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Fig. 20 Utilization trend of benchmarking per business sector
Approximately 65% of the benchmarking users prefer to use internal benchmarking, including over 70% showing a
revenue of less than 250 million Euros and about 60% showing an increasing revenue. Although internal benchmarking
has proved its usefulness in the sharing of best practices, this method has limitations. The best department, which
serves as a reference for internal benchmarking, may not be the best in the world, and as such, a company most
probably misses out on the best references on the market.
Our respondents seem to confirm this practice. As revenue increases, the share of external benchmarking increases. In
companies with a revenue of 1 billion to 5 billion Euros, 50% of the benchmarking exercises focus on the external
market, against only 30% in companies with a revenue of less than 50 million Euros. Large companies may find it
easier to allocate the necessary resources to the exercise, while in small and medium-size companies, the critical mass
and niche effect can render external benchmarking quite complex.
"Internal benchmarking has been very important to us for many years. Our operational staff can sometimes challenge
the indicators. This requires some educational efforts from our finance teams to show that we use the same rules for
everyone and adapt them if necessary."
Eric Masegosa,
Controlling Director/Chief Officer, French Establishment of Blood, Paris
17% of respondents do not use any of the reviewed methods
17% of the surveyed population do not use any method, mainly in the media and construction sectors. Of those, 80%
confirm that they have no intention of setting up one of the proposed methodologies. Furthermore, 35% of them are
located in the US, 19% in France, and 15% in the UK. With regards to intended use, benchmarking remains the
preferred method.
The balanced scorecard method is used mainly in large companies (revenue above 1
billion Euros)
The balanced scorecard
is used ďLJ ŵaŶageƌs to eŶsuƌe that theiƌ ĐoŵpaŶies’ aĐtioŶ plaŶs aƌe aligŶed ǁith the loŶg
-
term objectives. Rather than focusing on financial matters only, this method is used to manage the overall
performance of a company, based on four dimensions: the financial dimension (profit and loss analysis), the customer
dimension (analysis of customer satisfaction), the internal process dimension (analysis of the effectiveness of internal
processes) and the learning and development dimension (analysis of the company's HR policy).
Putting this method in place can be long and costly. When establishing the budget estimate, a company must also
consider the time spent by all executives to integrate this new way of thinking, to convince employees, and to align
actions. This method can be established only in companies with the right tools and sufficient resources for its effective
deployment.
Different evolution of the use of the zero-based budgeting (ZBB) method across the
companies surveyed.
We found that 21% of the respondents confirmed that the ZBB method is their most used method. Among the users
of this method, 29% are located in France, 20% in the US, 19% in South Africa, 8% in the UK, and 6% in Russia. The
most significant sectors utilizing ZBB include "Other services" with 27% of users, followed by Banking and Insurance
with 18% and Industry with 17% of users.
IAFEI Quarterly | Special Issue | 26