Benchmarks in Hospitality and Tourism

Sungsoo Pyo

• Publisher: Routledge
• Year: 2002
• ISBN:
  9781136799051
• Edition: 1
• Topic: Commerce
• Subtopic: Commerce Général

How much money is your business wasting? How good is the service you deliver?This pioneering book will familiarize you with benchmarking techniques that can be used to gauge and improve the performance of hospitality and tourism businesses anywhere! With compelling case studies drawn from hotel management, environmental systems, and desti

Articles

An Overview of Benchmarking Literature: Its Strengths and Weaknesses

Metin Kozak

Metin Kozak is Lecturer in the School of Tourism and Hotel Management, Mugla University, Turkey.

Kevin Nield

Kevin Nield is Principal Lecturer/Leader of the Centre for International Hospitality Management, Sheffield Hallam University, City Campus, Sheffield SI 1WB, U.K.

SUMMARY. The aim of this paper is to review the concept of benchmarking with emphasis on its strengths and weaknesses and the methods by which it can be applied to tourist facilities and destinations. To achieve its aim, the paper presents several approaches to the benchmarking and benchmarking development. In doing this, it examines the perceived benefits and costs of benchmarking and the implementation process. It then examines the different benchmarking methods using qualitative and quantitative research to identify performance gaps. From this, weaknesses of past benchmarking research are addressed. Finally, it analyses the development of benchmarking within the tourism industry together with some examples and its limitations. [Article copies available for a fee from The Haworth Document Delivery Service: 1-800-HA WORTH. E-mail address: <[email protected]> Website: <http://www.HaworthPress.com> © 2001 by The Haworth Press, Inc. All rights reserved.]

KEYWORDS: Benchmarking, quality management, tourism businesses, tourist destinations

Introduction

Benchmarking basically stems from Deining’s quality management theory that aims to enhance quality and check its sustainability. Despite this relative clarity, benchmarking has been defined differently by a variety of organisations and authors even though each aims to reach the same conclusion (Camp 1989; Vaziri 1992; Codling 1992; Watson 1993). Nevertheless, all of these definitions have a common theme, namely, that benchmarking is the continuous measurement and improvement of an organisation’s performance against the best in order to obtain information about new working methods or practices in other organisations. As Watson (1993) says, the benchmarking concept should be viewed as a process of adaptation, not adoption. It is not just a question of copying what others are doing, the power in benchmarking comes from sharing ideas. As benchmarking has been considered to be the process of learning from the best practices and experiences of others, some authors have used the term benchlearning (e.g., Karlof and Ostblom 1993). Thus, benchmarking is not different from the principle of learning from the experiences of others, but its real use is that it puts this learning experience into a structured framework.

Benchmarking theory is simply based on performance comparison, gap identification and the change management process (Watson 1993). A review of benchmarking literature shows that many of the benchmarking methods perform the same functions as performance gap analysis (e.g., Camp 1989; Watson 1993; Karlof and Ostblom 1993). The rule in benchmarking is firstly to identify performance gaps with respect to production and consumption within the organisation and then to develop methods to close them. The gap between internal and external practices reveals which changes, if any, are necessary. It is this feature that differentiates benchmarking theory from comparison research and competitive analysis. Some researchers have made the mistake of believing that every comparison survey is a form of benchmarking. Competitive analysis seeks product or service comparisons but benchmarking goes beyond comparison and assesses the operating and management skills that produce these products and services. It is also different in that competitive analysis only looks at characteristics of those in the same geographic area of competition whilst benchmarking seeks to find the best practices regardless of location (Walleck, O’Halloran and Leader 1991).

Upon reviewing an extensive selection of literature (e.g., Camp 1989; Zairi 1992; Rogers, Daugherty and Stank 1995), it is apparent that the purposes of benchmarking are to:

• help businesses understand where they have strengths and weaknesses depending upon changes in supply, demand and market conditions.
• help better satisfy the customer’s needs for quality, cost, product and service by establishing new standards and goals.
• motivate employees to reach new standards and to welcome new developments within the related area and to improve the motivation of employees.
• allow businesses to realise what level(s) of performance is achievable by considering other methods and to show how such improvement may be made.
• document reasons as to why these differences exist.
• enable businesses to improve their competitive advantage by stimulating continuous improvement in order to maintain world-class performance and increase competitive standards.
• establish a pool of innovative ideas that are cost-effective and time-efficient from which the most applicable examples may be utilised.

Despite these benefits, several barriers to successful benchmarking exist. Barriers identified include time constraints, competitive barriers, cost, lack of management commitment and professional human resources, resistance to change, poor planning and short-term expectations (Bendell, Boulter and Kelly 1993). A poorly-executed benchmarking exercise will result in a waste of financial and human resources as well as time. Ineffectively-executed benchmarking projects may have tarnished an organisation’s image (Elmuti and Kathawala 1997).

The result of this is that there are risks involved in benchmarking others and in adopting new standards into the own organisation. ’Best practice’ should be perceived or accepted to be amongst those practices producing superior outcomes and being judged as good examples within the area. One final criticism is that benchmarking findings may remove the heterogeneity of an industry because practices will themselves become globally standardised and attempts to produce differentiation may fail (Cox and Thompson 1998). For these reasons, benchmarking has its detractors, indeed Campbell (1999) suggests that businesses should spend little time on benchmarking, instead they should focus on their own planning procedures with regard to their own needs.

Types of Benchmarking

Several classifications of benchmarking are recorded in the literature. The main categorisations are internal, competitive, functional and generic benchmarking (Camp 1989; Zairi 1992). For ease of use the literature may be divided into two parts: internal and external benchmarking. In this context, competitive, functional and generic benchmarking will be classed under external benchmarking. Each is briefly explained below:

• Internal benchmarking covers two-way communication and sharing opinions between departments within the same organisation or between organisations operating as part of a chain in different countries (Cross and Leonard 1994; Breiter and Kliner 1995). Once any part of an organisation has a better performance indicator, others can learn how this was achieved. Findings of internal benchmarking can then be used as a baseline for extending benchmarking to include external organisations (McNair and Leibfried 1992). Advantages of internal benchmarking are the ability to deal with partners who share a common language, culture and systems and having easy access to data (Cook 1995). However, it is claimed that this type of benchmarking study is time-consuming and potentially wasteful, as competitors could be busy increasing their market share while the sample organisation is busy measuring its internal performance (Cook 1995).
• Competitive benchmarking refers to a comparison with direct competitors only. This is accepted as the most sensitive type of benchmarking as it is very difficult to achieve a healthy collaboration and co-operation with direct competitors and reach primary sources of information. As a result, this type of benchmarking is believed to be more rational for larger businesses than smaller ones (Cook 1995).
• Functional benchmarking refers to comparative research carried out not only against competitors but also of those who are not in direct competition, but operating in similar fields and performing similar activities (Karlof and Ostblom 1993). For instance, British Rail Network South East employed a benchmarking process to improve the standard of cleanliness on trains. British Airways was selected as a partner because a team of 11 people cleans a 250-seat Jumbo aircraft in only nine minutes. After the benchmarking exercise, a team of 10 people were able to clean a 660-seat train in eight minutes (Cook 1995). This type of benchmarking is also known as non-competitive benchmarking.
• Generic benchmarking attempts to seek world-class excellence by comparing business performance not only against competitors but also against the best businesses operating in similar fields and performing similar activities or those having similar problems but in a different industry (Breiter and Kliner 1995). Therefore, a hotel organisation’s accounting department could look at the accounting department of a manufacturing organisation that has been identified as having the fastest operations. It is believed to be easier to obtain data in such arrangements as best-in-class organisations are more likely to share their experiences. The disadvantages of generic benchmarking are that it can take a long time to complete and research outcomes may need a lot of modification in order for organisations to set their own standards (Cook 1995).
• Andersen (1995) introduces a further type of external benchmarking called ’relationship benchmarking’ which refers to benchmarking against an organisation with whom the benchmarker already had a relationship in advance of a benchmarking agreement. This method may potentially provide some benefits to organisations since less time is required and the trust established between the two parties will help break down confidentiality barriers. Relationship benchmarking which was introduced as an alternative option to ’competitive benchmarking’ is also known as ’collaborative benchmarking’ (Cox, Mann and Samson 1997).

Analysis of Benchmarking Models

Benchmarking method requires two parties, the benchmarker and the benchmarkee. The former is the organisation carrying out a benchmarking procedure whereas the latter is the organisation being benchmarked. Although benchmarking theory has been derived from Deming’s four stages: plan, do, check and act, numerous benchmarking process models have been proposed by researchers both in industry and academia. Approximately forty different models have been identified that originate from individual organisations, consulting agencies and individual researchers. The number of phases and process steps in these models is variable. While some specify five phases consisting of a total of fourteen steps (e.g., Camp 1989; Karlof and Ostblom 1993), some have just four phases with the same number of steps (e.g., Watson 1993).

Having reviewed all the major models, the steps of planning, data collection, analysis, action, and review may be postulated as the main categorisation. The benchmarking process should begin in the host organisation in order to be able to specify areas that need to be measured (Camp 1989; Vaziri 1992; Watson 1993). Further steps are then to collect data, examine gaps between partners to identify strengths and weaknesses, take action and review the future performance level of the host organisation. The review stage enables the organisation to understand whether or not the process has achieved its objectives.

The traditional benchmarking approach refers to the notion that there must be a gap between the host and the partner. The gap analysis model considers the differences between performance levels of businesses. The standard to be set is that the higher value is the best practice. For example, when the scores for two businesses A (the benchmarker) and B (the benchmarkee) are compared, if the score is greater than zero, it is strength for business A and a weakness for business B. This is regarded as a positive gap. On the other hand, when the score is less than zero (negative), this means that the specific attribute performs better in business B than business A. This is regarded as a negative gap. A large negative gap could be ...

Table of contents

• Cover
• Title
• Copyright
• CONTENTS
• Introduction
• Articles
• Index