What if more SMEs use Benchmarking as a Strategic Tool?!

After we discussed several strategic tools for SMEs in class, I found benchmarking to be one of the most significant tools. Benchmarking is not the practice which requires the deterioration of the flexibility and the smallness of the SME. Most importantly, benchmarking is easily achieved or successfully used in SMEs due to its flexibility. If benchmarking suggests the firm to restructure and usually, its usage leads to constant organic changes, then SME is more flexible to change constantly rather than large organization with its “big”, more or less “formal” structure.

According to Monkhouse (1995) “Strategic management” and “change management” are becoming synonymous due to huge emphasis and importance of continuous improvement and change in SMEs. Almost all organizational or SME business development models focus and suggest continuous growth and reinvention in SMEs. Specifically, internal organizational development is valued. Whereas, benchmarking is one of the strategic tools which assist in internal development of organizations, processes, functions, tools and techniques. Most importantly, leadership practices, people management and other critical assets can be compared and benchmarked mostly involving organizations from different industries. Benchmarking can be used at strategic as well as operational and tactical levels. One of the most significant outcomes of benchmarking is the establishment of “networks” that lead to innovation in SMEs - “Developing a network of knowledge transfer mechanisms amongst customers, suppliers and manufacturers may lead to greater innovation comparison to less effective knowledge sharing company routines, providing a situation of competitive advantage” (McAdam R., & Kelly M. 2002 p.12).

In addition, I would like to share with you the empirical evidence by McAdam R. & Kelly M. (2002), where they connected three SMEs with each other, three of them agreeing on free exchange of information and advices.

From the beginning, the Company 1 had a problem of employee commitment and loyalty in addition to customer dissatisfaction. Whereas, Company 2 had an experience in building teams within the firm, motivating employees, leading to more loyalty and commitment. While, Company 3 was rated high on customer satisfaction and it was known for its practice in meeting customer expectations. What happened after the benchmarking was used is that Company 2 and 3 shared their practices and provided advices to Company 1, leading to performance improvement, particularly in building employee commitment and customer satisfaction.

Finally, I would point out that Benchmarking is continuous and systematic process rather than done with intervals or some frequency. It allows improving performance gaps in SMEs and triggers new strategic thinking in entrepreneurs or owner-managers. Benchmarking practices lead to innovation in SMEs if it is used systematically and continuously. At last, it could provide a SME with a situation of competitive advantage.


REFERENCES:
McAdam R., & Kelly M., A business excellence approach to generic benchmarking in SMEs, Benchmarking: An International Journal, Vol.9 No. 1, 2002.

Monkhouse E., The role of competitive benchmarking in small to medium-sized enterprises Benchmarking for Quality Management & Technology, Vol. 2 No. 4, 1995, pp. 41-50.© MCB University Press, 1351-3036