De Los Habitantes

Benchmarking has been used in a wide range of business sectors. Surveys conducted by the Open University revealed the percentage of organisations claiming to be using benchmarking in the UK. The findings, split by sector, are given in Table 4.3. The figures reveal that 43 per cent of organisations in the transport sector claim to use benchmarking, which is just below the UK average. This shows that benchmarking can be considered to be a suitable approach to take for the research as it is being used by other companies in the transport sector. It can also be viewed as suitable because benchmarking cannot be seen to be an exhausted practice within transport, particularly when compared to a sector such as utilities and therefore provides an opportunity for original research.

Table 4.4: Percentage of UK Organisations Claiming to be Benchmarking per Sector

Government 58%

Education 62%

Health 69%

Manufacturing and construction 50%

Transport 43%

Financial services 33%

Services and retailing 36%

Utilities 78%

Other 49%

Average across all sectors 48%

Source: Holloway et al., 1999

Smith (2000) argues that the adoption of benchmarking techniques has been slower in the service sector. The figures in Table 4.3 confirm this to some extent with sectors such as transport and retail having the lowest take up of benchmarking. Other service sectors, however, such as health, education and government can be seen to have above average take up of benchmarking. It may be that these sectors are influenced by the regulatory environment in which they operate and are required to produce league tables of results which would impact on the number using benchmarking (Holloway et al, 1998b). Within these figures it must also be remembered that the distinction between benchmarking and best practice benchmarking must be considered. While an organisation may state that they use benchmarking, they may just be comparing results rather than processes. Holloway et al (1998a) confirm this, as their survey finds that many organisations place a greater emphasis on results rather than process benchmarking.

When compared to manufacturing firms, service organisations have a number of differences which has made it harder to develop comprehensive quality management programmes. This may explain why the take up of benchmarking has traditionally been slower in transport and other service industries. These differences include characteristics in the service sector such as simultaneous production and consumption, heterogeneity, perishability and the intangibility of the output. (Smith, 2000)

Table 4.4 shows the relationship between the size of an organisation and the use of benchmarking. The figures reveal that the larger the company, the more likely it is to engage in benchmarking activities. This finding supports the use of benchmarking at BAA Heathrow, which has approximately 3,000 employees. Other research has shown that more than 70 percent of the Fortune 500 companies use benchmarking on a regular basis (Bhutta and Huq, 1999).

Table 4.5: Benchmarking Activity as a Function of Organisational Size

26-99 25%

100-250 42%

251-999 53%

>1000 78%

Source: Holloway et al., 1999

4.4.1 Benchmarking in the Airport Sector

Francis and Humphreys (2005, p.99) state that in civil aviation, benchmarking may “offer the potential of:

• providing information to meet the needs of managers and planners in a volatile market environment; • offering possible solutions drawn from best practice

elsewhere in the industry; • offering a means of improving efficiency through learning both within

organisations and between organisations;

facilitating effective economic and environmental regulation; and

maintaining and improving air transport safety through sharing information and knowledge.”

In the airport sector, performance management techniques have long been used to measure efficiency, allow alternative strategies to be evaluated and to allow governments to regulate airport activity. They are also used to enable managers to monitor operational performance and identify areas for improvement. The techniques used are wide ranging and often quantitative with focus on cost performance, productivity and revenue (Humphreys and Francis, 2000). In many cases they allow only for comparisons to be made rather than for the underlying processes to be investigated. For example, Lobo and Zairi (1999a and b) carried out a benchmarking exercise with cargo airlines which used qualitative comparisons to highlight key benchmarks the industry could use to compare performance. The use of best practice benchmarking can allow airports to understand how better performing airports are achieving their superior status.

Graham (2005) states that it is only within the last 15 to 20 years that benchmarking in the airport industry has begun to be accepted as an important management tool. This relatively recent take up is because of the increase in business pressures since privatisation and because benchmarking was previously viewed as a difficult undertaking due to the range of inputs, outputs and the operational environment. Airports no longer regard themselves as

providers of infrastructure and recognise now the necessity for a wider range of business tools, which has led to a growing use of continuous performance appraisal and the use of benchmarking.

Francis et al (2002, p.239) state that benchmarking “is of potential importance to airports because of the challenges they face…airport privatisation, commercialisation, congestion of airport infrastructure, rapid growth in traffic, the formation of global airport groups, airline market deregulation and alliances.” The challenges posed by the congestion of airport infrastructure is an area being addressed in this research and, as such, the fact it has been considered by other academics provides justification for the use of benchmarking in this area.

Research into the use of benchmarking by airports was conducted by Fry et al (2005) who identified benchmarking as the most commonly used technique for improving performance with 72 percent of airports revealing they used benchmarking. Other techniques being used included quality management systems, balanced scorecards, activity based costing, business process engineering, total quality management, environmental management systems, value based management and business excellence models. As benchmarking allows organisations to look at processes rather than just results, this makes it more suitable to the research than other performance improvement techniques which would only allow BAA to compare results with other organisations and not the processes behind the results.

The same survey found that the larger the airport, the more likely it was to use benchmarking; all responding airports with more than five million passengers per annum were almost twice as likely to use benchmarking than those with less than five million passengers per annum. There was a stronger focus on performance measurement rather than process improvement with 65 percent using it for this reason. An even balance was found between whether benchmarking was used for the comparison of particular tasks and activities, or for more general business-wide comparisons.

It was found that airports almost exclusively benchmarked with similar organisations, almost invariably other airports and that some stated that it was difficult to identify suitable and willing partners. It was recommended by the authors that they should look to exemplar processes at dissimilar airports or other industries to extract full benefit from benchmarking (Fry et al, 2005). In other research there are few examples of airports engaging in best

practice benchmarking with organisations outside the airport sector. BAA, however, did undertake an exercise by benchmarking car parking processes and passenger throughput with similar processes at Wembley Stadium and Ascot race course (Francis et al, 2002). In the airline industry, the “putting people first” strategy adopted by British Airways in the late 1980’s is a well-documented use of benchmarking to achieve service improvement across different divisions of the airline (Francis et al, 1999).

The use of benchmarking by airports against other airports at a strategic level has been reported. Ratings published by the International Air Transport Association allow cross-airport performance to be compared in a range of cross-airport service performance indicators.

These ratings offer a starting point for airport management to begin analysing the processes generating the figures. In Europe, the FLAP group (comprising representatives from the Frankfurt, London, Amsterdam and Paris airports) have used benchmarking to explore the performance measures which cover retail activity (Humphreys and Francis, 2000). These comparisons tend to focus on results rather than processes however. Research has also been undertaken to assess the potential to use benchmarking techniques in the design of major airports worldwide, although it again focused on quantitative data and measurements rather than processes (de Neufville, 1998).

The use of benchmarking in the airport sector lends support and justification to using it as a basis for this research. It is a well established performance improvement tool in the industry.

The finding that most airports look for comparator organisations within their own industry means that the use of non-airport organisations as comparators in this research is a relatively innovative approach.