Benchmarks and benchmarking: definitions
There is a tendency to use ‘benchmark’ and ‘benchmarking’ interchangeably:
- Benchmarks are reference points or measurements used for comparison, usually with the connotation that the benchmark is a ‘good’ standard against which comparison can be made
- Benchmarking is a process of finding good practice and of learning from others
Published formal definitions of benchmarking include HEFCE’s own definition:
A process through which practices are analysed to provide a standard measurement (‘benchmark’) of effective performance within an organisation (such as a university). Benchmarks are also used to compare performance with other organisations and other sectors.
During the course of the HESA benchmarking project many variations on definition have been found, which have common themes. A simple and concise summary of these was provided by one university colleague:
A way of not only doing the same things better but of discovering new, better and smarter ways of doing things and in the process of discovery, understanding why they are better or smarter.
John Gallacher, Director of Finance, York St John University
Types of benchmarking activity
Existing literature describes the following types of benchmarking:
- Implicit (by-product of information gathering) or explicit (deliberate and systematic)
- Conducted as an independent (without partners) or a collaborative (partnership) exercise
- Confined to a single organisation (internal exercise), or involving other similar or dissimilar organisations (external exercise)
- Focused on an entire process (vertical benchmarking) or part of a process as it manifests itself across different functional units (horizontal benchmarking)
- Focused on inputs, process or outputs (or a combination of these)
- Based on quantitative and/or qualitative information
This resource focuses on two main types of benchmarking – metric (sometimes referred to as ‘performance’) and process:
Provides the information to identify those areas where there is an apparent performance gap. Unless a very complex set of data has been collected it does not usually provide an understanding of explanatory factors which are the key to understanding the apparent performance gap: metric benchmarking often requires further investigation in order to understand the results. Put another way, metric benchmarking often doesn’t provide answers to a business problem but can usefully help to focus on the correct questions for further exploration. Metric benchmarking is often undertaken independently by comparing one’s own performance statistics with similar statistics for other functional units or organisations derived from a data set.
Seeks to use the metric benchmarking output as a basis for understanding the apparent performance gap. This involves focusing on the examination and comparison of processes and will often be undertaken on a collaborative basis between functional units within an organisation or with other organisations with the aim of identifying best practice.
These two types of benchmarking may be seen as two extreme points in a spectrum of activity. Between them lies an intervening stage – Diagnostic benchmarking – in which the self-evaluation of metric benchmarking may be guided by performance criteria and/or facilitated by the insights of well-informed individuals.
The value of this intervening stage should not be underestimated. A diagnostic stage following metric benchmarking may be useful in shaping and focusing any following review. It may be for example that a diagnostic approach at this stage identifies likely process deficiencies that are worthy of further scrutiny within a process benchmarking exercise. However diagnostics might equally suggest the requirement for something rather more strategic and challenging such as a major review at departmental level, possibly followed by a restructuring. In this way diagnostics are important in directing effort to achieve effective results.
Different types of benchmarking can deliver different benefits but approaches also require different effort and resource. This is illustrated as follows:
Institutions should select the benchmarking approach that is appropriate to their needs, priorities and circumstances.
The pros and cons of metric and process benchmarking can be illustrated thus:
|Process benchmarking (qualitative, often collaborative)||Metric benchmarketing (quantitative, often non-collaborative)|
|Pros||Opportunities for higher education institutions to increase efficiency and improve particular functionsForum to explore shared services||Individual measures can highlight strengths and weaknesses and offer insightsPotential to boost international reputation|
|Cons||Difficult to identify a benchmark groupSensitive business information may be difficult to access||Metrics may not be the most relevant or appropriateDanger of promoting homogenity|
A very useful set of ‘ground rules’ for those institutions considering collaborative approaches to benchmarking can be found in the EFQM European Benchmarking Code of Conduct.
Drivers for higher education benchmarking
Benchmarking can be used to demonstrate accountability to stakeholders as well as develop the institution and competitive advantage in a continuum:
Two comments from the sector illustrate the two ends of the continuum:
"The HESA performance indicators and the University’s performance against benchmarks are included in the suite of performance management information which is shared routinely with the board of governors. Benchmarks and relative performance are good and objective ways of assuring that the university keeps on track with its plans. The indicators also help to provide assurance to stakeholders including the public and policy makers."
Vice-chancellor of a post-92 university
"The overarching aim of a benchmarking process is to place performance in perspective against the sector or a more specific group of institutions. A key element of benchmarking is the identification of institutions that achieve high levels of performance which can act as examples of good practice.
By analysing, assessing and implementing actions based on examples of good practice, institutions can achieve more efficient processes and ultimately higher levels of performance. Sensible benchmarking can lead to realistic target setting processes in relation to a broad spectrum of performance indicators, which encourages a more efficient environment."
A head of planning
It is clear that, given the seismic changes occurring in the UK HE sector, benchmarks and the uses of benchmarking are likely to change. Benchmarks that were important in a funding-led world will not necessarily be as relevant in the changed sector, and new benchmarks will be required.
There is no doubt that increasing pressure to demonstrate efficiency of operations and to prosper in an increasingly competitive environment are significant drivers to greater use of benchmarking techniques. Benchmarking enables institutions to focus on specific problems, isolate improvement opportunities and identify strengths that should be preserved.
"HE needs to understand how to operate in the changing environment and there is a consequent need to understand the market and student needs. There is a fast-moving agenda, and the dynamics of the marketplace are being introduced to HE. ‘privatisation’ and private providers are entering the sector and the role of FE colleges may change."
"There are issues of cost and quality, the efficiency and effectiveness of processes, tracking student mobility, and the data and skills necessary to support business-like operation."
Senior higher education managers at a ‘thinktank’ event during the project