Learning Organization Benchmarking
As organizations evolve their training organizations to further improve business impact, better leverage technology, and become more service-oriented, we find them looking more and more to benchmarking. As a research organization we have had the opportunity to help dozens of organizations with benchmarking. This article will explain what benchmarking is and how you can take advantage of this important approach to improving efficiency and effectiveness.
What Is Benchmarking?
Quite simply, the term benchmarking refers to comparing yourself against some form of benchmark statistics, trends, or best practices. By definition, a benchmark is a standard by which something can be measured or judged. Your goal in benchmarking is to compare yourself against relevant measures to identify where you are strong, where you are weak, and specifically where you can focus to improve your operations.
Why Benchmark our Learning Organization?
There are many reasons. First and foremost, by benchmarking yourself you can identify the key areas where you are “outside of range” – either financially, organizationally, or operationally. Once you identify these areas of opportunity, you can take a laser focus toward improvement.
If you do not do any type of benchmarking, you will still improve over time, moving up the learning curve as the chart above shows. However you will not see results as quickly because you will not pinpoint the biggest areas of opportunity. Benchmarking points out these areas of opportunity quickly and clearly.
In our research Training and HR managers often tell us that they are not sure if their operations are highly effective or not. They may be proud of certain programs and operations and less proud of others, but without comparisons to peers and industry statistics, it is difficult to validate these feelings. Benchmarking gives you laser focus on areas of improvement.
We have been working with a large, global high-technology company which is highly regarded by Wall Street and its customers. Its training organization has been highly acclaimed in many industry publications.
Yet inside the company, the directors and managers express dissatisfaction in several areas: they feel that they are overspending, not sharing content well enough, not effectively leveraging learning technology, and not delivering programs fast enough.
By providing data from similar companies in their industry, we have helped the training organizations see where it can and should improve. The major focus now is to build a set of clearly defined shared services to address the issues identified.
This benchmarking process, which has only taken a few months, has given the organization the ability to focus on specific problems and understand what can realistically be accomplished. The organization now has a roadmap and benchmark-driven goals they can use to implement solutions.
Two Types of Benchmarking
There are two fundamental forms of organizational benchmarking: competitive benchmarking and best-practices benchmarking
1. Competitive Benchmarking
Competitive benchmarking means comparing your organization against peer organizations (or sometimes competitors) in specific measurable areas. In competitive benchmarking you define a set of measures you would like to analyze, identify a set of peers you would like to compare yourself against, acquire the data, and perform comparisons.
Some of the key things to consider here:
- Do not compare yourself against broad industry averages. In our Corporate Learning Factbook® research, we find that many measures (i.e. spending per employee, hours of training per employee) vary widely from industry to industry and across different size organizations. The average may be totally irrelevant to you.
For example, based on our research, the overall average training per employee in the US is $1412 per year. In retailers, it is only $250 per employee per year. A retailer which compares itself against the broad industry average will be very disappointed and possibly start to overspend.
- Compare yourself against organizations in both (A) your industry, and (B) your organization size. Organization size has a huge effect on training benchmarks. Large, global organizations, for example, spend 1/6 as much on LMS systems per employee than small companies spend.
One of our pharmaceutical clients wanted to be benchmarked against 10 similarly sized, global pharmaceutical companies with similar product lines. By going through the process the company discovered it could do a much better job of content sharing across independent R&D units.
A high-technology client interested in improving its customer training business compared itself against eight similarly sized product companies with a significant focus on customer and channel training. After extensive analysis the client company realized that its training revenue as a percentage of sales was far below industry averages. The company decided to revamp its customer training business and replace its LMS with one more flexible for customer training.
- Compute numeric benchmarks on a per-learner or per-employee basis. Broad budget numbers (i.e. training as a percentage of sales, etc) are helpful, but do not become truly actionable until you compute them on a per-employee basis. The most actionable information is highly “normalized” against the number of employees or learners and other similar measures.
2. Best Practices Benchmarking
The second form of benchmarking is more qualitative: best-practice benchmarking. In this approach you decide that you want to understand the best practices in one particular area. These best practices may be processes, workflows, systems, tools, and methodologies used by other organizations.
For example, many learning organizations are currently trying to identify the best practices in e-learning content development. Professionals are asking questions such as: “How should we organize ourselves to best develop high-quality content in an efficient and reusable manner? What tools should we use? How should we collaborate with SMEs? What is an appropriate approach for a company of our size, in our industry, with our types of training?”
Such questions can be answered through best-practices benchmarking. In best-practices benchmarking you study case studies of companies with similar problems to yours, talk with these organizations, and understand what works. Much of Bersin & Associates research is designed to help get you this type of information.
The key to best-practices benchmarking is focus. Define specifically what area you want to improve (competitive benchmarking will help you here), and then search out the right set of peer organizations to study and interview.
How Do You Benchmark? Research is Key.
They key to both competitive and best-practice benchmarking is to gain access to unbiased, relevant research. Organizations can obtain this research through a variety of sources:
- Up to date publications with detailed, actionable information such as the Corporate Learning Factbook®, research from ASTD, and others. If you purchase or download such publications, it is important to have access to the source data so you can filter and sort by industry, organization size, geography, and focus area. And remember that if the data is not carefully cleaned and analyzed, you may find data which is based on a biased or small sample size.
- In-depth case studies and examples of how companies have solved problems similar to yours. You can identify such information by going to trade shows, listening to industry webcasts, and using research like ours. Most vendors and suppliers have many best-practice clients you can also talk with. Interview them by phone and take the time to dig into specific examples of how they solved problems similar to yours.
- Talking with your peers. If you visit a trade show or attend a webinar, take the time to sit down with a peer in your industry and compare notes. A face-to-face meeting or a one-hour telephone call will often teach you a lot. If you are purchasing a product, call vendor references and ask them precisely how they used the product to solve the problem you are facing.
- Call us.In the last several years we have built the US training industry’s largest database of trends, statistics, and best practices. Through our research library and advisory services we can help you get the information you need to pinpoint specific problem areas and identify best practices to improve.
Benchmarking is very new to the learning and development industry. If you have any specific questions or case studies on the use of benchmarking, please contact us. We offer research memberships to give you access to our entire library of best practices and industry trends as well as advisory services to help you solve particular problems.