Looking for higher benchmarks

By VICKI JAYNE

What do dairy giant Fonterra, winemaker Montana, insurance company Royal and SunAlliance and Fletcher Wood Panels have in common?

They are members of the New Zealand Benchmarking Club, which aims to encourage the good business practice of the world's most successful companies.

It's an issue that should get more Government attention, says Robin Mann, director of the Centre for Organisational Excellence Research at Massey University.

"The Government's attitude is one of focusing on our ability to innovate, and I think that hides a problem," he says.

"We might have the ideas but when it comes to managing them and nurturing them to maturity, our scoreboard doesn't look anywhere near as good as the cricket.

"What shows up when local organisations assess themselves against world best practice, is that they have very poor leadership, that their customer focus doesn't measure up.

"A lot of organisations don't recognise there is vast room for improvement."

He asks how firms can achieve long-term business growth if they cannot manage their good ideas.

"It seems ridiculous to me to throw money at start-ups or at helping business to innovate if organisations don't have good basic management systems in place."

Sorting out this problem is a major aim of the Benchmarking Club, which Mann directs.

Set up in May 2000 as a partnership between Massey University and the NZ Business Excellence Foundation, its 17 members include the Hamilton City Council, the Accident Compensation Corporation, plastics manufacturer Amcor Flexibles Australasian, Aviation Security Service and Canterbury Health Laboratories.

Using the internationally recognised "Baldridge criteria" for performance excellence members work on lifting their own and the group's standards.

The criteria are detailed yardsticks which cover leadership, project management, customer and market focus, and process management.

Companies self-assess themselves annually in each area. Mann and his doctorate students then crunch the numbers to see how they rate.

More than a year down the track, the member companies can point to links between performance improvements and financial results.

But the process is no quick fix and demands commitment.

For R & D Solutionz, a technology-based company in Palmerston North, it's a "bit of an effort" to sustain, but managing director Andrew Rushworth regards it as strategic investment that is proving its worth.

"We're a small New Zealand company competing on the world stage - 82 per cent of the business we do is overseas," he says.

"We absolutely need to meet world standards and the benchmarking club provides a vehicle through which we can do that."

The club doesn't provide any magic bullets, but is starting to show tangible benefits, he says.

"Probably the biggest impact is on company culture - just getting people to think about how we might modify what we do in the company to bring about strategic change.

"It's not about responding to immediate issues, but about creating future opportunities."

Also useful is that much of the information being generated is New Zealand-specific, he says.

"We've a lot to learn from overseas, but you can't just pick up and plug in best practice from the UK or Europe. It doesn't always apply, because New Zealand is different."

He admits some initial difficulty getting to grip with the wide range of companies in the group, but has found plenty of common issues.

And one of the benefits of sharing information is discovering what doesn't work a lot quicker.

"Sometimes when you're striving to do things better, you take on more than you need to and go down a lot of dead-end tracks," he says.

"How we communicate as a group cuts through a lot of that baggage."

NZ Sugar is another foundation member that has found contact with unrelated companies useful.

Previous benchmarking had been against other sugar or food manufacturing companies, says engineering manager Grant Ritchie.

"What would a sugar company have to learn from a city council or a software developer?" he asks.

"But when you get into looking at the criteria, you find they're generic.

"Take human resources as an example or leadership development - the processes are very similar."

The company signed up because it fitted its existing team-based, customer-focused culture.

Although the benefits of membership are a lot harder to evaluate than, say, installation of new Machinery, they exist, says Ritchie.

"There's no doubt we've raised internal awareness of the whole measurement system, and you can underestimate the impact of that.

"If you don't know about performance measurement in business, then you don't make the improvements.

"If everyone knows and understands what it's about, then often the little improvements just happen automatically."

His company is involved in two of the club's working groups set up to look at issues seen to represent a big opportunity for improvement.

Five studies are now under way looking at customer-focused culture; developing leadership capability; project management; performance measurement improvement; and strategic planning.

These look outside club membership for best or better practices and most are facilitated by the Massey doctorate students "to add some academic rigour", says Mann.

Organisational excellence is his academic specialty and although he ran a similar benchmarking club in the UK food industry before coming to New Zealand three years ago, he sees the local and highly structured version as unique.

And its aim goes beyond lifting members' game to more nationwide benefits, says Mann.

"We want to see widespread adoption of excellent business practices throughout New Zealand.

"Once we have 17 organisations that have achieved world-class status, then it starts pulling others up because we have all this best-practice information to share.

"It could really help raise New Zealand's profile in world business."

* vjayne@iconz.co.nz