Making time to be part of that peer benchmarking group was the smartest decision I made early in my business career. Peer benchmarking helped me build my yard from one to 130 employees and 15M in annual sales. It was the most significant source of the ideas that made my yard better than the competition and made Ford willing to pay me for it. Since then, I have used peer benchmarking to start,
grow, and sell businesses in a variety of industries. What is Peer Benchmarking?
Chances are, you’ve heard expressions that relate to the basic concept – “two heads are better than one,” “let’s put our heads together,” “don’t reinvent the wheel,” etc. Those catchphrases apply to different sce- narios, but the basic idea remains the same: A group draws from a wide base of knowledge and experience and that dynamic leads to creative and efficient prob- lem solving that no individual can achieve on his or her own.
People often tell me, “Oh, we have peer groups; we have work groups,” or something similar that they think is peer benchmarking. What is the difference? I hear that question a lot. Peer benchmarking compares real numbers, metrics, objective measurements, and shares techniques among the owners and top man- agers in the room.
A real peer benchmarking meeting begins with each participant writing columns of numbers that reflect his yard’s performance on a board at the front of the room –alongside the numbers of the other par- ticipants.
The numbers show whether you are an average per- former, a laggard, or a star relative to your peers. Everyone wants to know where he or she is better and to learn where others are ahead of him or her. Some learn they come in last in an area. I recall a peer benchmarking meeting that I facilitated where this was the case. One owner lagged everyone else sig- nificantly for a metrics related to labor productivity. When we drilled down, we found that he was running his yard differently. He didn’t remove a part from a car until he sold the part. All the other yards disman- tled cars and stored parts. This owner thought that storing the parts on the cars was right, but the numbers convinced him to rethink.
In other cases, a particular operator will have num- bers that are better than the norm for a particular metric. In the group that I was in, I recall that I had better-than-average productivity for parts delivery because I had found that my delivery drivers were much more productive when they were paid per delivery, rather than by the hour.
Peer benchmarking compares real numbers, metrics, objective measurements, and shares techniques among the owners and top managers in the room.
Crunching the Numbers
The crucial part of the meeting is finding out how you are doing relative to a set of peers who are working hard to improve their yards. Each participant goes home with a realistic view of how his performance for the most crucial metrics stacks up against similar yards. In some cases, a yard owner also goes home with a new vision of what is possible for a particular metric and an initiative to achieve the kind of per- formance the top yard in the group is achieving. A peer benchmarking group is simply unlike any other work group because it includes owners of similar sized yards and involves much deeper sharing of performance data than typically occurs when owners meet in different settings.
Of course, you should be going to state and national conventions for recyclers. You will learn a great deal about best practices and you will connect with other owners in the sessions and over a drink or two. You can learn a lot, but you won’t learn nearly as much as you will when you get the kind of inside look at how your business performs against your peers in a peer benchmarking group.
In addition to bringing numbers to the group, each participant brings the details of one or two initiatives that he or she is considering. The usual format of these sessions is that the morning is devoted to a look at the metrics and the afternoon is devoted to consid- ering the issues and initiatives of each of the partici- pants. At the benchmarking meetings that I have facilitated, I usually use a technique called big and easy analysis that helps participants to evaluate the work required to implement an initiative and the likely impact it will have on the performance of their business.
Although many yard owners have similar life expe- riences, each participant brings something different to the table. Being able to talk about the initiative that you are considering to improve performance with another eight or nine experienced owners and a facil- itator who knows your industry yields valuable insights. Sometimes one of the yard owners has tried a similar initiative and can share what he learned by trial and error. The savings in time and money make joining a
September-October 2016 | Automotive Recycling 49