A Quantitative and Qualitative Look at Southwest Airlines and British Airways
In today's competitive marketplace, all firms are seeking ways to improve their overall performance. One such method of improvement, recently adopted by many firms, is benchmarking. Benchmarking is a technique used to evaluate internal business processes. "In this analysis, managers determine the firm's critical processes and outputs, baseline those processes, then compare the performance of each process against a standard outside the industry" (Bounds, Yorks, Adams, & Ranney 1994). To effectively improve a business process to world-class quality, managers must find a firm that is recognized as a global leader, not just the industry standard. Successful benchmarking requires tailor-made solutions, not just blind copying of another organization. Measurement and interpretation of data collected is the key to creating business process solutions.
"Benchmarking's real role has to be seen in the context of the organization that is continuously implementing improvement" (Bendell, Boulter, & Goodstadt 1998). Organizations implementing the benchmarking process are continuously looking to improve, and planning improvement. Improvements can be made by looking at the firm both internally and externally. Internal improvements are implemented by analyzing processes and setting targets for performance. However, output performance measures are not able to help management understand why a practice is effective. This understanding is a result of personal interpretation of the process. Organizations must look to other firms for ideas to borrow from global leaders, regardless of the scope of the necessary improvement. Equally important as data collection is the actual implementation of the newly acquired business practice.
The most important aspect of benchmarking is to enable companies to employ the best business practices. This fundamental theory cannot be overstated. Global competition is growing due to the technological boom. The expansion of the Internet and digital communication has forced once domestic firms to consider foreign competitors. To remain ahead, companies are realizing they must match or exceed the business practices of the best in the world. "The only way that we can drive our organizations to excellence is to ensure that we keep our eyes on our competitors and world best practice in all aspects of business" (Bendell, Boulter, & Goodstadt 1998).
Benchmarking should not be considered simply a tool of management, but rather an integral part of the business strategy of a firm. When implementing benchmarking, management must consider the overall issues of performance and process re-engineering.