Some incidents as they occurred at Enron, WorldCom, Disney and Xerox, have
forced managers to rethink their values and to consider the expectations of
their stakeholders. In fact, companies operate in a socio-economic environment
that functions more effectively when key stakeholders are included in business
practices and decision making (Sachs and Ruhli, 2005;
Emiliani, 2001). These rapid changes in the environment
and hence in organizations has led to some changes in business benchmarking
and performance measurement (Anderson and McAdam, 2005).
Emerging second generation performance measurement solutions is one of these
changes which are based on the philosophy of stakeholder orientation and value
creation (Green and Jack, 2004; Jack,
2002; Neely et al., 2001). Regarding the conceptual
interrelation between performance measurement and benchmarking (Zairi
and Leonard, 1994; Elmuti and Kathawala, 1997; Kouzmin
et al., 1999; Sarkis, 2001), this spirit of
stakeholder orientation can affect common benchmarking processes. Applying the
new generations of performance measurement solutions concepts, benchmarking
processes can be transformed to a new generation. In this way, benchmarking
as a tool for building strong capabilities, ensuring an inward flow of ideas
and establishing true competitive gaps (Jarrar and Zairi,
2001), can help organizations to be more responsive to all of their stakeholders.
In this study, using of non-common performance measurement frameworks
is examined to shift the viewpoint of benchmarking process to a stakeholder-oriented
one. For this aim, some common benchmarking process models are reviewed.
Then the stakeholder-oriented approach is focused and also the value mapping
a second-generation performance management solution- as a basis for designing
the suggested model of benchmarking process, is discussed. Proposing stakeholder-oriented
model for benchmarking is discussed. Finally, application the proposed
model to a case from Irans higher education sector is presented.
REVIEW OF BENCHMARKING PROCESS MODELS
In order to utilize and achieve benchmarking benefits, most of authors have
suggested various models of the benchmarking process which are included different
steps to be followed and these steps are often provided for in a model (Magd
and Curry, 2003; Elmuti and Kathawala, 1997). In
fact, the process of benchmarking involves focusing on the issue of how learning
can be made and incorporated in a systematic way into the organization (Ahmed
and Rafiq, 1998).
The most publicized benchmarking process is due to Camp (1989)
and was developed and applied at Xerox Corporation ( Fig. 1).
Also, some models are described and compared by Zairi and Leonard
(1994). Fourteen benchmarking procedures are considered in their comparative
exercise and finally they suggest that there are many similarities between them
(Zairi and Leonard, 1994).
||Xeroxs benchmarking process steps source: Camp
However, according to some main
benchmarking processes which are investigated by Zairi and
Leonard (1994), Elmuti and Kathawala (1997), Ahmad
and Rafiq (1998), Magd and Curry (2003) and Kyro
(2004), we can distinguish three main phases in each benchmarking process:
Planning, Analysis and Change.
Planning phase is the most important set of actions in a benchmarking process.
Regarding most of considered benchmarking processes, identifying benchmarking
study subject (What to benchmark?), specifying measures and also selecting benchmarking
partners are the critical tasks which are done in this phase (Cassell
et al., 2001; Magd and Curry, 2003). Among
these tasks, defining the object of study of a benchmarking initiative (What
to benchmark?) is a first and fundamental step (Carpinetti
and de Melo, 2002). This can be found through investigation of some benchmarking
processes like Xerox pioneering ten-step benchmarking process, Kaiser Associates,
Inc. seven-step process, Spendolini five-step process, IBM five-phase/fourteen-step
process, Alcoas six-step benchmarking and many other classifications, that
while these approaches are organized differently, they all share a crucial stage
at the beginning: determining which function to benchmark (Partovi, 1994).
Although the question of determining what to benchmark is less focused by researchers
in the benchmarking literature rather than other components of benchmarking
process, some studies as well as benchmarking processes are focused on this
issue like Partovi (1994), Buyukozkan and Maire (1998) and Carpinetti
and de Melo (2002).
||Stages of strategic benchmarking source: Partovi (1994)
Partovi (1994) suggests using of the Analytic Hierarchy Process (AHP)
which relates customers desires for specific product features to the
selection of value chain processes for benchmarking. In this way, he addresses
the strategic benchmarking process as the basis of his proposed model
(Fig. 2). The main contribution is occurred in the process
selection (determining what to benchmark) stage which process selection
is directed at the detailed evaluation of various important activities
within the firm to reach a higher level of competitive advantages and
also customer satisfaction. Partovi (1994) tries to use a more quantitative
approach to find the critical activities which are important for strategic
goals as well as customers value creation aims but not all of stakeholders.
Buyukozkan and Maire (1998) propose the use of Principal Component Analysis
(PCA) and Common Factor Analysis (CFA) as tools for determining the objects
of benchmarking study. Their study is based on a benchmarking process
which is divided into 15 steps regrouped in five phases (Fig.
||The steps of the benchmarking process source: Buyukozkan
and Maire (1998)
The first phase which is named Self-analysis is devoted to measure
and analyze the internal performance of the enterprise to identify its
strong and weak points. A diagnosis tool called Olympios Audit is used
for this aim which provides raw data for next steps.
The important point in latter benchmarking process is reliance on performance
measurement and a specific performance audit tool for identifying benchmarking
priorities is used. But the focus point in this process is still only
customers and a customer-supplier approach is used for evaluating the
Carpinetti and de Melo (2002) stress on the using a
qualitative method of analysis in the path of deploying product and process
improvement needs into benchmarking projects. The approach presented in their
study is concerned with identifying dimensions of performance of product and
operations, as well as mapping business processes involved in delivering value
to customers. Their suggestion includes a sequence of steps for defining what
to benchmark (Fig. 4) which is followed by a set of typical
benchmarking project steps.
As a conclusion, two points can be stressed, first, except Buyukozkan and Maires
benchmarking process, other benchmarking processes have not addressed a specific
performance measurement framework for identifying as is level of performance
and hence specifying improvement needs (benchmarking targets); while according
to some researchers like Zairi and Leonard (1994), Elmuti
and Kathawala (1997), Kouzmin et al. (1999) and
Sarkis (2001), performance measurement is a critical concept in a benchmarking
process which significantly help us to know the answer of What to benchmark?.
In fact, although the Longbottom (2000) study shows,
determining what to benchmark is largely ad hoc in practice and
Carpinetti and de Melo (2002) have stated that there is generally no clear
procedure for identifying improvement needs, but exploiting structured performance
measurement frameworks during the benchmarking process can form a more organized
procedure to determine what to benchmark.
Second, it seems that the necessity of responsiveness of enterprise to all
of its stakeholders is neglected in most of investigated benchmarking processes
and only customer needs as a member of stakeholders group are addressed in these
benchmarking processes. This can be a major mistake in nowadays organizational
environment which is stakeholder oriented than ever. We need to rethink the
purpose of the firm as being a social institution that needs to create value
for stakeholders (Moir et al., 2007) and benchmarking
should be employed as a tool to boost value-creation functionality of processes
STAKEHOLDER-ORIENTED APPROACH TO BENCHMARKING
The stakeholder-orientation approach to benchmarking can be formed through
considering the link between benchmarking and performance measurement (Fig.
5). Although benchmarking is not measurement itself but a process of establishing
gaps in performance and setting objectives and developing plans to close identified
gaps (Zairi and Leonard, 1994). On the other hand, performance
assessment is one of major steps in determining what to benchmark, so performance
measurement and metrics is a critical element in a benchmarking project in order
to know where the company stands today and where it will be tomorrow (Elmuti
and Kathawala, 1997; Sarkis, 2001). Therefore one
major issue is the need to decide on suitable indicators to be used in the benchmarking
process (Kouzmin et al., 1999).
Evolutions in performance measurement field form mere financial to multidimensional
indicators and measures have lead to developing new performance measurement
frameworks like BSC and EFQM in 80 and 90 decades. While these various frameworks
have been created or adapted to help deal with the problem of deciding what
performance measures to select for use within organizations (Neely
et al., 2001) they have evolved from different backgrounds and perspectives
and this has influenced the structure and focus of each framework.
each of these approaches has helped to focus the minds of managers on broader
performance measures for their organization (Jack, 2002; Pilcher and Jack, 2006) and on this basis, some researchers
have examined these approaches role in benchmarking for self-assessment purposes
and identifying improvement needs, as well (Ahmed and Rafiq, 1998).
But in recent years, some problems in realizing the potential of first generation
measurement frameworks (e.g., EFQM and BSC) to address the needs of all stakeholders
and also learning from their application in organizational settings, has lead
to the development of second generation performance measurement frameworks.
One of the problems with approaches like EFQM Excellence Model and BSC is that
they direct managers of the organization to develop strategies around the limited
perspectives of the respective approach i.e. the four perspectives of the scorecard
and the nine criteria of the EFQM model. But one of the lessons in nowadays
organizational climate is that strategy must adapt to ever changing requirements
(Jack, 2002). Also, first generation approaches are still
focusing on outputs rather than using the language of outcomes which is a dangerous
point that can lead to significant stakeholder dissatisfaction (Pilcher
and Jack, 2006). As a counterpart, second generation performance measurement
approaches like Performance Prism and Value Mapping can help us to have a comprehensive
stakeholder orientation and focus on broader stakeholder needs as an important
step forward to move thinking away from the traditional approach that measures
should be derived from strategy. This idea directs us to view stakeholder needs
as the fundamental perspective on performance (Neely et
al., 2001; Jack, 2002; Green
and Jack, 2004). This point can help us to form a new approach to benchmarking
as well. Using the second generation performance measurement approaches like
Value Mapping and its related concepts, a new perspective of organizations
performance which is based on stakeholder needs can be developed in the field
of benchmarking. Thus whole of the benchmarking process can be established on
a stakeholder-oriented viewpoint which enables us to view own and our benchmarks
performance in view of stakeholders, their needs and values which should deliver
Value mapping solution as a basis for designing present proposed model, integrates
the continuous improvement and performance measurement concepts hence helps
organization to focus on activities and assets which are of highest utility
in satisfying stakeholder and organization needs (Green and
Jack, 2004). This approach which is developed in the UK helps organizations
to manage the value drivers that impact on achieving desired outcomes (Pilcher
and Jack, 2006). The four building components of this approach are (Green
and Jack, 2004; Jack, 2002):
||Value needs: the highest-utility needs of the
||Value drivers: the tangibles and intangibles relating to
activities and assets of the organization those create value
||Value outcomes: the measurable outcomes of value creation
and can be both intangible and tangible
||Value maps: visual representations of the value drivers and
value outcomes, including links to performance measures, strategic
objectives and stakeholder needs
The relations between stakeholder needs, strategic objectives, value
outcomes and value drivers are shown in Fig. 6.
The review of some major benchmarking processes and improvement
opportunities that were addressed along with considering second generation
performance measurement frameworks like Value Mapping as a new viewpoint
to organizational performance, led to theoretical development of a stakeholder-oriented
process model for benchmarking in the end of year, 2007. The model is
designed with a focus on enterprises stakeholders and is based on some
extracted concepts from Value Mapping approach as a performance management
solution. These concepts are used specifically in the planning phase of
the benchmarking process as a performance measurement body to define suitable
measures and therefore for determining what to benchmark. This model is
shown in Fig. 7 and its steps are described as follows:
Identify stakeholders: Regarding the stakeholder-oriented nature
of proposed benchmarking process, it starts with identifying stakeholders
of specific organizational scope which is aimed to boost its performance
through benchmarking. This identification can be matured through an iteration
mechanism. So, in each iteration of benchmarking process more and more
stakeholder groups can be addressed hence going through the way of satisfying
more and more needs to reach higher levels of performance based on a continuous
Assess value needs: In this step, needs of pre-identified stakeholder
groups will be assessed. These needs can be known through some tools like
interview (with sample groups of stakeholders) or questionnaire and etc.
However, the important point in this step is that stated needs should
present the stakeholders clear need for a worthy and useful service or
Identify value drivers: When stakeholders needs are known, the
organization then has to identify the value drivers that have greatest
utility in satisfying these needs.
||Stakeholder-oriented benchmarking process model
Develop metrics: For a realistic self-assessment suitable metrics
are necessary. In this step, performance variables will be developed for
evaluating identified value drivers.
These metrics should be tailored to outcomes assessment rather than outputs
and this can be achieved through embedded iteration mechanism in the benchmarking
process. So, while in primary iterations outputs can be addressed but
as our understanding of stakeholder needs get matured, the focus will
be on outcomes.
Assess own value drivers: One of the main tasks to determine what
to benchmark is done in this step. Based on developed metrics, a self-assessment
action is conducted focusing on processes and assets which have greatest
utility in value creation. As a result, own value drivers can be evaluated
in comparison with value needs which were stated by stakeholders and then
specify their value-creation condition.
Identify improvement priorities: Through assessing own value drivers,
barriers and difficulties in the pass of meeting stakeholders needs become
clear, so we can find out improvement needs in our organizational setting based
on a stakeholder-centric thinking.
Select benchmarking partners: Benchmarking partners may include
other departments of own organization, competitors in the same or different
geographical markets and companies in related or unrelated industries,
in the same or different countries. Choosing benchmarking partners can
be dependent on similarities between own and theirs in terms of respected
stakeholder groups and relations with them or value drivers which are
Data collection: Data collection in this step means assessing
benchmarking partners performance considering identified improvement
priorities. So, data will be gathered through measuring their performance
based on pre-developed metrics and by different tools such as observation,
interview, questionnaire or search in the internet.
Compare and gap analysis: By making comparisons, the gaps can
be cleared and some good lessons can be learned. Analyzing the gaps show
that why others can employ specific value drivers more efficiently than
us and how they can do this.
Improve own value drivers: Employing lessons learned from earlier
step can help to improve our weak value drivers. This improvement can
be realized through a set of actions which may comprises of setting objectives,
developing action plans, implementing actions and monitoring.
This research is structured based on proposing a process model for
benchmarking and then testing through implementing whether the presented
solution brings the expected advantages. In fact, given the exploratory
approach of present research to design a benchmarking process model, it
is required to perform at least one case study to support the theoretical
design. It is therefore a research cycle in which theory development should
be tested in an organizational setting and in turn it helps further theory
Thus, after conceptual formalization in earlier section, the next step
was concerned with developing case of application of the proposed steps.
The proposed model was applied in one of top Iranian business schools during
the first months of year 2008. This decision is justified because of ever-expanding
commercialization of higher education which leads to a need for applying the
concepts of business process improvement to colleges and universities (Comm
and Mathaisel, 2005). On the other hand, higher education institutes and
business schools specially, must be very responsible to their stakeholders including
students, scientific society, industries, businesses and all of people.
The selected business school as the oldest business school in Iran is
a public institute with more than 1900 students at all levels and more
than 50 teachers in several education and research fields. It seems that
the business school faces with a range of problems in some areas which
have affected its performance and have decreased its perceived rank among
competitor business schools. These problems have motivated schools authorities
to find causes and develop some plans to improve the situation of the
school. For this aim, the proposed benchmarking process model was employed
and its steps were implemented sequentially as mentioned in the following:
Identify stakeholders: As stated before, higher education institutes
have a range of stakeholders from students and teachers to industries
and society and even the administrative personnel. All of this stakeholder
groups must be addressed by a comprehensive performance improvement initiative.
But due to some time and cost constraints in this case study, in the first
iteration of the benchmarking process; students as one of the major stakeholder
groups of the business school were identified and selected. It is clear
that in next iterations further stakeholder groups could be addressed
and the stakeholder orientation claim of proposed model would be realized
Assess value needs: Assessing the real needs of students of the
business school was conducted through interview with sample groups of
them. The results demonstrate that the real value needs of students are
some issues like:
||Convenient student-centric campus
||Up-to-date and dynamic conditions and facilities for learning
||Real world approach to education
||Open and non-discriminative environment for research
||Non-biased atmosphere for cultural and social activities
Identify value drivers: Based on assessed value needs, four main
value drivers in organization of the business school were identified which
have greatest utility in satisfying students, they are:
||Cultural and social system
Develop metrics: In the first iteration of benchmarking process,
most of metrics were focused on outputs. Some of these measures were quantity
based and some other were quality based which covered various aspects
of pre-identified value drivers.
Assess own value drivers: By conducting a self-assessment, the
situation of pre-identified value drivers has been revealed. Questionnaire
and check list were used for data gathering. The 119 usable questionnaires
with the five-point Likert scale were collected for analysing. This assessment
has helped us to evaluate the role of each value driver in satisfying
students needs. According to some criteria like convenient campus environment,
suitable sport and recreation facilities and rate of number of students
to number of PCs, the condition of facilities value driver was moderately
good. But about three main systems: Education, Research and Cultural and
social, the school faces some problems which are reflected in variables
like: number of scientific lectures and conferences which were held, number
of presented research study, number of presented courses and majors and
the level of interaction with industries and other higher education institutes.
||Status of value drivers
Identify improvement priorities: According to scores of each metric,
the overall score of each value driver could be calculated. In this way,
the identified difference between Facilities value driver and other three
main systems (Fig. 8) has justified us to select these
systems as main areas for improvement (benchmarking subjects).
Select benchmarking partners: In this case, main comparisons were
made with direct competitors who consist of five business schools. Although
all of processes and functions of these competitors were not superior
but some good practices could be found in these benchmarking partners
that would help to improve the value drivers of the business school and
to catch up competitors performance. Moreover, since one of the important
aims of benchmarking projects is to set higher standards and goals, top
10 world class business schools were considered as best in industry benchmarking
partners. Benchmarking against these partners significantly help to add
new perspectives to the business schools activities and processes and
define new kind of relationships with all of stakeholders.
Data collection: Most time consuming step of this case study was
conducted through multiple data gathering tools. Internal benchmarking
partners were assessed in terms of three major systems through questionnaires
and check lists, that at last 275 usable questionnaires were collected.
Also, data about worlds top business schools was gathered through browsing
and studying about 500 web pages and documents on the internet.
||Comparison with competitors
||Comparison with worlds top business schools
Compare and gap analysis: Since two groups of benchmarking partners
were selected in this case; comparisons and gap analysis were made in
following two sub steps:
||Against direct competitors: As discussed earlier,
comparisons with competitors help to refine and improve current operational
performance and may lead to superiority over them in the market. According
to Fig. 9, the business school has got the second
position after D in Education value driver. One important reason of
superiority of D over other business schools is its serious focus
on master and doctoral educational programs. But in Research value
driver, B is in the first position and the cases business school
has not been able to get a better position than fourth. B is in the
top because of providing a better research environment by using a
large number of qualified teachers and scholars along with publishing
several scientific journals. Taking into account the number and variety
of student clubs in B, it has got first rank in cultural and social
system and the business school is in the second position. This element
is most important one in the Cultural and social value driver which
has significant impact on students extracurricular activities
||Against worlds top business schools: Although, data gathering
through the internet has some shortages and collecting the quantity
or quality of some measures was impossible in this benchmarking project,
but anyway, results of this study have shown big gaps clearly (Fig.
10). Significant gaps can be seen even in Facilities value driver
(which has not identified as an improvement need, previously) and
this has led to closest placement of business schools points to the
centre of the chart. Generally, top business schools kind of viewpoint
for satisfying students needs, can be benchmarked. In a closer view,
high level of provided facilities, quantity and content of diverse
educational majors, number of presented scientific papers, high level
of interaction with international universities and businesses and
many student organizations and communities, are some of value creation
capabilities which can be set as a high standard for the business
Improve own value drivers: Regarding the identified gaps against
two groups of benchmarking partners, improvement projects have been launched.
Based on lessons learned from worlds top business schools, desired standards
for all of four main value drivers have been set. Also using competitors
analysis, short-term improvement goals and plans has been developed in
align with standards. Acting upon these goals and plans, have resulted
some considerable improvements in the business schools value drivers.
Improved quality of schools sport yards, restaurant and cafe; increased
number of PCs; developed IT infrastructure (e.g., providing wireless
connectivity to internet across the campus) and empowered student communities
(e.g., scientific community of students) are some of these improvements.
Considering ever changing expectations of stakeholders, improvement
tools such as benchmarking must be adapted to this condition. While strategic
issues and customer needs has been the focus of most benchmarking processes,
stakeholder orientation can be a way to rethink performance improvement
initiatives and to consider stakeholder needs during benchmarking the
best practices and processes from superior partners.
In this study, the stakeholder-oriented viewpoint of second generation
performance management solutions has been exploited. Concepts like value
need, value driver and value outcome have helped us to form a new perspective
to benchmarking which views organizations performance more realistically
and considers creating value outcomes for all of stakeholders instead
of only making outputs for customers, as the main criteria of excellence.
Taking into account the literature about benchmarking process models,
we have proposed a model, which comprises 10 steps with the aim of improving
process and assets, which have key role in value creation for stakeholders.
Since the value is a very abstract concept, the complete understanding
and perfect usage of the model can be achieved through several iterations.
The case application of proposed model as another outcome of this study,
have resulted in substantial improvements in selected Iranian business
school. These improvements can be continued through monitoring current
actions in the way of reaching high level standards and also iterating
the benchmarking process to cover a wider range of stakeholders and their
needs. Moreover, this case study has shown that the proposed benchmarking
model has some good potential to employ in higher education.
On the other hand, present study was limited in that it was based on
only one case application and only first iteration of proposed model has
been accomplished. Consequently, applying the proposed model in several
cases with multiple iterations should be planned in future research attempts.
Also, more investigation of second generation performance management frameworks
and scrutiny of stakeholder orientation literature would be useful for
improving the theoretical foundations of proposed model and can be addressed
as a major research opportunity in the future.