Article originally published in the Philadelphia Business Journal on July 23, 2018
I recently attended a conference at which the general manager of a business unit within a large company described how he was able to achieve a significant turnaround in operating results by benchmarking sister operations in his organization. He broke all accepted paradigms about what was possible. The adage, “don’t tell me it can’t be done – find a way to do it” came immediately to mind.
After his presentation, I asked how successful other general managers within his company were at applying his approach to improve the results of their business units. He responded that although he was willing to share his approach, no other general manager bothered to internally benchmark what he did to achieve the turnaround. He said there wasn’t a culture within the company to benchmark other operating units.
External benchmarking competitors is important to determine a company’s competitiveness in the marketplace and learn about best practices within the industry. However, it can be a difficult process to externally benchmark competitors due to the frequent inability to get the data that is needed.
Internally benchmarking sister operations that are achieving great results within the company is much easier. The data is available. So why isn’t it done as a matter of course?
Internal benchmarking is not part of the corporate culture
As with many other techniques to improve operating performance such as the process of continuous improvement, delivering a great customer experience or empowering employees to make decisions, internal benchmarking is not part of the leadership mindset in some organizations.
The CEO needs to be held accountable by the board to bring this mindset to the company and make it part of their culture.
Bonuses are based on business unit results and not corporate results
If there is no incentive to share what works across all business units, a huge opportunity is wasted. The shareholders don’t care about the results of individual operating units. They care about the results of the entire company.
Bonuses should be based both on individual operating unit results and corporate results, so there is an incentive for sharing what works within an operating unit with other operating units. When benchmarking improves the results of a business, it needs to be celebrated throughout the company to encourage more benchmarking.
“By helping you, I diminish my own chance for career advancement”
Unfortunately, some business unit leaders feel that they are playing a zero-sum game: “If I help to make you look good, I will not look as good.”
It needs to be made clear that in fact this attitude diminishes one’s chances of career advancement and will have a negative impact on the individual’s performance review. The desire to help others within the company will have a positive impact on one’s chances for advancement.
“It is a weakness to apply successful techniques developed by others”
Business unit leaders who feel that benchmarking others diminishes their own stature lose out on opportunities to improve their operating unit’s results and limit their chances to advance.
Using the ideas and applying the techniques of others shows you are open-minded and are not limited by the “not invented here syndrome,” which is universally frowned upon by all effective leaders.
Some business unit leaders are not comfortable with change
There is a universal expectation that all leaders will move their areas of responsibility forward and not be wedded to the status quo. Leaders who resist change shouldn’t be in their jobs and need to be replaced anyway.
Internal benchmarking and operational improvement need to be key components of any organization’s culture. It’s a source of competitive advantage.
Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and a MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com.
