Making benchmarking work: Five lessons from the Netherlands
25 October 2016
Benchmarking has the potential to be a tool to improve performance and support change, but too often it is reduced to a regulatory burden. Last week we hosted colleagues from the Netherlands who shared lessons in how to make benchmarking a success.
For the last two years, PwC in the Netherlands has managed a national programme of multi-dimensional benchmarking for social landlords to evaluate and understand performance across the social housing sector, as well as running a similar programme for care providers for many years.
Reflecting on the Dutch experience, a number of lessons stood out:
- When it comes to benchmarking, what you get out depends on what you put in. And this doesn’t just apply to the quality of your data. What has made the Dutch model successful is the commitment and engagement from the organisations being benchmarked, from collaborating in the methodology, validating the baseline and engaging with the outputs. The Dutch success is as much because this has been a process of engagement, rather than a response to regulation or inspection, as it is to do with the nature of the methodology.
- Organisations need to think beyond the benchmark: it’s what you do with the analysis that counts. This means that leadership and culture are both critical. Organisations need to take the time to understand and reflect on their performance and, more importantly, use the insights garnered to influence change and drive improvements.
- Nobody is going to argue with an ‘AAA’ class ranking, but the Dutch experience shows that trends are more important than the score at any one time. Over the years, improvement has been seen across different sizes and types of housing associations, while those at the top have to work hard to stay there. Being the best one year shouldn’t lead to complacency, and neither should a lower rating leave anyone despondent.
- The multi-dimensional nature of the Dutch benchmarking – it includes customer experience, staff experience, and operational performance - highlights the need for organisations to balance their priorities. Those rating highest in terms of operational performance do not perform best overall. While the current environment means there is often a relentless focus on costs, organisations need to balance this with achieving outcomes for their customers.
- Parts of keeping the customer happy are relatively simple – do things right the first time, focus on customers’ real needs, and communicate clearly – but another crucial component is keeping your staff engaged and empowered, and so ‘happy’. It sounds obvious, but the Dutch evidence shows that customer engagement and staff engagement go hand in hand. Particularly in times of change or mergers, keeping a focus on engaging staff is key. And this is of course where leadership is most critical: creating the right upward performance spiral or reversing the downward one can be attributed to one key personnel change.
When the benchmarking began the largest organisations found it difficult to score highly on all measures and there were no ‘AAA’ associations with more than 25,000 units. That position is beginning to change slowly but the greatest feature of the approach is that after only three years, the use of the benchmarking data to analyse performance is narrowing the gap between all performers top to bottom whilst also raising the standard overall.
There are common lessons here for all sectors in how to transform benchmarking from a tick box exercise into a powerful tool for improving performance.
Get in touch if you're interested in finding out more about the Dutch benchmarking approach and how it might applied to your organisation.