8 Steps to Implementing Benchmark Assessment

Features - Management

Implementing a benchmark assessment program requires buy-in from all levels of employees within a company.

October 14, 2011
Paul Thomas and Charlie Hall

Benchmarking can provide you with the information needed to increase profits, reduce losses and understand where your company is headed. Several growers have indicated that they have attempted to implement various benchmarking assessments, only to find their employees lost interest in the program quickly, did not collect data consistently and seemed confused as to why they were collecting the information in the first place.

Another benchmarking issue is that some growers have difficulty finding the time to review the metrics generated. In almost every case, the specific data collection process was clearly communicated to employees, but the goals and reasons underlying why this effort was undertaken were not.

We have seen owners who are reluctant to discuss profitability and company growth with ground-level employees because they fear these workers will demand higher wages. However, this level of communication and trust is absolutely essential for management to obtain meaningful and actionable information. In many cases, a good benchmarking analysis can pinpoint adjustments that could increase profitability by 10-15 percent the first year. If company growth, and even survival, is something you worry about, benchmarking can help you reduce risk, increase cash flow and perhaps even build a more loyal and engaged work force.

Companies that have implemented this goal-sharing process have frequent company-wide meetings that include every employee. Larger companies may have meetings of various sub-groups of employees to facilitate information transfer.

Early morning meetings usually include refreshments and a discussion of goals, last month's outcomes, production issues, team performances and any new policies or procedures. The result is that every employee feels they know what's going on, where they fit in, why it is important to provide information and meet objectives. Most importantly, they can see the company is moving forward.

For any company to enjoy the cooperation and the management advantages to collecting benchmark data, the following steps should be considered.

The benchmarking process can be used to improve a specific unit or level of management. But all levels within a company must be involved with clearly defined goals, such as meeting production deadlines or lowering shipping costs.

1. Set goals across all management levels
The biggest mistake that's made when implementing a benchmarking program is to expect that one level of management will carry out the entire process. The benchmarking process can be used to improve a specific unit or level of management, but to reap the financial benefits, all levels within a company must be involved with clearly defined goals.

These goals can be as simple as meeting production deadlines, reducing overtime labor hours, lowering shipping costs, energy and/or water conservation, reducing losses due to disease/damage, or just about any resource-draining activity within a company. However, each goal must be vertically communicated within the company.

If improvements are trying to be made to shipping, the improvement goals must be communicated to the general manager, the shipping manager, the order pullers, the drivers, the sales office and the production manager. As with any issue, there are usually several factors that come together to affect profits. Each unit manager and his or her employees must be educated on why the seemingly minor data they provide adds to the big picture. It is imperative that all the employees understand the financial goals and how their efforts add to further the goal, and how that improves their job security, potential pay raises, and personal well being. Simply put, explain the goal and why it should be important to them.

2. Establish accountability in writing
No employee is ever happy about having more work added to their daily routine. Unfortunately, most growers have never had employees provide data on key issues such as production outputs by the hour, or the number of plants discarded during production or even the number of miles driven per client. If an owner or manager assigns data collection to an employee with a "just do it" attached, it will likely happen initially and then degrade quickly as time passes.

The spring season gets busy, and it's easy for line managers to look at the big picture and say "I'm just going to get this crop planted and into the greenhouse…that's all that matters. No reason to collect this data now."

Collecting important production data during the busiest part of the spring season is critical. That's the data you need if you ever hope to be able to improve efficiency.

It is imperative that owners and managers add the benchmarking activities assigned to each person's job description in writing. This is assuming that all managerial staff members receives job descriptions. If not, these descriptions need to be written down.

By publishing the new benchmarking duties, it is made clear to the employees that these duties are a part of their jobs, and that their performance assessments depend on accomplishing these tasks. The specific benchmarking tasks may change, and these can be handled by an addendum to the job descriptions as the goals of the company change.

Writing down the benchmarking tasks forces the owner to think carefully about how realistic each benchmarking goal is, and who is the best person to carry it out. There are hundreds of activities that can be benchmarked. Obviously owners need to focus on one or two each year/season that address the greatest needs or areas of improvement.

Goals such as energy conservation can be divided by building, work zone or by management unit. Saving on shipping may require several layers of sub goals; hence there may be numerous benchmarking efforts at different levels feeding into the overall goal. The best way to approach it is to prioritize the goals. Do one or two things well and hold management and employees accountable for each discreet set of new tasks.

By opening up the benchmarking process to all employees while it is being implemented, management often learns “the whys” and “ the who’s” involving poorly performing areas.

3. Communicate the process, outcomes
There are many ways to communicate a benchmarking process. Keep in mind that the average employee may not hold an MBA or undergraduate degree in accounting. If an owner provides highly technical documents describing the process, techniques and financial goals, the message may be lost and the project will fail.

There are, however, several tried and true delivery mechanisms. Simple diagrams that are specific to the unit employees being educated are always effective. PowerPoint presentations can be made to small groups if appropriate, but paper diagrams handed to someone works best. One paragraph or two consisting of brief statements on how new tasks will increase efficiency, profits and/or job security should be provided.

A one or two page "How to do this" document can be posted in the workroom, lunchroom or be given to each employee. This can be followed by small group meetings with the owner and general manager and with the unit managers present. The owner leads the meeting to indicate that this process is endorsed by top management.

Once the process is started, the general manager and unit mangers must follow up and monitor the process and the level of acceptance. Questions need to be answered, suggestions accepted from the employees and the process improved within the first few weeks.

The owner and management must nurture this project by being present, engaged and involved. By doing so, management is communicating that this is a serious process and that the company is 100 percent behind the outcomes being met.

4. Share results, highlight performance
Successful companies typically hold facility-wide employee meetings during which the results of a week's or month's production efforts are shown in simple-to-understand charts. During the meetings, each team's or production unit's efforts are documented, compared to last month's and discussed. Changes based on both management and employee suggestions are presented and new goals set for each team. The meeting continues until every unit is evaluated and discussed. The general manager and perhaps the head of marketing then discusses with employees what is happening in the near future, good or bad, and why reaching certain goals are essential for the company's well being.

During a one-hour meeting, a few simple charts can be explained by an involved owner. The result is everyone knows where they stand, what needs to be accomplished and what needs to be changed for improvement. Other companies simply send out emails to management units and perhaps post a paper copy of the results and current standings in the employee workroom. It is a less-effective method, but can accomplish the job.

Employees who provide feedback are invaluable to the process of improving profitability.

5. Solicit solutions, adjustments
A key point to employee "buy-in" of the benchmarking system is to have a formal venue for all levels of employees to weigh in on the process. This includes the way data is taken, what data is taken and when.

By opening up the process to all employees while it is being implemented, management often learns "the whys" and " the who's" involving poorly performing areas. This can be as important as the data.

When employees see that things are being documented, they are usually more motivated to speak up and address an issue they may otherwise have let slide. They may fear that management will "discover" what's going on, and would prefer to give their own accounting of it. Employees who provide feedback are invaluable to the process of improving profitability.

The process of discovery should never be punitive, rather there should be an open discussion and a company attitude of "let's fix this and move on." One way to accomplish this is to reward employees who suggest reasonable improvements or ways to measure an aspect of production, etc. The currency used to reward employees is up to the greenhouse owner and/or managers. It could be a day off, a long lunch, a prime parking spot or a gift card to a local store. It's not so much the money as the recognition that an employee made a contribution.

6. Implement changes from within
Owners often carry too many areas of responsibility. Some do not delegate, others are understaffed. Regardless, if you can't put the personal time into the benchmarking process for a few weeks, it will fail. Growers interested in implementing the benchmarking process should consider doing so in late summer or early January.

Many owners think they are too busy to benchmark. Keep in mind that benchmarking is a process that returns "management" to the owner through timely, focused information collection. A certain amount of time each day must be spent checking and implementing the benchmarking process. This means changing habits, routines, perceptions of their own job limits, and making a personal commitment to executing this system. In the real world where managers are pulled in different directions every day, it can be very hard to accomplish. The solution is in the hands of the owner. Make it the job of the managers to do these tasks and give it some kind of priority so the managers can function.

7. Collecting, saving records
Imagine spending the next nine months collecting benchmark data, processing it into graphs and then, in the spring, it was lost in a huge pile of paperwork including invoices, plant orders and tax forms. Benchmark data is valuable. It costs time and money to obtain and has value to a business for three to five years after it is taken. This data is a historical record of how certain sensitive/problematic areas of a business did over a number of years. It can be extremely helpful when a problem arises.

Dedicate a portion of a file cabinet or safe to store these records, back up electronic data files and maintain copies of job descriptions, goals and solicited inputs. Make it someone's responsibility to keep those records and reports straight. When a production/shipping issue arises, the past data that was collected can be referred to and compared with the current situation. Companies that have a CPA can have them store a copy of the benchmarking data along with production/sales records.

8. Reward participation and success
Employees who engage in the benchmarking process by making suggestions and sharing opinions, observation and histories should be rewarded. The next level is to reward the company staff as a whole for engaging in the process.

Company incentive programs can be tricky as employees start counting on receiving them if they are not identified with a specific task/goal. In this case, rewards and recognition must be defined as discretely being associated with the benchmarking effort.

Some companies have a company-wide lunch with unit awards where everyone in a unit receives a gift. Examples include a pizza party for that unit, free turkeys or hams at Thanksgiving and a plaque to be hung in the employee break room. In the case of a staff that works together and saves a company a large amount of money, a bonus at the end of the year specifically given as a reward for participating in the benchmarking process can have a major impact. Be sure to clarify that this is not an annual award, but solely given out when the "team" does something extraordinary.


Paul Thomas is professor and extension specialist, University of Georgia, Department of Horticulture, pathomas@uga.edu. Charlie Hall is professor and Ellison Chair in International Floriculture, Texas A&M University, Department of Horticultural Sciences, charliehall@tamu.edu.