Historically, measures of corporate performance have been compared with previous measures from the same organisation at different times. Although this gives a good indication of the rate of improvement within the organisation, it gives no indication of where the performance stands in absolute terms. The organisation could be getting better and better; but if its competitors are improving even more, then better and better is not enough.

In their book “Benchmarking: A Tool for Continuous Improvement”, C.J. McNair and H.J. Liebfried describe four different types of benchmarking:

• Internal benchmarking. This is a bit like the process of quality management, an internal checking of the organisation’s standards to see if there is further potential to cut waste and improve efficiency.

• Competitive benchmarking. This is the comparison of one company’s standards with those of another (rival) company.

• Industry benchmarking. Here the comparison is between a company’s standards and those of the industry to which it belongs.

• Best-in-class benchmarking. This is a comparison of a company’s level of achievement with the best anywhere in the world, regardless of industry or national market. The Japanese have a word for it, dantotsu, which means “being the best of the best”.

Benchmarking is a fluid concept which recognises that the relative importance of different processes changes over time as a business changes. For example, a retailer that shifts from selling through stores to selling over the internet suddenly becomes less concerned about customer parking facilities and more concerned about the performance of its fleet of delivery vans. The importance of benchmarking these respective activities changes similarly.

The process of benchmarking often requires that companies put their measures into some sort of public arena where others can use them for comparison. This is usually carried out by a third party, who puts the data in order and then discloses it in a way that does not reveal the identity of any individual data provider. Firms can, of course, recognise their own data and judge where they stand in the pecking order.
The enthusiasm for benchmarking has been fuelled by two things in particular:

• The Japanese development of total quality management and the idea of kaizen  (see article), of continuous im provement. This was a system built on careful measurement of industrial activities, followed by close monitoring of those measures. It not only forced managers to make such measurements; it made their competitors do so too.

• The work of Michael Porter on competitive advantage. This forced firms to think more about their competitors and where they stood in relation to them rather than where they stood in terms of their own history.

From:  The Economist

 July 27th 2009

Business leader Terry Morgan took on a new job and new, non-executive role at the beginning of June as chairman of Crossrail Ltd, the multi-billion pound trans-London rail scheme. It is the largest civil engineering project in Europe. He moved to Crossrail Ltd from another high profile post in transport infrastructure, as CEO of Tube Lines, where he spent seven years establishing and developing the public private partnership with London Underground – one of the biggest PPPs in the world.

Morgan’s appointment as non-executive chairman of Crossrail Ltd was announced last November by the Transport Minister Lord Adonis and London Mayor Boris Johnson. The Government and TfL (Transport for London) have set up a £15.9bn funding package to cover the costs of Crossrail.

He was quoted at the time as saying that it was one of those infrastructure projects that would help lead the recovery of the economy and give London the [transport] capacity it needed. The east-west London railway will run from Maidenhead in Berkshire to Shenfield in Essex, taking in on its route Heathrow airport, the West End, the City and Canary Wharf and is due for completion in 2017.

Morgan says that when he decided last year to move on from Tube Lines he had no definite plans other than a desire to see his successor in place before he completed his year’s notice period. His replacement, Dean Finch, took up his post at the beginning of May, leaving Morgan free to start a fresh chapter in his life.

On the timing of his move, Morgan says: “I just believe that there is a lifecycle about how long a chief executive should be in post. Not everybody is the same but I’ve given up some great jobs before because I actually felt there was what I would describe as a danger of bringing old solutions to new problems.”

He has overseen the first, and one could argue, probably the most difficult, phase of Tube Lines’ 30-year franchise, which is made up of four, seven and a half year blocks. Each block of time is negotiated, funding is agreed and the plan then goes forward. Speaking in April he said:
“We are just about to start those negotiations and I’ve always had the view that the chief executive of the business should be the guy who does the negotiating and lives with the consequences and that isn’t going to be me.”

He says that he has had a great time running the company responsible for maintaining and upgrading the infrastructure of the Jubilee, Northern and Piccadilly lines but that it was now time to let someone else have a crack at it.

To read the full article click on the link below:

http://www.managers.org.uk/client_files/PM%20July%2009%20profile.pdf

Interview conducted by Sue Mann
from Professional Manager - July 2009