Features Consulting Matters
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The Value of Benchmarking How does your business stack up? How does your current performance compare to previous performances? How about to other businesses in your industry? What does the future look like for you, your competitors, or your industry as a whole? The answer to these questions lies in benchmarking—but what value does benchmarking actually provide in architecture, engineering, and design businesses, and how can it be used to give your business an edge?
Accountants then convert these activities to numbers and produce a report card, which will be in the form of an income statement, a balance sheet, and most importantly a cash flow statement. Business leaders usually then turn to their CFO’s to decipher the numbers, who then describe back the activities that caused the numbers in the first place.
Conclusion
The numbers are always a reflection of the decisions that were or were not made.
Management For Design adds certainty to business decisions by combining your vision and hard data. We uncover the fundamentals of your business, identify areas for improvement and enable sound, evidencebased decisions, to move your business and projects forward confidently with fewer surprises. For more information, contact Gordana Milosevska on gmilosevska@m4d. com.au.
Benchmarking is a radar for change; in and of itself, benchmarking is only a means to an end—and it’s worthless if not accompanied by a call to change.
Doesn’t it stand to reason that if businesses want to change the numbers, they simply need to change the activities that caused the numbers in the first place?
The value is not in the benchmarking, but in the decisions you make, as leaders, to create change that will enhance your performance. Benchmarking leads us to focus on change and provides a clear direction for the change process.
It’s not just financials that need to be measured; reputation, brand, quality of work, client satisfaction, and staff morale are equally as important. These metrics should be measured, year in, year out.
There are two components to benchmarking performance: • Comparing your business with your own historical and expected performance • Comparing yourself to the industry and other businesses By benchmarking in these areas, there will always be a call to action, a call to change. Benchmarking can be effective in driving performance and initiating change. For instance, for a business that’s operating in the top quartile, benchmarking could highlight areas where they are doing well and should provide a focus for how to maintain their advantage, as well as presenting an opportunity to raise their standards.
If you’re relying on quarterly management reports to keep you on track—that’s only four shots a year to identify issues and make improvements. By implementing monthly reporting, you have a lot more data and more opportunities to change course and fix problems. You need to compare to how you are tracking yearly as well as comparing your results with those of appropriate peers, that is, businesses that are similar in size and business model to your own. Chances are that benchmarking will reveal many areas of your business that can be strengthened. For example, your results relative to your peers may present opportunities to: • Raise your standards • Focus on growing revenue
Alternatively, for businesses in the bottom quartile, benchmarking identifies areas of opportunity where they can make improvements such as:
• Reducing your labour
• Reviewing fees
• Or take numerous other actions
• The work they are taking on • How they're producing it • Employment costs
Decision making Typically, business leaders are regularly pressed to make decisions. These decisions are then converted into activities.
• Increase your use of productivity-enhancing technologies
Measure. Assess. Create change. Ultimately, if you want to run a successful business you need to know what’s going on in your business, so you need to be measuring as you go. Monitor your progress from year to year. And then compare yourself to your peers.
Gordana Milosevska M4D
