Benchmarkin g

In the Public Sector

Ana Martos 06 December 2012

The daily life of a company is a globalized and competitive environment, leading to a continue dependence of information about the development of new methods of organization that enable companies to absorb and adapt quickly to technological and strategic changes that are taking place on the market and the global economy. In this environment, firms need to overcome their critical points and achieve a position ahead the competition. The problem that arises is the way to locate effectively failures on the company managing, and be able to create new solutions, seeking the best way to optimize the resources that are available. This essay will explore the definition of Benchmarking from different reference points, as well as some ways this tool can be classified and a couple of successful Benchmarking case studies developed in Peru and China. Finally, the essay will be finished with a conclusion. There are many definitions of the word benchmarking like the one provided by David Kearns, a Xeroxs CEO who describes this tool as "the continuous process of measuring products, services and business practices against the toughest competitors or those companies recognized as industry leaders." Camp (1989, p.250) Bramham (1997,pp.10-13) defines Benchmarking as a systematic process of comparing your business with others, or a part of your own with one another to test how you stand and to see whether change is needed. Chandra, S. (2010, pp.882-885) states that this tool is a comparative method where a firm finds the best practices in an area and then attempts to bring its own performance in that area in line with the best practice. There are several definitions of benchmarking; most of them argue it is a continuous process and not a silver bullet that solves problems within the organization. It is a process that must be applied more than once, due to it pursues a constant search for the best industry practices and all sectors are in constant change, and adaptation involves developing new practices, so it can not be accurately ensure that the best techniques developed today, would be also successful in the future. In addition, it is important to consider that Burke (2010) has divided Benchmarking into four different categories which are internal, competitive, functional and generic. It is known that many types of benchmarking have been

emerging over time and according to McNair (1992), Benchmarking projects can be also classified in many different ways; in first place, by the subject matter of the analysis, by the type of participants, defining the mission statement, or by methodology. Secondly, the complexity of the benchmarked system Walter (2010), also it can be divided by the companys current process performance gaps. For instance, the German automobile company, BMW states that its mission in to be the worlds largest provider of products of high quality and excellent services for individual mobility. DeLayne (2012). As indicated by Greene (1993,p.114) "To understand how Benchmarking has became so popular and how it gained wide acceptance among international companies, it is important to become familiar with the history of strategic planning as a discipline and the tools developed for managers to discuss strategic issues. " What might be thought as the time span during which strategic planning began his "great expansion and popularity" Boxwell (1995,p.145), located in the sixties, reaching its peak in the seventies. Also Camp (1989, p.180), said that through strategic planning seeks to predict the future, for which "requires an extensive knowledge of the market, the likely competitive activities, the latest in products and services, financial requirements for trading in the market and customer base, among other factors. On the other hand, strategic planning involves high level analytical tools useful for macro level decisions on major strategic issues that often tend to take big business. Moreover Benchmarking should be "directed only to the strategy and worry about some execution" McMillan (2011). However, there are other people that consider Benchmarking not useful at all. Leinwand & Mainardi (2011, p.18) declare that too many companies use benchmarking as a crutch and rely on it as a competitive guide and a stand-in for real strategy, the way benchmarking is practiced at most companies provides no insight into what they need to do to actually break away from the pack." Public Management Among the ideas of reform and modernization, as a way of action to achieve a state with capacity development in design and effective implementation of public policies and the active participation of civil society, it have been used some techniques provided by private management.

On the one hand, Watson (1993) considers that the need for social change and modernization is growing every day, so public management should possess increasingly, innovation capacity and entrepreneurial spirit that exists in private management. As Owen (2003) said, management is the activity of managing resources to achieve a particular purpose, and in a very generic can be established that the distinction between public and private management is level of ends, in the sense that, for the purpose of public management is the common good and private management is the increasing wealth of their owners. Public management deals with the use of appropriate ways to achieve a collective purpose. It is about decision mechanisms for the allocation and distribution of public resources and the coordination and encouragement of public officials to achieve collective goals Camp (1989). For all the authors above, it is considered that public administration would be related to the way of achieving the greatest social benefit involving the least possible economic cost through proper rationalization of available resources, unless this practice is highly difficult to achieve, the contributions ensure optimum management of public organizations. Benchmarking in the Public Sector Although the first experiences of Benchmarking were perceived in the private sector, it have not been rejected it application in the public sector. Moreover, this tool has become increasingly more noticeable between those that have power and the ones that develop public functions, in order to find suitable mechanisms concern aimed at the modernization of the state and structure in order to achieve a more efficient and effective sector. At the same time, it is important to satisfy the requirements of its target who are only members that make up civil society. For instance, in Peru, in the water sector particularly, companies and governments were managing a bad performance, inappropriate system maintenance, the levels of unaccounted for water were increasing, and there was also a low water quality. For that reason a useful tool as a good Benchmarking study was developed. Aidtow (2008) The working process consisted of first detecting areas of efficiency affecting the interests of each stakeholder and then identifying indicators for each of these

areas. Some indicators were selected and grouped in different areas of efficiency, such as; quality of service; the continuity of service, and the percentage of water served receiving chemical treatment. Also the coverage of service attained; the management efficiency involves the operating efficiency, the percentage of connections with meter installed, and procrastination. And finally, the managerial finance efficiency, which is defined by the ratio of costs and expenses to revenues. Corton (2003). Another Benchmarking case is the one from China, and it is related to hotels energy; the problem was the company was seeking for a more effective and efficient sustainable development on the sector. To accomplish this, there were performed some interviews with hotel engineers, system designers, and professors in order to identify the challenges faced by current hotel energy benchmarking. Wilco (2012). The Organisation for Economic Cooperation and Development, an international institute, it is responsible for evaluating the application of benchmarking in the public sector; and it concluded that Benchmarking and the quality initiatives tend to be widely used and are included within public organizations as mechanisms for the improvement and implementation of reengineering processes. OECD (2012). Studies on the application showed that in many countries, the public sector compared to the private sector, in many cases increasing levels of demand in their performance and gain more credibility from the community, clearly observed interest in the meeting and submission of major challenges in the levels of comparison. Boxwell (1995) considered that Benchmarking would be also open in the public sector, whether the lack of competition in the sector will not create the same sense of urgency to improve the perceived private sector. However, the author stated that inflation on budget deficits in the public sector would recognized the need of doing things in a better way, which is faster and is cheaper; so Benchmarking would become a natural tool for improvement. Undeniably estimate today, any benefits to any organization that could be perceived product Benchmarking application, moreover, for the public, because its implementation would significantly reduce the economic costs and in terms of results could also be seen in a space times than with any other technical or management tool.

To sum up, it is important to add currently public institutions should be at the forefront of innovations produced in the private sector, with the use of mechanisms that were previously in the public sector application. The times are different, and Benchmarking can help to improve the competitiveness of the organization only if it is properly done; as Mard (2004, pp.210) notes the path will also open benchmarking in the public sector; although lack of competition within the public sector does not create the same sense of urgency to improve that exists in the private sector. Inflation continued budget deficits may, however, help to recognize, in the near future, the need to make things better, faster and cheaper, and benchmarking is a natural tool for improvement. Today businesses and in particular, public enterprises are facing increasingly globalized markets, where the main challenge presented to them is related to competitiveness. So a good Benchmarking analysis should be done, in order to improve the public company performance, so it can reduce general costs and gradually improve the technology according to the fast society changing.

References: Aidtow, S. (2004) Donor profiles on aid to water supply and sanitation. [Online]. Available at: http://www.oecd.org/dac/aidstatistics/41752319.pdf (Date of access: 07 December 2012).

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