Benchmarking

Benchmarking.  Isn’t that something that just applies to big companies? How can I get useful information from my competitors?  They’re not public companies that share their operating information with the public?  I don’t think it will work for me.

These are reasonable statements.  Each of them holds a grain of truth.  But DHL (yes, that DHL) has a great website, their Business Resource Center,  with some interesting information for small businesses.  For example, "Benchmarking:  How You Stack Up Against the Competition" puts some of the misconceptions about benchmarking to rest.  in particular the article provides links to two on-line benchmarking sites.  One, BizMiner offers detailed information on a number of industries.  Unfortunately, there isn’t much coverage of retail.  And, the site charges for its information.

Another site, BizStats provides less detailed information but it has two advantages.  One, it does include retail businesses and two, it’s free.  While the information is somewhat generic, for example you won’t find specific categories like sewing machine retailers, or vacuum cleaner retailers, or lighting showrooms, you will find more broad classifications like Retailing-Furniture and Home Furnishings. 

BizStats has a lot of interesting information including sales per square foot, profitability, and safest and riskiest businesses. 

The second article, Building Business Benchmarks gets a little more into the "how to" of benchmarking.  For example, don’t get hung up on finding businesses that match yours exactly.  There is plenty to be learned from other industries.  As the article points out, an airline benchmarked an Indy 500 pit crew to learn about fast turnaround and hospitals benchmark pizza delivery companies to improve their response times and the Ritz-Carlton hotel chain to improve customer satisfaction.  One hospital system that I’m familiar with drastically improved their system of ordering and distributing medical supplies by studying a major retailer.

Another source for good benchmarking information is the Malcolm Baldrige Quality Award web site and the sites of the various state and local quality awards.  Winners are obliged to share their application information (except for confidential items).  Many of the winners have been small businesses.

No matter where you get your information, you can waste a lot of time reinventing the wheel.  By drawing on the experience of other successful businesses, you can improve your business without going through the pain of a trial-and-error approach.

Puttin’ on the Ritz

"Whenever I enter a Ritz-Carlton hotel, I know ‘I’m not in Mediocreville anymore!’”  That’s how Bill Kalmar begins his Quality Digest article on the Ritz-Carlton Hotels.  Kalmar’s article describes the "love fest" between him and the upscale hotel chain.  Of course, there’s no question that "the Ritz" sets the standard for quality service.  Even the name itself brings luxury to mind.  The phrase "put on the ritz" means to live in elegance and luxury.  (Dictionary.com). 

But it takes more than just a "ritzy" name to create a "ritzy" experience in more than 60 hotels with more than 40,000 employees. 

How do they do it?  The Ritz has a system in place that allows each of those 40,000 employees to duplicate the experience in each of those 60 hotels.  The system is very much the same in every single location yet it allows each employee the freedom to make sure that each guest is treated exactly the way they want to be treated.

The Ritz has won the Malcolm Baldrige National Quality Award twice, in 1992 and 1999.  More important, they use the Baldrige criteria as the basis for their quality system and use the feedback from the Baldrige examiners as a blueprint for improvement.

How do we know it works?  One way is to take a look at what it costs to stay in a Ritz-Carlton Hotel compared to the competition.  A rate comparison of the R-C in St. Louis, MO with the  competition shows that the least expensive rack rate (for a "quality room") is $279.00 for one night, July 16, 2007.

A deluxe room at the five star Chase Park Plaza Hotel is $189.00 for the same one night.  While the Ritz is located near the St. Louis County Government Center, The Chase is across the street from St. Louis’ Forest Park and convenient to downtown.  There must be a reason why travelers are willing to spend $90 more per night at the Ritz.

Personally, I’ve never stayed at either hotel (too rich for my blood), but I have attended events at both and there’s a certain customer-first attitude that’s present at the Ritz from every staff member that you meet.  (They refer to their associates as their "ladies and gentlemen".)

You might think that it’s easy to be good when you’re charging an extra $90 per night per room.  But I like to think the reverse.  It’s easy to charge an extra $90 when you’re that good.  The R-C is so good, in fact, that you can attend a session at their Leadership Center where they’ll teach you how they do it.  A one day session will set you back between $1,400 and $1,700 per day.  The price does include a continental breakfast and lunch.

If those prices scare you, you can get an idea of how the Ritz does things by reading their 1999 Baldrige Application Summary.  It’s available from the Baldrige web site.

But, to boil it down to just its simplest points, the Ritz-Carlton system focuses on satisfied customers, no matter what it takes, and empowered employees who are trained to make the customer happy, no matter what.  They use what’s called the CLASS database to keep a record of what the customer likes and doesn’t like.  Once you’ve stayed at the Ritz and mentioned to the housekeeper that you like an extra feather pillow on your bed, every time you stay at one of their hotels in the future, that extra pillow will be waiting for you when you arrive. 
And every employee has the ability to make entries in the database.

We can all take a lesson from this high-end hotel chain.  Customers like to be pampered.  They’re flattered when you remember what they like and don’t like.  They’re loyal to businesses who take care of them the way they want to be taken care of.  And they don’t mind paying for it.

There are a number of tools on the Baldrige web site that you can use to evaluate and improve your own business.  Check them out.   

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Self-Evaluation

Trophy
First a disclaimer: If you’re interested in trophies, the one at the left can be bought
online from Dinn Brothers for $72.00. A
Baldrige Award will cost you many, many times that amount. If you want to improve your business,
increase your profits, make your customers and employees happy, and get more
enjoyment out of life, read on. If you
want a trophy, save yourself some time and expense and check out Dinn Brothers’
web site.

Yesterday, we talked about some of the self-evaluation tools
available from the National Institute of Standards and Technology (NIST), the
Baldrige Award people. Today, I’d like
to introduce you to the “Criteria for Performance Excellence”.

First, there’s no magic in the criteria book. It’s basically a series of questions,
covering seven categories of business management. When you answer the questions, you paint a
picture of your business. If you apply
for either a local award or the Baldrige itself, you will receive feedback from
experts in business excellence that you can use to improve. It’s the feedback, not the award, that gives
the program its value.

But, even if you never apply for an award, the process of
asking and answering the questions will give you more insight into your company
than anything you will ever do, short of hiring a professional consultant and
spending thousands of dollars.

 The seven Baldrige categories are:

  • Leadership
  • Strategic Planning
  • Customer and Market Focus
  • Measurement, Analysis, and Knowledge Management
  • Workforce Focus
  • Process Management
  • Results

In scoring for the award, the Results category is worth 450
out of a total 1,000 points, so obviously results are very important,
especially to you.

It’s important to mention that the Baldrige process, either
at the national or local level, doesn’t tell you how to run your business. They don’t care what your process is, they
just want to know that you have a process.

It takes time to look at your total business and identify
the processes, but once you do, improvements should come easily. Quality isn’t something that you do. It’s not something extra added to your daily
task list. In fact, good processes save
time and money and deliver a better product or service.

 The Organizational Profile

The first section of the Baldrige criteria is called “Preface: Organizational Profile”. If you looked at the EBaldrige Organizational Profile mentioned in yesterday’s post,
then you know the questions asked in the profile. In broad terms, the Organizational Profile
asks “What are your key organizational characteristics?”  and “What are your key challenges?” If you can answer these two questions, you’ll
have a pretty good handle on your business. If you can’t answer them, then finding the answers will be an education
all by itself.

If you haven’t already, download a copy of the Criteria for Performance Excellence from the Baldrige web site.  Print out the Organizational Profile section  and the  associated instructions.  Read them  while you’re at lunch, or in the evening while you watch TV.  Can you answer the questions?   If not,  where can you get the answers?   Some questions you’ll be able to answer off the top of your head.  Some may take some research.  Ask you staff for help.  Make it a fun project. 

If you can answer every question,  you will know more about  your business than  the majority of  business owners in the United States and you’ll have a huge advantage over your competition.   

And, it won’t cost you a dime.

 

Improving Your Game

Golf_dummies
Every weekend, millions of people watch professional golf on
television. The number of people who
compete in the pro tours is incredibly small and the number who actually ever
win a tournament is even smaller. Recently, on the men’s tour, the number has been just one.

If you do a book search on Amazon.com for the term “golf
instruction”, you will find 1,058 titles. If so few people ever win anything, why all the interest in instruction? The answer is simple. People want to improve their game. They want to be the best that they can be.

I was thinking about this because I recently received the
2007 edition of the Malcolm Baldrige National Quality Award Criteria. The Baldrige Award, and the forty-four state
programs
modeled after it, recognizes the best businesses in the United States. Like pro golfers, Baldrige winners are the best of the best. Since the program began in 1988, there have
been just 68 winners out of 1,139 applicants. 

In spite of this small number of winners, the National Institute of Standards and Technology (NIST), the agency that administers the Baldrige program, has distributed more than 2 million copies of the award criteria since 1988.  It’s estimated that, on average, each book is copied once, and the criteria can be downloaded from the NIST web site.  Obviously there are millions of companies using the criteria for self-improvement with no intention of ever applying for the award.

Award winners are chosen because they can serve as
role-models for others. In fact, one of
the requirements for applying is that the winners must be willing to share
their expertise. Copies of winners applications are available for download.  The goal of the program
isn’t to hand out awards, the goal is to improve American business. Since you’re paying for the program(s) with
your tax dollars, it makes sense to take a look at what they have to offer.

NIST offers a number of no-charge
materials on its web site that can be very helpful in improving any
business. The first, and easiest to do
is the E-Baldrige Organizational Profile. It’s just 22 questions to identify what you know about your
business. You answer the questions
online and immediately receive a simple break-down of how you compare to other
businesses.

A second tool is a questionnaire called “Are We Making
Progress”
. It’s a questionnaire for your
employees that helps identify strengths and areas for improvement. It’s available from NIST in either paper or
electronic format. Again, the questions
are easy to answer and will help you understand what your employees are
thinking. You may be surprised!

Next time, we’ll take a look at the actual criteria and how
you can begin to use them in your business. For now, you can learn more by visiting the Baldrige web site. Download a copy of their “Getting Started”
booklet or a copy of the complete criteria.  You can check this list of state and local
programs to see what your state has to offer. Many state programs offer individualized help for companies who want to
improve their performance either free or at a nominal fee.  If you have any questions, you can email me.