For benchmarking success choose right topics

Here are some tips for doing it right

By Robert G. Gift, Principal

Systems Management Associates,

Council Bluffs, IA

Doug Mosel

Doug Mosel Associates

Oakland, CA

No single factor contributes more to the success of a benchmarking effort than selecting the right topic to benchmark. Selecting the wrong topic is a common reason novice benchmarking practitioners are disappointed.

Important elements to consider when selecting a topic include linking project selection to organizational strategy, identifying decision criteria to guide the selection of benchmarking projects, applying these decision criteria in a disciplined and objective manner, involving leadership in the selection process, and having an organizational culture ready for benchmarking. "Key Variables in Benchmarking Success," presents these elements in the form of a fishbone diagram, below.

"What you benchmark should be of strategic importance, a competitive area, a critical success factor, a problem area, or significant in terms of quality, cost, or cycle time," says C. Jackson Grayson Jr., chairman of the American Productivity & Quality Center. No one wants to squander very limited time, money, and leadership attention on benchmarking studies that do not deal with strategic issues. For most health organizations, that means focusing on what is important to customers.

Identifying decision criteria

With strategic issues in mind, organizational leaders must develop decision criteria to guide selection. There are two major advantages in doing this: 1) Agreeing on criteria before identifying possible study topics avoids fitting selection decisions around preconceived, often unspoken, conditions; and 2) The criteria cull the list of potential benchmarking topics.

The trick is getting everyone to first agree on the criteria, but there are a few basics they should address: alignment with key processes; alignment with organizational competencies; relation to principal measures of performance; and fit with organizational strategy. In addition, leaders may add other criteria that reflect special considerations for their organization.

Concurrent with developing decision criteria, leaders must identify the relative importance, or weight, of each criterion in the set. Groups typically assign weights in one of two ways.

In the first approach, each member of the group divides 100 points among the decision criteria, reflecting his or her perception of the relative importance of each criterion. Then, the group displays the ratings in a matrix. The scores for the criteria are then summed to create a group rating. If necessary, the group may discuss any widely disparate individual perceptions and adjust the values accordingly.

Prioritization matrix

The second way is more systematic; it uses a prioritization matrix. The matrix compares each criterion to all others, using a five point scale (10 - much more important, 5 - more important, 1 - equally important, 1/5 less important, 1/10 - much less important). The ratings for each criterion are totaled and their sums rounded. Then, the lowest total is divided into each other total to determine the weights to be assigned to the criteria. (See Michael Brassard, The Memory Jogger Plus, 1989, pp. 99-134.)

The leadership team of Catholic Health Corp., in Cincinnati, (one of the three regional health systems that merged to form Catholic Health Initiatives) used such a matrix in its inaugural benchmarking project, as displayed in "Sample Weighted Decision Criteria." (See insert). The criteria included considerations about principal measures of performance, key processes and strategy.

Because the health system included a large number of long term care facilities, the group incorporated a criterion that assessed the proposed benchmarking topic’s impact on each type of facility. In addition, as an inaugural foray into benchmarking, the group wanted to ensure that its initial project was something at which it could enjoy success.

The senior leadership group determined the relative weights assigned to each.

Applying decision criteria

Once criteria are developed, leaders must apply them objectively to reach consensus on a benchmarking project. Should the initial list be lengthy (more than a dozen possible topics), the group may wish to shorten it by multi-voting, paring the list down by two-thirds.

For example, if 15 possible topics exist, each member would select five that best meet the decision criteria and warrant further consideration. The group then tallies the votes and the remaining topics are processed through the decision matrix.

The decision matrix focuses discussion on the critical few benchmarking topics that warrant further consideration. The matrix lists all criteria and their respective weights (across the top) and all possible topics under consideration (down the left-hand side).

Participants in the decision agree on a rating for each topic. This rating may occur on a 1 to 3 scale, with 1 being low; 2, medium; and 3, high. Or, if the group desires more distinction between ratings, it may use a 1 to 5 or 1 to 7 scale. The broader the scale, the more participants can distinguish between the relative ratings of the topics on each decision criterion. The "Sample Completed Decision Matrix," inserted in this issue, displays Catholic Health Corp.’s results.

To determine the total score of a potential topic, multiply the score for each criterion by the relative weight and add the products for each potential topic. After the group applied the scores and weights, the number of topics under consideration was reduced from 11 to two: days in accounts receivable and workers’ compensation.

It is important that organizational leadership participate in the benchmarking process from the inception because such participation will provide insight into the topic selection process, and it will help cement leadership’s commitment. Management is best positioned to know how a project fits into the organization’s overall strategies, conditions and needs, so it only makes sense to involve senior management in the topic selection process.

If senior managers have a stake in selecting the topic, and the group has been careful to select a topic with a good chance of a substantial return on investment, then managers are more committed to the benchmarking process, on the initial project as well as future projects. With senior leadership involvement, there is also a high level of organizational awareness of the benchmarking process and its priority is assured.

For example, the leadership group of Catholic Health Corp. selected workers’ compensation as the topic for its inaugural benchmarking project. Ultimately, the effort resulted in a $1 million improvement in costs, increased operating efficiencies, and greater satisfaction of program customers. Much of the success of the project can be attributed to the leadership displayed by the vice president of risk management resources. His involvement from the inception of the project played a key role in keeping it on track. He worked continually, both formally and informally, to keep the project and its progress before the senior management team. Through his efforts to communicate the project effectively, all the members of the senior management team were aware of the project’s development, status, and outcomes.

Cultural preparation for benchmarking

Even an organization that has considerable experience with continuous quality improvement (CQI) needs to prepare its management team for a benchmarking project. To avoid the perception of benchmarking as the "method du jour," it should be introduced as a strategic component of CQI, a method for breakthrough, as distinguished from incremental process improvement.

In addition, the organization must be prepared to value and actively support the learning that results from the benchmarking method, the experience of teams, and from interactions with others outside the organization. Without the ability to engage in learning actively, the organization risks losing the ability to adapt the practices identified in the benchmarking effort that will propel performance to the next level. The "Benchmarking Readiness Assessment" tool displayed on p. 10 helps determine an organization’s readiness for benchmarking.

[Editor’s note For more information about the inaugural benchmarking project of Catholic Health Corp., contact Tom Stoddart, Director of Risk Financing, Catholic Health Initiatives, (513) 347-1038.]