What is a Best Practice?
Best practices are “those practices that have been shown to produce superior results; selected by a systematic process; and judged as exemplary, good, or successfully demonstrated”, these practices are then adapted to fit a particular organisation.
What is Benchmarking?
Benchmarking is a systematic process for identifying and implementing best or better practices. Although experts break benchmarking into several types, there exist two main types of benchmarking:
In the West most large and highly successful organisations i.e. insurers and investment & commercial banking use best practice benchmarking as a tool to continually learn and improve.
The resources needed to carry out repeated best practice benchmarking projects properly and in a way that maximises the learning to be gained from the experiences can be considerable. Many organisations find it difficult to find the expertise and resources required.
One way to address the resource issue is to use the expertise of RMA consultants or website dicated resource like www.rmadviser.com/riskareas - a benchmarking website designed to assist in every step of a rigorous benchmarking process and which contains best practices from around the world. On the other hand, comparative or competitor benchmarking is not affected to the same degree by resources, and is used by organisations of all sizes, the most basic form of this practice is simply knowing your main competitors product price, something that is a prerequisite to staying in business.
Performance benchmarking involves comparing the performance levels of organisations for a specific process. This information can then be used for identifying opportunities for improvement and/or setting performance targets. Performance levels of other organisations are normally called benchmarks and the ideal benchmark is one that originates from an organisation recognised as being a leader in the related area. Benchmarks are also often used in the form of indexes such as the American and European Customer Satisfaction Indices.
Best Practice Benchmarking
Best practice benchmarking is where organisations search for and study organisations that are high performers in particular areas of interest. The processes themselves of these organisations are studied rather than just the associated performance levels, normally through some mutually beneficial agreement that follows the benchmarking code of conduct. Knowledge gained through the study is taken back to the organisation and where feasible and appropriate, these high performing or best practices are adapted and incorporated into the organisation’s own processes. Therefore best practice benchmarking involves the whole process of identifying, capturing, analysing, and implementing best practices