Financial Benchmarking for Your Business

By Ray Shaw

Over the past several years, owners of telemessaging call centers have shown increasing interest in comparing their call handling statistics, financial data, and agent ratios with their peers. ATSI has responded to this need with two industry initiatives: industry standards and financial benchmarking. The subject of this article will be financial benchmarking.

The increased level of competition in the marketplace and the strong desire of telemessaging call center owners to remain competitive in their service pricing and performance has been the driving force behind the ATSI financial benchmarking project. Benchmarking is an essential management tool for the successful operation of any business in a competitive marketplace. It can identify areas of a company’s operation in need of improvement, aid management with goal setting, and help a company establish reasonable target areas for improvement.

Benchmarking is a process used in management – particularly strategic management — in which organizations evaluate various aspects of their processes in relation to industry best practices.  This allows organizations to develop plans for adopting such best practices, usually with the aim of increasing some aspect of their performance.  Benchmarking studies can also help evaluate service effectiveness and efficiency.  It helps answers the questions: “Are we doing the right thing?” and “Are we doing what we do right?”

Key Elements of a Successful Benchmarking Program

  • Benchmarking is part of the total quality management process.
  • Benchmarking is focused on processes rather than on outcomes.
  • Benchmarking requires partners that are willing to share information.
  • Benchmarking implies a willingness to change and a desire to excel.
  • Benchmarking is a continuous process. Organizations that use benchmarking as a ranking for their activities do not get any real benefit.

The Phases of Benchmarking

  • Planning
  • Data collection
  • Analysis
  • Implementation
  • Recalibration: best practices become outdated and need to be reviewed and renewed.

By undertaking this project, ATSI has begun establishing a database of information to address a critical need for the telemessaging industry. To date, ATSI has collected general demographic and financial data only, and future data collection surveys will deal with operating statistics. The information that has been collected will facilitate financial benchmarking by allowing the ATSI membership to compare their financial data with their peers and learn from others’ experience.

The benchmarking database will also facilitate the identification of industry best practices by highlighting top performing organizations so that the methods they used to achieve desired results can be analyzed and shared. In order to provide meaningful results to all participants and to maintain a company’s confidentiality, the ATSI benchmarking committee has elected to use common size income statement data in its collection model.  Common size data is expressed as a percentage of total revenue and only the percentages are presented, not the actual results.

To find out more about the ATSI financial benchmarking project, attend the benchmarking session at the ATSI convention in Colorado Springs, on Saturday, June 23.

Ray Shaw is president of ATSI, an international trade association for the teleservices industry. Ray can be reached at rpshaw@bpeinc.com.

[From Connection Magazine June 2007]

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