"It's simple," Brady says. "It's easier to track and compare graphically rather than going back through and going through a lot of sheets and a lot of computer backup information."
Benchmarking uses charts, graphs and other visual elements to compare your company's performance during a time period to a previous year, quarter, month, cycle or any time period. You can compare output, financial results or anything that contributes to running your company. The idea is not new, but it is now much easier to gauge your internal performance against industry averages to see where your company stands in the market.
"Benchmarking is becoming a lot more popular because people have better access to information," says Dale Ruther, partner at accounting firm Bober, Markey, Fedorovich & Co. in Akron. "The Internet has helped, and trade associations are offering more of this type of information to their members."
Ruther has helped expand North American Precast's benchmarking program to help compare to the rest of the pre-cast concrete industry using data collected from the Pre-cast Concrete Institute in Chicago, a trade association.
"Now I let Dale do all the work for me," Brady says. "That way he has all the information that concerns the accounting firm."
Here are some benefits of benchmarking.
The major plus to benchmarking is it lets you quickly see your operational costs over time. Even fractional changes to your labor, material or overhead expenses can have a large financial impact at year's end.
"People see their material costs were only 1 percent higher than the year before and they think it's not a big deal," Ruther explains. "If you spend $20 million on materials, that 1 percent translates into $200,000. That all falls to the bottom line."
Benchmarking allows you to track more than just sales records with your competitors. Highly specific information like salary scales, gross profit, return on assets, labor cost per square foot and other labor productivity statistics, material costs, sales per plant, sales at job site level is usually available. That data will give you a much clearer picture about where you stand in the market.
Better employee management
Benchmarking can help establish productivity and financial goals. Using industry average labor costs, a company can manage labor differently, change schedules, limit overtime or revise processes to ensure that materials are delivered to the worksite more efficiently.
How to reach: Bober, Markey, Fedorovich & Co., (330) 762-9785; North American Precast, (330) 655-9336.