Assistance, Insight, Assessment, Understanding
Benchmarking is an important device for strategic and business planning, though the greatest value that benchmarking can bring to your business is clarity and direction.
Simply put, benchmarking is a valuable tool for improving your company’s performance. Whether you want to set improvement targets based on your own history or aim for performance levels achieved by the best in the business, benchmarking is your vehicle.
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Performance Benchmarking
The performance benchmarking process identifies the most profitable 20 or 25 percent of the participants as Best-in-Class. The metrics of those Best-in-Class performers are compared to industry norms and other participants, allowing us to measure where gaps exist. Further, those performance metrics that have high correlation to profitability are determined, allowing identification of critical success factors.
Performance benchmarks help you keep your focus on results: your own performance and that of comparable operators. Ultimately, performance benchmarks can spur you to strategy revisions as you seek to match or exceed Best-in-Class levels.
Baseline or Self-Comparison Benchmarking
In addition, baselining or self-comparison benchmarking is also a worthy endeavor. The primary benefit of self-comparison benchmarking lies in your ability to applaud improvements. Every contractor should perform self-comparison benchmarking on a number of data points. For example, one of the most intriguing baselines lies in the value per employee metric (i.e.: What is your gross profit per employee?).
Assistance can range from a quick, honest assessment to comprehensive guidance. A complete benchmarking program can tell you where to go and how to get there.
Contact Rea & Associates to reach out to a member of our construction and real estate team or give me a call at 614.314.5937 to learn more.
By Doug Houser, MBA, CEPA (Dublin and Zanesville offices)
More Pathways Toward Success
One key way to ensure your long-term success is to make it a point to strengthen your relationship with your banker. Listen to episode 161, “Better Banking Relationships … or bust!” to hear Doug Houser, director of Rea’s construction and real estate services team, explain why what you don’t know could actually hurt you on this episode of Rea’s award-winning podcast unsuitable on Rea Radio.