from which the benchmarking exercise is being conducted will remove many barriers in terms of gaining access to organisations.
4.9 Conclusions
Best practice benchmarking is a performance management technique which allows organisations to learn from other organisations, regarded as best practice, either in the same industry or in unrelated industries. An advantage of best practice benchmarking over other performance improvement techniques is that it focuses on the processes which lead to better results. Within the context of the research it is processes associated with the introduction of a financial incentive or disincentive car parking measure for employees which are explored.
This chapter has shown that the concept of benchmarking is being used within the research to learn from “best” or “better” practice elsewhere in similar areas and processes. The chapter helps to achieve the following objective as set out in section
3.5 from a methodological perspective:
• explore whether good practice in the non-airport sector can be transferred to
an airport context and in particular Heathrow Airport. Further original research and the benchmarking discussion and analysis contained in Chapter 8 with further address this objective.
Best practice benchmarking can be seen to be more suited to the area being studied than other performance improvement techniques as it looks at processes rather than just results.
Benchmarking as a technique has been used in the airport and wider transport sector, but at the same time its use has not been exhausted and there is still scope for original work. In the airport sector specifically it has been stated that airports could learn from benchmarking with dissimilar airports or organisations from a different industry.
Several benchmarking typologies exist, most notably the distinction between internal, competitive, functional and generic. It is considered that functional benchmarking, whereby processes are compared between the benchmarking organisation and the best practice organisation, is the type most suited to the research being conducted.
Additional considerations when conducting a benchmarking exercise have been discussed including data collection, consideration of the benchmarkee and the importance of benchmarking champions, culture and employees. These will all need to be considered when conducting the benchmarking exercise. Issues surrounding data collection are discussed in more detail in Chapter 5 which addresses the more specific methodology for conducting the exercise. Benchmarking has also been shown to have a number of limitations all of which will have to be carefully considered to achieve the maximum benefit from the benchmarking exercise. These limitations are possible to overcome and should not restrict the findings of the research.
Camp’s ten-step benchmarking process has been highlighted as a suitable base model. This model has been used by several organisations when benchmarking and has also been shown to be adaptable to individual circumstances and characteristics. This is important for the benchmarking exercise in the research and as such a model has been developed based on Camp’s ten-step process, as described below in section 4.10. The nature of the thesis means that the latter stages of Camp’s benchmarking process cannot be completed.
Recommendations can be made to BAA based on the findings of the benchmarking exercise, but then the subsequent stages of the benchmarking process cannot be followed through within the scope of the research.