Internal benchmarking

Internal benchmarking
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Internal Benchmarking is an important tool which is used inside a company to improve its processes. It compares all types of results of a team, department or an individual to another part of a company. Internal benchmarking says which practice or habit is the best. That procedure is then implemented to another parts of a company or organisation. Internal benchmarking focuses primarily on the research and evaluation of processes and methods that take place in the company. Thanks to this method of analysis, it is easy to define which activities are ineffective or performed incorrect in a company, and then it is good to eliminate them. The effect of this should be to improve the results(J. Saul 2004, p. 6).

A company’s „problem”

For example there is a company which makes hand made wooden watches, there is two shifts. One is able to produce, pack and send to client about 25 watches a day, second shift only 20 of them. Managment of the company wants to achive the level of 50 watches per day overall. This level of production efficiency is the benchmark to achive.

Some analysis is contucted, It is focused on the way the product is made. It seems that two employees can assemble watches faster than others. Mangment draws conclusions and good habits, then intoduces it in second shift with the aim of improving results.

More about benchmarking[edit]

As we can see internal benchmarking makes companies to set golas in its development and guide employees to the best development path.

Internal benchmarking is one of four types of benchamarking. There is external, functional, general and internal. Internal benchmarking is the basis for starting external, general or functional one.

Internal benchmarking seeks to develop their own and autonomous standards. Examples of internal benchmarking are, strategies (plans, programs), organizational solutions for the future or the past or available technological products.

How to properly do internal benchmarking?[edit]

Five steps of internal benchmarking

1. Selection of the object to benchamark.

Selecition of proper „object” of benchmarking is the most important step. Without specyfying the „object” there is no possibility of proceeding any benchmark. Usually the problem is well known, so it should not be tough to determine.

2. Selection of the object to comparison.

There is also need to choose a comparison „object”. The one which is our goal, or causes for example best financial results in other departments, makes the company management delighted.

3. Selection of information.

To perform a comparison and of course internal benchmarking a lot of information is necessary to obtain It is good to gather them from both sides. For exmple: information about duration of a process, what kind of tools are used, what facilitations are used by employees or why the specific item is usually broken.

4. Indentification of mistakes in performance

This step should be done carefully. Only the exact finding of the causes of errors will be effective and will result in improved factors, processes being checked. Errors in this step can contribute to unsatisfactory results of internal benchmarking.

5. Development of solutions and remedies In the last step changes should be made to the processes and habits that will lead to improvement. Some require an immediate response, others should be introduced gradually(L.O’Rourke(2012), p.10-29).

Advantages and disadvantages[edit]

Advantages of Internal Benchmarking:

  • It is cheap solution, becouse it takes palce inside a company.
  • It has a short lead time and most important - has a very low risk of failure.
  • The success of benchmarking is not dependent on external factors.
  • Because it is done inside the company, it has easy and quick access to documents, company data and information. Thus, it enables a better understanding of own processes in the company and allows for a full assessment of the company's operation. In addition, it enables accurate data analysis .
  • Someone who carries out the process have full rights to use special solutions.
  • It brings high results in large and diversified organizations
  • The company's management knows its needs, thanks to which it is possible to determine quickly in what direction changes are needed and which elements should be analyzed.
  • It helps in SWOT analysis
  • Unnecessary and time-consuming researches and analysis are eliminated.

Disadvantages of Internal Benchmarking:

  • It has narrow perspective of action – limited only to the inside of the company.
  • It is a comparison of employees – prejudices for the process.
  • Impossible to compare the results with other companies

Target and Range[edit]

Range of Internal Benchmarking:

  • functions,
  • departments,
  • projects
  • business in the same company or group at the same or another location.

Targets

  • improvement of actractivness on the market
  • improvement of competitiveness
  • improvement of economic efficiency
  • finding an effective remuneration system for employees
  • finding easy ways to achive aims

References[edit]

Author: Angelika Zając